The big question (Economics of Solar Power) for any homeowner considering installing solar power is a simple one: How quickly will the system pay for itself?
Initial Solar Power Cost
The installation price of a residential solar-electric system in 2013 is $3 to $5 per watt. Therefore, a small to medium-sized residential system in Maryland generating 5 kilowatts (kW), or 5,000 watts, of electricity would cost $15,000 to $25,000.
Return on Solar Power Investment
The average household in the Maryland spent about $2,700 on utility bills in 2012. This amount encompasses energy used for heating, cooling, hot water, appliances, lighting and other household electricity consumption. If your house operates entirely on solar energy, from the heat pump to the electrical system, you would save the entire amount of your annual utility bill each year. You might reap extra financial rewards if your system generates more power than you use and you are able to feed the excess power back into the main grid, a service for which your utility company would pay you.
Lifespan of Solar Power Equipment
A residential photovoltaic power system can generate 76 to 109 percent of its initial cost over 7 years in Maryland, depending on available incentives, financial products, and other variables. The primary, and most expensive, component of the system is the PV array -- the solar-radiation collecting panels -- many of which come with a 10- to 25-year warranty, depending on the brand.
Financing of Solar Power System
Tax credits are available through the federal government's Energy Star program to defray the cost of installing home solar. As of 2011, American homeowners can get up to 30 percent of the cost of their solar-power system, including installation, for their new or existing, primary or vacation residence. This tax credit is effective through 2016 and has no upper limit. Homeowners can apply this credit to purchase and installation of solar water-heating for the home as well. Qualifying solar installations must comply with local building codes. In addition to federal, state and local utility incentives, new financing models are available. These include third-party ownership, favorable property tax assessments and the sale of solar renewable energy certificates.