The size of the solar power system, the amount of energy hours produced, and the amount of government incentives and rebates all influence the cost of solar energy. Solar energy systems that are larger will typically cost more to install and use more electricity. There are a number of rebate and incentive programs available to help with the costs of system installation and energy conversion.
The installation and maintenance of solar panels are the most expensive aspects of solar energy. A solar power system converts sunlight captured by panels into electricity, which is then delivered through an electricity panel and into the building’s existing electrical wiring. Meters keep track of how much electricity is used in the building and how much of it is generated by solar energy. Electricity consumption is typically measured in kilowatt hours in the United States.
Customers are typically charged a predetermined rate per kilowatt hour by electric companies. Additional fees and surcharges may be added to the total bill, but the cost is primarily determined by the number of kilowatt hours used. The cost of solar energy is also largely determined by the use of kilowatt hours. Meters are read to determine how much energy was used in a given period of time.
Solar-generated kilowatt hours may be eligible for discounted rates. Some local governments and jurisdictions provide production incentives to help reduce the cost of solar energy. Because the kilowatt rate is often significantly lower than that of standard electricity, these incentives make it more cost effective for a building owner to install a solar power system. The rate charged for solar energy, unlike standard rates, may remain relatively stable.
Building owners who want to install solar power systems are usually eligible for rebates. This is an additional cost-cutting tool that can help offset the cost of solar energy. Because these systems require a significant financial investment, the rebate returns those funds to the owner. Owners may be able to reap the long-term benefits of avoiding utility rate increases because the overall installation cost is reduced.
One of the main cost determinants is the size or number of solar panels required to meet the building’s electricity needs. A larger structure usually necessitates a larger system than a smaller structure. Some building owners choose to use solar power for only a portion of their electricity needs, allowing them to install a smaller system.