The first solar panel was invented in 1954, but the concept of harnessing the sun’s rays goes all the way back to the Ancient Greeks. Since the 1970s, solar energy companies have been manufacturing panels designed for home usage. At that time, the average efficiency of solar panels was 14 percent. Fortunately, the efficacy of these products has continuously increased, and homeowners can now get approximately 30 percent efficiency.
Some types of solar panel can reach 46 percent efficiency, but this comes with a hefty price tag. It’s reasonable to assume that these high efficiency solar panels will become affordable soon, as clean energy continues to overtake traditional energy sources. For now, most people need to weigh the effectiveness of typical solar panels versus the cost of installing and maintaining them. Only by doing this can you determine if switching to solar power is truly worth it.
How Does Solar Energy Work?
Some people have the misconception that they merely have to invest in solar panels and their entire house will be powered for free. The reality is that solar panels on their own aren’t enough. Here’s how they work:
- Solar panels are only able to produce direct current (DC) electricity.
- This isn’t compatible with your home, so an inverter must switch DC into alternating current (AC).
- From there, AC goes into your home’s electrical panel where it can be used as power.
This process does not enable you to go completely off grid. In fact, you’ll still need to be hooked into the general electric system, though your usage will decline. If you want to be completely free of this system, you’ll need to invest in solar battery banks that can store energy for future usage.
What’s the Difference Between Leasing and Buying?
Purchasing and installing a solar panel system requires a large upfront investment of up to $30,000. Alternatively, you can get a loan under the condition you pay for everything in 20 years. You may be eligible for rebates or government incentives, and you will save an average of 40-70 percent in lifetime energy costs.
If you lease solar panels, you’ll have little to no upfront costs and you won’t be responsible for maintenance. On the other hand, you won’t qualify for any rebates or incentives, and your energy costs will only be reduced by 10-30 percent.
Important Facts About Solar Energy
There are some facts about solar energy that you need to know in order to make an informed purchasing or leasing decision. All these statistics are averages, so your exact results may vary.
- Average Cost of Solar Energy/Watt – $3.16/watt, which is 20 cents cheaper than a year ago.
- Average Cost of Non-Solar Energy/Watt – $1.25.
- Average Cost of Solar Energy/kWh – 12.2 cents.
- Average Cost of Non-Solar Energy/kWh – 12 cents.
- Average Payback Time for a Solar Energy System – Seven to nine years.
Can You Rely on Solar Power?
Solar panel failure rates are only 0.05 percent, which means that they are very reliable from a manufacturing standpoint. It’s important to note that this doesn’t mean they can seamlessly provide all your home’s energy needs.
The average home needs between 28-34 solar panels, especially if you want to go completely off grid. Because solar panels don’t always operate at peak efficiency, you’ll need to calculate your home’s annual energy needs and add approximately 25 percent to figure out exactly how many panels to buy.
Your location will also play a big role in how reliable solar power is. For example, Michigan homeowners will get an average of 2.9 kWh per day for every 1 kW solar panel system. Meanwhile, Arizona panels get a robust 4.8 kWh per day.
The average U.S. home needs approximately 30 kWh per day. No solar panel is fully efficient, so Michigan homeowners would need at least 13 kW in their system. Arizona residents may be able to get the same amount of electricity with a solar system containing only 8 kW.
In both examples, unusual weather conditions could potentially cause interruptions in service. Therefore, you need to be aware that solar power does have some limitations. However, some experts believe we’re not far away from achieving exclusive solar dependence. UC Berkeley Professor Mehran Moalem has hypothesized that the entire earth could be powered by placing solar panels in only 1.2 percent of the Sahara Desert.
Utilizing Government Tax Credits and Rebates
There are numerous tax credits and rebates available to reduce your expenses. Be sure to look at expiration dates before making plans based on any specific tax credit program. Current options include:
- Federal Investment Tax Credit – 30 percent of the system price.
- State Tax Credits – Vary widely from state to state.
- Cash Rebates – Cities, states and utility companies often offer a cash rebate of up to 20 percent.
- Solar Renewable Energy Certificates (SRECs) – Some states allow homeowners to accrue and sell SRECs.
- City and State Tax Deductions – The value of your solar power system might be excluded in the city or state taxable value of your home.
Advantages and Disadvantages to Solar
Ultimately, the best way to decide if you should invest in solar power is to look at the advantages and disadvantages. Here’s a brief recap to help you make the best decision for your situation.
- Advantages – Long-term financial gain, potential to sell SRECs at a lucrative price, eco-friendly and less dependent on local power companies.
- Disadvantages – Large initial investment, high repair costs and your system may not be enough to provide 100 percent of your power needs.