So you want to get in on the solar exploitation. Is it really a good investment?
For many people, of course, there is more to this calculus than simply dollars in and dollars out: the knowledge that you are reducing your carbon footprint is meaningful enough to outweigh purely financial considerations. And for those who make the extra investment in an off-grid, battery-connected system, there can be an extra measure of satisfaction and security in becoming more independent from the local infrastructure.
All that aside, it’s still going to cost money. Unless you can take advantage of a special arrangement with an installer, for most people putting solar panels on the roof is a significant investment. This outlay is offset, in purely financial terms, by the reduction in your electric bill (and sometimes in a monthly check from the power company) to reimburse you for the power that you supply to the grid.
Beyond those general statements, it is impossible to make specific predictions about the finances of residential solar power. That’s because all the relevant factors vary so widely depending on where you live. In the cities with the most expensive prices for electricity, an investment in rooftop solar can be competitive with putting your money in a typical index fund. In places with much lower utility costs or weather conditions that make solar panels inefficient, installation on individual homes may amount to a financial sacrifice (although one that, for reasons above, may be worth it for some people). How much you get back when your panels overproduce also varies from state to state.
Energy researcher Joshua D. Rhodes points out that the average cost of rooftop solar power, taking into account the costs of installation, expected lifetime, and other relevant factors, is now equal to the US average for utility-supplied electricity: about 12¢ per kWh. This may signal a turning point, suggesting that everyone who owns a home, or is considering purchasing or building one, should seriously consider making solar panels part of the equation.
However, these average figures obscure many details. The price of a kWh consumed from the grid varies by nearly a factor of 10 across the country, and the panel installation costs and available sunshine varies widely as well. Rhodes has combined this data on the county level to produce maps that show, in a general sense, where residential solar power may be a good bet for the homeowner and where it may still not be ready for prime time.
The result? There are large regions with both high energy costs and abundant sunshine, such as most of southern California, where installing solar panels may be a good idea. Others, such as Washington state, have poor sunshine and low electric prices, so it may not be worth the trouble.
But this information can go out of date fast. Conventional (silicon-based) PV panels have seen a steady decline in price due in large part to economies of scale, as manufacturing has ramped up to meet increased demand. This process may be approaching saturation, and future cost decreases could depend on research into new types of solar cells or manufacturing techniques, a topic we visit in a companion article.