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Solar Panels and the Return on Investment

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If there is good news for the consumer who wants to "go green" it is that the cost of solar panels is beginning to come down.  With federal and state tax incentives many in some areas of the country are finding that solar power is becoming more and more affordable.

It is not absolutely necessary to begin the solar transition with a full solar array.  There are good tax incentives for solar powered water heaters for in home use.  The incentives do not cover the cost of solar powered water heaters for pools or hot tubs.  For federal tax incentives for solar powered water heaters click here.  It is also worth checking with your state of residence for additional incentives.

For the consumer who is considering an on house solar panel array there are several considerations.  The amount of sunlight available during the course of a day sufficient for powering solar panels is highly dependent on the part of the country.  For example in the more northern states three hours a day is a good estimate.  The amount of sunlight increases to about seven hours a day in the southern most states. 

Naturally, it is far more economical to install an array of solar panels in the south rather than in the northern areas.  With the expectation of six to seven hours of sunlight a consumer home could get by with fewer solar panels or a smaller array and have the benefit of the sun for longer periods of time without having to invest in a battery to store the energy.

An array of solar panels for a smaller home would begin at approximately $20,000.  The larger the home and the greater the need for electricity the more solar panel array would be required and the greater the cost.  In general the cost to generate a watt of energy is between $10.00 and $12.00 when calculating the cost of solar arrays.

While the cost of a kilowatt of electricity from a utility company runs anywhere between $ .07 and $.25 depending on where one lives, the national average is about $ .10 per kilowatt.  Of course, it bears mentioning that the electric bills come each and every month.  The cost of the solar panel array is a one time expense, but all on the front end.

On average the American home uses somewhere between 750 and 1000 kilowatts per month.  Again, this depends on the size of the house, the amount of insulation, and the positioning of the house to utilize passive solar energy.  Additionally, many of us use more electricity than is needed.  A good example is leaving our computers on twenty-four hours a day.  Quite often other small appliances are using electricity even when we are not using the appliances.  Learning which appliances are the biggest additional drain on our utility dollars can help save energy and reduce monthly eletric bills or for the "green" house there is a reduction is the amount of solar power required.

To accomodate the average utility needs of most homes a four hundred to one thousand square foot solar array would be required for use during the sunny hours of the day.  Again, depending on where a person lives and the amount of expected sunlight will have a considerable impact on the return on initial investment.  Obviously a house that is situated to capture the full benefit of passive solar energy and is located in a southern area with the expectation of up to six or seven hours of sunlight per day would produce a greater return on investment.

While solar energy is highly recommended when possible, each individual household should consider the benefits of investing in solar panel arrays and the front end cost versus the benefits before making a determination is solar panel powered energy is cost efficient.

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Buying and Installing Residential Solar Panels
January 29, 2010 at 4:15 pm

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