Cost is a basic question for anyone considering a residential solar installation. To help you understand why solar is highly affordable and highly cost effective, let’s look at the initial investment and financial return for an average rooftop installation near SunUp’s company headquarters in the vicinity of White Plains, New York, just north of New York City.
Because circumstances differ so much from property to property, a case study of one of our customers to illustrate solar costs isn’t that helpful. Instead, let’s look at some average costs for a mid-sized residential project. These will be the costs to install and operate a solar energy system that’s owned (not leased) by the property owners.
Because each utility company has a different pricing structure for residential electricity, it’s important to know what company provides electricity to your area. In our example, the utility company is ConEdison.
Many of SunUp’s customers have enough roof space to build a system that would produce electricity equal to what they use. To avoid over-producing power, most opt for smaller systems that cover 30 to 90 percent of their electrical consumption. The economic return of a solar energy system, however, is governed by the amount of power it produces, not what proportion of a home’s usage it provides. SunUp grid-connects the solar energy system, so that excess production on sunny days can be banked in the utility grid for later use.
Sample Solar System Costs
Let’s take a look at our hypothetical solar energy system:
|Size of system||6,630 watts capacity|
(factors-in efficiency, orientation, tilt, shading, and local weather)
|7,691 kwh annually|
|Total system investment||$29,835|
(after clean-energy incentives)*
|Approx. local utility electrical cost (fluctuates)||$.24/kwh|
|Value of first year’s production||$1,556|
|Projected future increase in cost of utility electricity||3.5%/year|
|Lifetime of system (even though it should last much longer)||25 Years|
* Assumes system owners can utilize solar tax credits
So, how much does solar really cost? Cost varies from property to property, but in the example above, the customer would be responsible for $11,244 of the total cost. This $11,244 could be financed or paid in cash. For purposes of this analysis, let’s assume it’s paid in cash.
Using a basic cash analysis, here are at some of the system’s key financial metrics.
|Payback period||6.6 years|
|25 year internal rate of return||14.89%|
|25 years solar earnings||$76,446|
The New York State Cost Advantage
Homeowners in New York State have an extra advantage when it comes to paying for their solar installation over time. They can put their solar purchase ($11,244 in the example) on their utility bill at only 3.5% interest, as long as their solar payment doesn’t exceed their savings. This means their utility bills won’t go up and they will own the solar energy system. In fact, in certain instances, utilizing the on-bill payment plan can eliminate any out-of-pocket expense and make the financial return infinite. To keep the calculation above simple, however, the utility-bill payment plan isn’t part of the cash analysis.
There are many reasons for adding solar energy to a home that have nothing to do with financial considerations. Still, it helps to know that a predictable, low-risk return of this magnitude is available for homeowners.
Solar is a bit technical, but we keep it simple for our customers. That’s why our motto is, “All you need is enough sunlight on your roof. We do the rest.”
This is SunUp Solar’s standard disclaimer about the need for a careful evaluation of each unique property to determine if and how to best adapt solar to that property. Like any other kind of property improvement, solar requires an inspection by a professional to take site conditions into account. In the case of solar, these include roof size, pitch and orientation, shading issues, the status of the property’s electrical system and the property’s electrical billing history. This is routine for us and it is absolutely necessary to provide an accurate proposal for property owners. We use satellite photos, such as Google Earth, to get a general idea of your property’s situation. Unlike some companies, we will not provide a firm quote until one of our Energy Consultants has visited the property, done the proper analysis, and discussed the project thoroughly with the property owners. We stand behind our work and must have customers that are pleased with every aspect of their solar project.