Based on a recent study conducted by the North Carolina Clean Energy Technology Center, West Valley EIS has learned that the majority of homeowners in at least 42 of the 50 U.S. states can enjoy lower utility costs by getting off their local grid and investing in a fully financed solar PV system.
It has long been assumed that an investment in residential solar power is the preserve of the rich who can more easily afford the costly equipment and installation, but no more.
The study made use of several data metrics collected by online quote service EnergySage, including first year monthly average utility savings, average cost per kilowatt over the expected 25 year lifespan of the solar array, and the value of investing in solar, relative to a long term investment in the S&P 500 stock index.
The study found that even with utility rate disparity across different regions, savings could still be achieved in the majority as consumers enjoying lower electricity prices tended to consume more energy units than those suffering higher rates.
Some of the initiatives identified as being useful in bringing down the cost of solar investment include the federal tax credit, net metering, value-of-solar tariffs and state renewable portfolio standards. We believe these measures have gone a long way in meeting their goal of encouraging the increased use of renewable energy sources amongst the states and making access to solar power affordable for lower income households.
The Lawrence Berkeley National Laboratory has found that the median cost of residential solar power has fallen by about 60% over the last 15 years to $4.70 per watt, while EnergySage puts the current level at between $3.70 and $4.24. At these rates, the NC Clean Energy Technology Center study estimates that roughly 21 million households in the 42 states will save money by acquiring fully financed solar systems. 9 million households in 14 cities are also expected to make savings should they opt to buy the solar systems outright.
Since most consumers are unable to afford an outright cash purchase of solar photovoltaic systems, low cost financing would be an ideal solution. In the study’s results, found that with this low cost financing, with an assumed interest rate of 5%, residential homeowners would wind up paying less for electricity than if they continued to be hooked up to the local power grid.
One of the reasons for the decline in solar power energy costs is the fall in prices on equipment. Many of the currently available solar components and solar power storage options are more affordable now than they were a few years ago, and are expected to become more efficient in design, allowing for more harvesting of solar energy.
The non-hardware costs associated with solar PV system installation will drop in coming years. This refers to such expenses as those that arise from customer acquisition, installation, inspections and financing. These non-hardware costs account for more than half of the expense of investing in a solar PV system.
One of the reasons that the study found that an investment in solar energy would be more profitable than many of the top stock market index funds was the projected increase in electricity costs from utility companies and the expected decline in non-hardware costs related to solar PV systems. This theory will hold should the financial incentives offered by federal and state agencies, such as the federal tax credit, continue to be extended in the long term to the households.
In addition to the study’s conclusion that there is plenty of monthly savings and long term investment value to be had by investing in solar systems, this also points to the property value added by such installations, which have an estimated lifespan of 25 years.