Is Solar Power for you?

The benefits did not justified its cost when I first started researching about solar power for my home 5 years ago. I was optimistic at first when new incentives has been drastically revamped by the current administration to make solar power more affordable. The the PV (Photovoltaic) modules has dropped from $10/kWh to like $3/kWh. The government incentives has offered better rebates and tax credit. Early this year the $2K tax credit cap limit has been removed.

Basically, you end up paying only 1/3 the cost of the whole system. 1/3 is the rebate check that you get within 6 months from the time your system is operational. Another 1/3 is the tax credit that the IRS basically owes you. You can either use this one time or within 5 years. The credit will be a little less if you decide to split your credit within 5 years of course. With this you can get back whatever income tax you have paid the IRS by the end of the year.

First question you would hear from a PV system installer/contractor is how much you actually consume a year. Most US homes consumes about 600 kWh/month on a average. This will require you to have a 5kWh solar power system if you decide to cover 100% of your monthly electric bill. Another common standard they use is $/kWh. This is how much you will pay per kilo watt hour. There will be $/kWh rating on each component you need like the PV module, grid-tied inverters, etc...

Now how much does it really cost? The same rating unit is used on a completed or installed solar power system. I have taken 7 different bids and they range from $6.50/kWh to $8.50/kWh. You need to make an informed decision on which contractor to go with depending on there experience, company profile, components they use, guarantee, and even talk to their customers within your area to see the qulaity of there work and satisfaction level of there customers. I have determined that the $7/kWh was the better choice among all the bids, which for a 5kWh system would cost $35K !

Now the bottom line. Even with all the rebates and credit you would still either need to raise that $35k or get a loan. You will be hyped and deceived by all these contractors that all this would cost you is $11k. Well yes and now. Unless you have enough savings you would have to factor in to your decision the monthly payments on the loan. In most cases, the loan will pretty much be the same amount you have been paying monthly for your electric bills.

There are 2 ways of looking at this. You can either see this as an investment for your home to increase it's property value or instead of forever paying the electric bill, the same money you spend on your electric bill will be relocated the monthly cost of your loan.

What does this mean? In 10 years or so, the money you have paid for your loan has pretty much paid for the $11K you have spent for your system. Provided that you paid your loan with the rebate check and tax credit you got back from the IRS.

Things you should ask yourself:
1. Are you going to be in your home 10 years from now?
2. Are you going to pay for your loan when you get that $11,000 rebate check?
3. Are you going to send that tax credit you get at the end of the year to pay the loan?
4, Lastly, with the current banking situation and economy, how confident are you to get a loan?

Personally, I doubt if I'll still be in the same house after 10 years. I can barely pay for the mortgage for my house that is worth so much less now. I really dont trust myself if I can actually control myself with the rebate check and tax credit. I'll probably end up paying off my bills, car, and maybe spoil myslef a bit ...lol . If your fortunate enough to have home equity with your property you'll probably get a 30 yr loan for about $100 a month at 7% interest. Im not so lucky.

If your purpose is to save money now, solar power is not for you because it is still very expensive in spite of all the rebate and tax credit. If you plan to sell your home within 10 years, it adds about 10% to the value of your property which is probably is a good idea to go solar. Now if you want to take advantage of renewable energy and want to go green then go for it!