Six easy steps to estimate the cost of a solar energy system

Solar energy systems are not cheap. That said, it’s important to compare them in the context of other types of home improvement projects. Home buyers and real estate agents see a solar photovoltaic heating system or solar water heater system as a significant value-added improvement – ​​similar to adding a patio or remodeling your kitchen. Plus, unlike a patio or kitchen renovation, you also get a benefit on your energy bill.

Solar systems often also get an extra financial boost: Many jurisdictions and utilities in the US offer attractive financial incentives to reduce the initial cost of capital associated with a solar energy system.

Here are some surefire ways to estimate the cost of a photovoltaic or thermal solar system and find out if a solar power system makes sense for you. Let’s start with a photovoltaic (PV) system for the home.

Step 1: Estimate your home’s electricity needs

For starters, it’s good to have an idea of ​​how much power you’re using. You’ll get a better point of comparison if you figure out how many kilowatt-hours (kWh) you use per day, per month, per year. Your utility bill should contain that information.

Of course, the utility bill also reflects your costs, and many utilities include a graph showing how your monthly energy usage/costs vary throughout the year. This way you can estimate where your highest energy consumption is and at what time of year.

New housing construction

If you are building a new home, estimate your demand based on the type of equipment you plan to install and the square footage of your home. The pros call this “your load”.

To calculate your expected load, create a table to record the wattage consumption for each device. Every appliance – be it a water heater, electric light, computer or refrigerator – should have a nameplate stating its power rating in watts. Or you can get the information from the manufacturer’s website.

Some labels only list amperage and voltage; to get watts, multiply the two together (amps x voltage = watts). In another column, write the number of hours each device is expected to run. Then multiply the watts and hours together to estimate the number of watt-hours used per day. Since it’s hard to anticipate all electrical loads (it can be tedious to explore every toothbrush and cell phone charger), you’ll want to add a multiplier of 1.5 just to be safe.

Step 2: Anticipate the future

In 2005, average US residential electricity rates ranged from about 6 to nearly 16 cents per kilowatt hour, depending on where you lived. Average retail and commercial electricity rates have risen about 30% since 1999 and the upward trend is likely to continue, especially as the cost of the coal and hydropower used to generate that electricity also increases. So think about your home’s electricity needs and its current and future costs in relation to each other.

Step 3: How Much Sun Are You Getting?

The Florida Solar Energy Center conducted a study to examine how a 2 kW photovoltaic system would perform if installed in a highly energy-efficient home in the continental US ( publications/html /FSEC-PF-380-04/  ).

The study took into account all the factors that affect the performance of a PV system, such as the temperature effect on the photovoltaic cells, the number of hours of sunshine in different regions, and the efficiency of the inverter to convert solar energy from DC to DC. AC.

As the study points out, solar photovoltaic systems operate virtually everywhere in the US. Even in the Northeast or in “rainy Seattle,” a PV system can stand out if it’s designed and installed properly. In New York or New Jersey, a one-kilowatt system should produce approximately 1,270 kilowatt-hours of electricity per year, in Seattle, a one-kilowatt system should produce approximately 1,200 kilowatt-hours per year. In the Southwest, of course, those proportions will be much greater.

Solar contractors in your area can help you determine the best size for your solar photovoltaic system.

Step 4: Size Your System

In general, solar photovoltaic systems of 1 to 5 kilowatts are usually sufficient to meet the electricity needs of most homes. One advantage of grid-connected systems is that you can use solar PV to supplement or offset some of your electricity needs; therefore you can adapt your system to your budget and always add to the system later if necessary.

As an aside, here’s a rule of thumb to remember to help you estimate the physical space your PV system will require: One square foot produces 10 watts. So in bright sunlight, one square foot of a conventional photovoltaic panel will produce 10 watts of power. For example, a 1000 watt system may require 100-200 square feet, depending on the type of PV module being used.

Step 5: Know your discounts

Many states and local jurisdictions offer homeowners discounts, tax credits and other types of incentives for installing photovoltaic and solar water systems for household use. Visit  to view a comprehensive database of available renewable energy incentives.

At the federal level, you can take advantage of a 30% tax credit (up to $2,000) on the purchase of a residential solar system through at least December 31, 2008.

Step 6: Run the numbers

While the cost of a solar PV system will depend on the size of the system you plan to install, your electricity rate, the number of kilowatt hours you expect to generate, and any state/local discounts/tax credits available, the formulas for calculating returns are pretty much the same.

For those who appreciate having the formulas, use the formulas below to get a quick estimate of how much a solar photovoltaic system could cost you.