One of the first questions I get about our solar photovoltaic system is about cost. While details vary by system size and details of the house, I thought it would be useful to share what it cost us. I mentioned before that we got the top-of-line panels from SunPower, so keep that in mind when examining these numbers. Also, as you’ll see, I don’t have the cost of individual components such as price per panel, or price for the inverter. These are the numbers that Renovus gave me in roughly the same format they gave me. At best this might give you a template for a very rough estimate.
|Description and Quantity||$/ea||$|
Labor is another $6,880 for a total of $23,740.
But then the rebates come into play. Renovus takes care of the NYSERDA rebate, which at the time this system was designed was $1.40 per watt. Our 4140 watt system (12 panels generating 345 watts each) therefore qualifies for $5,796 that gets cut off the cost listed above without me having to worry about it.
Then there are the New York State and federal tax credits. Both are based on the cost of the system after the NYSERDA rebate is deducted. That’s $23,740 – $5,796 = $17,944. The New York State tax credit which returns 25% of that number for a return of $4,486. The federal tax credit gives back 30%, for $5,383.
So in summary:
|Cost of the system||$23,740|
|NYSERDA Rebate ($1.40/watt)||-$5,796|
|NYS Tax Credit (25% after rebate)||-$4,486|
|Federal Tax Credit (30% after rebate)||-$5,383|
|Our cost after filing taxes next year||$8,075|
When do we earn that cost back? It’s hard to say with lots of variables like the amount of electricity that we actually generate (which is dependent on things like how clear the skies are) and the cost of electricity in our area. Renovus estimates we’ll generate about 4800 kWh/year. If the cost of electricity stays at 15 cents per kWh forever, we’ll recoup the cost in a little over 11 years. Renovus’ projection takes into account historic rises in electricity rates so they estimate payback in under 9 years.
That’s all well and good, but it’s not all about recouping the cost of the system for us. We’re using less coal- and natural gas-produced electricity and we feel good about that.
By the way, in case you’re not familiar with how tax credits work, they’re not just cash given to you by the government. They’re credit towards tax that you owe. So a.) your tax liability has to be at least as much as the calculated credits for you to take full advantage (I think you can carry over excess credits to the next year, but I’m no expert on that) and b.) you don’t get that money until you file your taxes, which for us will be around April 2014.
With the monumental number of expenses we have from buying and fixing up a house, we don’t just have $9,869 (the total of the two tax credits) that we can afford to have tied up while we wait for next year. Many solar installers work with Enerbank (maybe other outfits too) to give their customers same-as-cash loans that remain interest-free for about a year, giving the customer time to get their tax savings and apply it towards the balance. It’s a great way to capitalize on solar savings early without locking up lots of cash.
One final, very quick note: solar leases are pretty popular. Their low or no cost to entry is attractive, but if you can afford to own your own solar system, I think you’re much better off keeping all the electricity savings for yourself.