Solar power is much more than the latest trend. It is renewable and becoming more affordable year after year, with improving technology to support it. You can save about $60,000 in the solar panel's 25-year lifespan, but what's the initial cost? Let's dig into the real price of solar in bright and sunny Oakland.
Solar photovoltaic panel systems vary by the size of system, which is determined by the energy needs of the home. For residential homes, this ranges from 3 kilowatts to 12 kilowatts. The average single-family home would need a 5-kilowatt system. In Oakland, we can assume $3.50 per watt, so this would translate to $17,500 for a full solar panel system with installation. That figure seems intimidating but don't worry, that won't be your out-of-pocket cost.
So how much am I really paying for solar in Oakland?
The federal government offers a Solar Investment Tax Credit (ITC). The ITC gives you a 30 percent credit on your taxes based on the total gross cost of the solar energy system. That would reduce our intimidating number to $12,250. But act fast, because the tax credit reduces 4 percent each year after 2019 and will be completely eliminated in 2021 for residential properties.
In addition to the ITC, the California Energy Commission's New Solar Homes Partnership offers financial incentives for the construction of energy-efficient homes in order to increase the amount solar energy in the state. The incentive is offered at a certain amount per watt, until the total amount allocated for a certain tier is used up. Prices per watt range from $0.50 to $1.25, for an incentive of up to $6,250. The application deadline extends out until August 31st, 2021. Learn more and apply online if you are building an energy-efficient home.
Still nervous about dropping all that money in one go? There are solar financing options available for zero-down loans. Instead of paying your monthly utility bill, you will instead divert your monthly payments to the cost of the loan until you pay it off completely. This will extend your payback time a bit, but allow you to own the system without having to put any money down.
Payback time for installing solar panels on my home in Oakland?
This is the amount of time it takes to make your money back from your solar investment. You can think of it as just that, an investment, because the payback time is around 7 years on average. Then, for the rest of the solar system's 25-year lifespan, you can consider your avoided utility bills as savings. That leaves you with 18 years of reduced or eliminated utility bills. Imagine completely eradicating one monthly payment from your life! If only we could do that with other monthly payments.
See the table below shows the average cost per watt and the average payback times for different sized systems, assuming an average cost of $3.50 per watt.
|System Size||Oakland Average Cost (before ITC)||Oakland Average Cost (after ITC)||Payback Time (estimate)||Total Savings over 25 years|
|3 kW||$10,500||$7,350||6 years (assuming $100/month utility)||$22,800|
|5 kW||$17,500||$12,250||7 years (assuming $150/month utility)||$32,400|
|10 kW||$35,000||$24,500||7 years (assuming $300/month utility)||$64,800|
|12 kW||$42,000||$29,400||7 years (assuming $350/month utility)||$75,600|
In reality larger systems around 10kw are available fully installed from reputable solar companies in Oakland for closer to $3.00 per watt meaning the payback time is shorter and the return on investment is actually better for larger systems.
The larger the system you have, the more you will save. Get more accurate pricing for your home's specific needs on Solar-estimate.org.
What other financing options do I have?
Solar leases are available as a financing option. Everyone's financial and home situation is different, and the solar industry has solutions for almost every scenario. Operational solar leases are 15 to 25-year contracts where the homeowner can pay fixed monthly payments to rent the solar equipment from a company. Typically, the cost stays fixed no matter how much energy the system produces. A clear advantage is the renter will not be responsible for maintenance on the solar panels. However, this also means the renter is just a renter, and the system owner gets to enjoy ITC.
There are also power purchase agreements (PPA). These are similar to solar leases, but the cost is not fixed. It depends on the power production of the rented solar panels on your roof. The PPA company can dictate the price of the electricity purchased and it escalates each year, but the increase is generally lower than the cost of the annual utility increase, so you can still come out on top.
Money, money, money. What are my returns if I install solar panels for my home in Oakland?
In addition to the money saved in utility bills, solar panels will add a premium value to your home. In a comprehensive study done by the Ernest Orlando Lawrence Berkeley National Laboratory, each kW increase in the size of the systems equates to an additional $5,911 in home value. So for a 5-kilowatt system, this would add $29,555 to the valuation of your home. Of course, the value will also depreciate as the system ages, as is the case with most investments.
However, this value is on top of the energy bill savings and when you join the two together it can add up to a whopping profit from installing solar on your home.
There is a clear advantage for solar panels compared to other home improvement investments since you will enjoy savings during the entire lifetime of the solar panels with reduced or eliminated utility bills. With other home improvements, they do not earn you savings while they are being used, but rather, only at the end when the home is ready to be sold. Solar panels add value then, as well as the moment they are installed.
I heard about net metering. Is it available in Oakland?
Net metering is available in Oakland. This is the program where excess energy you generate will be bought back by your utility and credited at the full retail rate of power less non-bypassable charges of around 1.8 cents per kWh (with PG&E the average rate for power paid by owners of single family homes is around 21 cents per kWh, slightly higher than the overall PG&E average power rate of 18.7 cents).
Now take that fantasy of eliminating your electricity bill and add some earnings to it. With net metering on top of zero-down solar loans and PPAs in place, there's no excuse to not invest in solar today.
One exception to net-metering is for two downtown areas of Oakland with zip codes 94607 and 94612. PG&E recommends contacting their Electric Generation Interconnection Department at Rule21Gen@pge.com if your project is in one of these zip codes for further assessment.
I'm sold. How do I find the best deal available?
With Solar-estimate.org's calculator, you are able to put in your home's address, roof type, and a few more details for a very specific and accurate estimate of the cost of your solar energy system. After you fill out the form, the system recommends the top solar companies in your area and helps you take the next steps to actual installation. Check it out below.