Costs for solar panels are down and incentives to install them are up, so now might be the right time to invest in solar panels for your home or commercial property. As an example of how much the end cost of a solar installation has changed in the last few years, I could install a 6-kilowatt system today for about the same price I paid for my 4 1/2 kW system in 2020.
An increase in your electricity consumption is another reason to consider solar panels. The cost of operating a new heat pump system, electric water heater or electric stove is reduced significantly if you generate some of your own electricity via solar. My electric bill has barely changed after installing a heat pump water heater a year ago, and I eliminated my summer oil delivery. With solar, the water heater will pay for itself much more quickly.
In 2020, I paid about $3.16 per watt for my total solar installation, including labor but not counting my tax incentive. In 2023, the average per-watt cost for a solar installation in the United States was $2.68, according to National Renewable Energy Laboratory. This contributed to a 15% decline in prices for residential solar installations in 2023. That trend is likely to continue due to falling prices for the solar panels. Our World in Data research shows that solar panel costs fall by 20% each time global capacity doubles. This has resulted in a 90% drop in the cost of solar photovoltaic panels over the past 10 years.
If you investigated solar panels years ago, you might have had justifiable concerns about their efficiency and durability. Efficiency is a measure of how much of the sunlight a solar panel collects is turned into usable electricity. In 2010, the best solar panels were about 17% efficient. Today, many solar panels can convert 22% to 24% of the sunlight they receive into electricity.
This is important, especially if you have a limited area to place panels. Today, you are more likely to fulfill your goals for solar electricity generation than you were just a few years ago, probably for less money. Efficiency and durability are key factors when determining how fast your solar installation pays back the investment. Solar panel efficiency declines slightly every year. My solar installer projected that I would get 20 to 25 years from the panels before their efficiency declined to below optimal levels. Payback on the investment was estimated to be about 10 years, so I can expect 10 to 15 years of “free” electricity before considering replacement of my solar panels.
That was in 2020. Today, top-quality solar panels have an effective lifespan of 30 to 40 years, according to solar advocacy group Solstice. Combined with declining solar prices, you can now expect a quicker payback on your solar investment and many more years of electricity from them.
The federal government offers strong tax incentives to install residential and commercial solar systems in the form of a tax credit. The current incentive is a tax credit of 30% of the cost of your solar installation. That means you can expect to deduct $4,500 from your owed taxes on a $15,000 solar installation. Battery backup on your solar system is also eligible for the 30% tax credit.
Installing solar panels is not an option for many residents such as renters or property owners with sites not suitable for a solar installation. Joining a community solar project can allow those people to enjoy the benefits of solar power.
Community solar refers to solar installations that are funded by multiple customers who might be individuals, businesses, nonprofit organizations or private investors. Customers who invest receive a share of the electricity generated by the solar installation and the tax benefits. The Town of Jaffrey is about to begin a community solar project on a capped landfill by partnering with ReVision Energy. Construction on the 1.4-megawatt installation is expected to begin next year. Any Eversource customer in the region may buy a share of the project;
Jaffrey residents have had an early exclusive opportunity to buy shares. Anyone buying shares in the Jaffrey project can take the 30% federal tax credit on the investment. They will also be locked into the lowest rate for electricity for 25 years. In other words, community solar investors receive most of the benefits of having their own solar array without having to go through the process of building their own.
The federal government has awarded New Hampshire with a $43 million Solar for All grant to give low-income households access to solar power via community solar projects. The state has not begun the program as it awaits guidance from the Environmental Protection Agency, which administers the program.
If you want to learn more, the Peterborough Renewable Energy Project is hosting a Solar Energy Workshop on Sept. 7 at 10 a.m. in the Peterborough Town Library classroom. You may also attend remotely by Zoom by registering at bit.ly/solarworkshopsept7. Solar expert John Kondos will lead the workshop, which will cover solar energy basics, financial benefits of solar, incentive programs, and installation insights.
Michael Nadeau is a member of the Peterborough Renewable Energy Project.