Solar panel on the roof of the house and coins in hand

Have you considered installing a solar power system on your home? Do you have concerns about the affordability of a home solar system? This article is the first of a three-part series that explores the financial aspects of installing home solar.

Cost of Grid Electricity

The cost of electricity varies widely throughout the United States. Massachusetts, Hawaii, California, and Connecticut have some of the highest rates, while Washington, Texas, and Nevada have some of the lowest. The best way to determine your electric rate is by looking at your utility bills.

Your electric rate is significant because it determines the value of the electricity that your solar system will displace. If a family pays 8 cents a kilowatt-hour (kWh), their system will pay for itself in savings more slowly than for a family that pays 16 cents per kWh, if all other factors are equal.

What Is a Kilowatt-Hour of Electricity?

Electricity is measured using watts, kilowatts, and megawatts. A kilowatt is 1,000 watts and is the measurement of electricity that appears on your home utility bill. Appliances, lights, and electronics consume a certain amount of power to operate. For example, if a light fixture has ten 100-watt bulbs, it will use 1,000 watt-hours or 1 kWh of electricity to run for one hour. A one-kilowatt drill uses 2 kWh of power to run for two hours.

How Much Does It Cost to Install a Solar System?

The cost of a solar power system varies and depends on a variety of factors. One of the most critical factors is its size. Homes that consume a lot of electricity need a larger system to produce the majority of a home’s power.

The most important factors in sizing a solar system are the:

  • Energy needs of the house
  • Solar radiation in the given area (depends on the climate)
  • Available space for panels
  • Project budget

You can look at a year of your power bills and add up the kilowatt hours of electricity use to get an estimate of how much energy you will need in the future. If you know of factors that will increase or decrease your future power use, take this into account.

For example, if your son is moving into his own home, you may need less power in the future. Or, if you just turned a spare room into an Air B&B rental, you’ll probably need more. Perhaps you’re purchasing an electric vehicle, so you’ll need more power for home charging. If you plan to replace gas appliances with electric units, check the new appliances’ labels for energy consumption estimates that you can factor into your future energy needs.

If space is limited for solar panels, this will reduce the size of your solar system. Mounting solar panels on a south-facing roof is ideal, but some homes have gables and other features that reduce the available roof space for panels. Also, you can install solar panels on a garage roof or a ground mount, but this can increase the cost of the solar project.

How Quickly Will a Solar System Pay for Itself?

Solar systems are one of the few home improvements that pay for themselves in savings in your utility bills. The payback period depends on the:

  • Cost of the solar power system, including finance charges
  • System output, which depends on the local weather
  • Cost of grid electricity now and into the future

The typical payback period for a solar system is five to 10 years, according to EnergySage.

Get Lots of Bids

In most areas, there are at least two reputable solar power installers. Shop around when choosing an installer to find the best price, warranties, and solar equipment available. EnergySage is an excellent free service that connects solar shoppers with high-rated solar installers in their area for personalized solar estimates. 

Do you have questions about solar for your home? 

Earth911 has partnered with EnergySage to get you comparable cost quotes and all the answers needed to confidently make a renewable energy investment. Visit EnergySage to begin profiling your home’s solar potential.


By Sarah Lozanova

Sarah Lozanova is an environmental journalist and copywriter and has worked as a consultant to help large corporations become more sustainable. She is the author of Humane Home: Easy Steps for Sustainable & Green Living, and her renewable energy experience includes residential and commercial solar energy installations. She teaches green business classes to graduate students at Unity College and holds an MBA in sustainable management from the Presidio Graduate School.