Analyzing the Costs of Solar Energy

It is a well known fact that the costs of solar energy have dropped considerably in the last 20 years. The price drop has mainly be attributed to photovoltaic cells and panels becoming a lot cheaper, but there are also other significant contributing factors to the price drop. The cost of solar energy should not be viewed as a number dictated by the price of a panel. In truth, the panel account for around 30 percent of the whole price tag.

Solar alternatives provide the cheapest electricity in many states across the U.S.

The True Costs of Solar Energy

The costs of solar energy can actually be divided in five categories:

  • panels
  • supporting equipment
  • installation costs
  • permits and inspection fees
  • operational costs

Each of these categories is responsible for a significant portion of the total costs. If you add up all expenses involving permits and installation, you will get a number as big as that invested in the panels themselves. This is why the total cost of solar energy needs to be expressed by a figure representing a sum of all these categories.

A business with large energy needs may get a better price for purchasing panels in bulk

Cost per Installed Watt

Summing up all costs of solar energy systems and dividing them by installed watt is one of the best ways to represent the price you have to pay. On average, solar energy systems cost $3 per installed watt, which makes any calculation relatively simple. For example, if an average home needs an installation of 3 to 5 kilowatts, the occupants of that home would need between $9000 and $15000 to buy and install the whole system.

Of course, to these calculations change when you factor in all government grants that apply in your region. For more information, check out the Database of State Incentives for Renewables & Efficiency. This resource is government funded and it always provides the most current data.

Costs of Solar Energy Never Amount to Zero

Even when you see a deal with zero upfront payment, it does not mean that the total costs amount to zero. With a solar lease you pay fixed monthly installments to use the equipment, but you get ahead by producing your own electricity.

Similar zero upfront payment deals are the power purchase agreement. With a solar power purchase agreement, a third party owns and manages the solar equipment on your property while you get the benefit of cheaper electricity with no delivery charges. One way or another you do have to pay something -the important thing is to lower your bills.

Ask Luminext for Help

Luminext is always ready to help you reduce your energy bills. We will quickly analyze your location and determine the best solar solution for your home or business. Our solutions will account for both your needs and your budget. If solar is not a right fit for you, we can also provide you with alternative ways to save on your energy bills. Just give us a call or fill out our contact form and we can start working on a way to lower your utility bills. Our advice is always impartial and the consultation is free of charge.

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