Although solar power has skyrocketed in the United States in recent years, solar energy is more cost-effective in some areas than others. In fact, the return on investment of a solar system varies widely, depending on the cost of grid electricity, the available sunshine on the property, and the installed cost of the solar system. Let’s explore when solar energy is the most economical.

The Cost of Electricity

Electricity rates vary widely across the United States. Massachusetts, California, Hawaii, Alaska, New York, and Connecticut have some of the highest prices. Meanwhile, Washington, West Virginia, Wyoming, West Virginia, and Arkansas have some of the lowest. The easiest way to determine your utility rate is by looking at your electricity bills.

Knowing your electric rate is critical because it determines the value of the power that your solar panels will displace. If a family pays $0.09 per kilowatt-hour (kWh), their solar system will pay for itself in utility savings slower than for a family that pays $0.15 per kWh, if everything else is equal.

How Much Does a Solar System Cost?

The cost of installing a solar power system depends on numerous factors. One significant variable is the size of the solar system. Thus, houses that consume a lot of electricity need a larger solar system to generate the majority of a house’s power.

The essential variables in sizing a solar system include the:

  • Electricity needs of the home
  • Solar resource of a given area (depends on the climate)
  • Available space for mounting solar panels
  • Total project budget

One of the best ways to estimate future energy needs is to tallie how much electricity the home used in the past year. You can do this by adding up the kilowatt-hours on each monthly power bill. If you think power use will increase due to circumstances like having more occupants or getting an electric vehicle, then take this into account.

For example, if your daughter is moving into her own home soon, you may need less electricity soon. Or, if you just installed air conditioners for the first time, you’ll likely use more power in the summer months. If you plan to replace natural gas appliances with electric alternatives, check the new appliances’ labels for energy consumption estimates, and factor this into your future energy calculations.

If you have limited space for solar panels, this could reduce your solar energy system’s size. Ideally, you want to mount solar panels on a south-facing roof, but some homes have gables, skylights, and dormers that reduce the available roof space for solar panels. Remember, you can install solar panels on a garage roof or a ground mount, but this can boost project costs.

How Quickly Will My Solar System Pay for Itself?

Solar energy systems are one of the few home improvement projects that pay for themselves in savings. The payback period of the system depends on the:

  • Cost of the solar system, including finance charges or fees
  • Solar system output, which depends on the local weather and climate
  • Current cost of grid electricity now and into the future

The typical payback period for a solar system is five to 10 years but it can be longer in states with lower electricity rates.

Get Multiple Bids From Solar Installers

In most areas, there are at least two reputable solar installation companies. When selecting an installer, shopping around is essential for finding the lowest price, longest equipment warranties, and the best solar equipment available. It is also helpful to consider the quality of the workmanship of the installer and its reputation. High-quality solar installations tend to have few repairs and better warranties, reducing the cost of ownership.