The promise of big savings makes home solar energy highly attractive to many consumers. Who wouldn’t like the idea of lowering — or even eliminating — their monthly electricity bills?
But if you’re like some homeowners, you may wonder whether investing in solar power can really save you money. We’re happy to tell you that the answer is yes, regardless of the type or size of photovoltaic system you install.
Here’s a look at how much you can save on monthly electricity costs with a residential solar array.
Average Monthly Electricity Bills in the Intermountain West
First, let’s consider how much you’re paying for electricity. In the Intermountain West, the average cost per kilowatt hour (kWh) of home energy is 12.2 cents. Idaho is on the cheaper end at 10.29 cents per kWh, while homeowners in Colorado pay more, 12.78 cents per kWh.
The average home uses 901 kWh every month, according to the U.S. Department of Energy (DOE). So electricity bills in the Intermountain West states range from about $92 to upwards of $115 per month.
A home solar energy system can bring your electricity costs down significantly. And if you opt to add a battery storage system, you can go completely off-grid. This could add up to savings of well over $1,000 per year!
Savings with Home Solar Increase as Utility Rates Go Up
Utility rates for home electricity have been steadily rising for many years, and signs point to this trend continuing.
Back in 2001, homeowners paid an average of just 8.58 cents per kWh. Five years later in 2006, that amount had jumped to 10.4 cents. By 2011, utility companies were charging 11.72 cents per kWh, and last year’s price was up to 12.53 cents per kWh.
If prices continue to go up, savings from residential solar systems will also increase. Even a small cost increase to, say, 14 cents per kWh would result in a monthly bill of more than $126 and yearly energy costs of more than $1,500. With a home solar array, most (if not all) of that cash stays in your pocket.
Using Your Savings to Calculate Your Home Solar Payback Period
The money you save with a residential solar array adds up quickly. Eventually, you’ll reach the point where your photovoltaic system has paid for itself, known as the payback point. After that, your free solar power is purely profit.
How long will the payback period be for your home solar panel system? To find out, determine your net system costs, or the total price after subtracting the federal solar tax credit and other state and local financial incentives for installing a photovoltaic array. Then, divide by your yearly electricity bill savings.
So let’s say that your net home solar costs were $11,000. And prior to installing your photovoltaic installation, you were paying $1,200 per year to the electric company. Here’s how the math goes:
$11,000 ÷ $1,200 = 9.16 years
In this case, it will take a little over nine years to reach the solar payback point. Since photovoltaic systems regularly produce at nearly full capacity for 25 to 30 years, you can see how financially beneficial this renewable energy source can be.
Would you like more information on how you can save with photovoltaic power? The professionals at Intermountain Wind & Solar offer complimentary home solar consultations in Utah, Idaho, Wyoming, Nevada and Colorado. Contact us today to schedule yours.