This article talks about the cost of such a system.
by Tom Ferrio
First, some observations
Despite how long solar power has been around, watching this process has convinced me that there is still a lot of progress to be made to reduce the cost of an installation. A system installation today requires a lot of specialized design, permitting, and even research. The stuff between the solar panels and the existing home electrical system is essentially a semi-custom design. The electrical components and wiring must be different depending on the state it's being done in and the electric company the home is connected to. Imagine if you had to use different GFCI plugs in your kitchen in Charlestown versus North Stonington? It's just about like that today with a solar power installation.
And the installers have a lot of specialized knowledge and experience that you would be hard-pressed to find in local independent contractors. Frankly, the companies doing the installations get rightfully paid for that knowledge. That is an added cost, today, for having an installation that passes inspection and will be rugged.
The price of our system
I have developed an opinion over time that buying something locally and having it installed can cost about double what you can find for the parts on the internet. An example is a good automatic standby generator that you can find online for $2,000 to $3,000 and would cost you $4,000 to $6,000 to purchase installed from a local contractor.
A solar power system is like that. I found one website that sells a package of parts nearly identical to our system, for about $11,500. By comparison, the total installed price for our system was $23,000. After seeing this one installation done I figure I could manage the installation of one of these and save a few thousand dollars. Or maybe I would end up with a mess. And that is assuming I could find a licensed electrician with the specialized knowledge and experience to get the installation right.
And shopping around aggressively among installers could certainly get a lower price. However, in my case Alteris was the only company that ended up with residential installations supported by the state grant. That makes a big difference.
Financial support
I mentioned, in the earlier articles, that our trigger to do this was the presence of a state grant with Federal stimulus money. There is also a Federal tax credit that applies in addition to that.
Those two together will cover about 60% of the total installed price, or about $14,000.
After reading that number my friends who advocate small government are certainly gasping for air. Do I feel any guilt for accepting these "handouts"? No. I'm one of those people who are convinced that:
- hydrocarbon fuels have gotten lots of financial support over the years
- alternative energy sources are essential and morally good
- solar electric power can develop to be cost competitive with oil over $100/barrel but it will take research, manufacturing and installation experience to get there
- financial support now can provide the needed manufacturing and installation experience and stimulate research and development.
Does this make financial sense?
Some people have approached me saying things like "this is very interesting; I would like install some solar panels to save money on my electricity." I tell them that can't be their motivation at this time unless they can buy the parts online, successfully install them themselves and find big grants to lower the cost.
There are several key aspects to help decide the financial sense or nonsense:
- How long will the solar power system operate? Solar panels degrade over time but these panels are guaranteed to produce 80% of the rated output after 25 years which seems quite good. However the "extended product warranty" is only 5 years. The inverter has a 10-year warranty. I must confess that I don't know all of the warranty details,
- How will the price of electricity change over the next ten years or so?
- Do you have to finance the system? If you need to borrow money at 8%, the interest could be comparable to the annual energy savings.
Our net cost will be about $9,000 and the system is estimated to save us about $650 in electricity the first year. Depending on your judgment on those financial factors this is either a really stupid investment or one that is ok in order to make a statement about green energy. (I believe the second choice, not wanting to flaunt my stupidity.) But there is no way, yet, to do it to "save a bunch of money."
