Six Easy Steps to Estimate Cost of a Solar Power System - part 6

Step 6: Run the numbers

Although the cost for a solar PV system will depend on the size of the system you intend to install, your electricity rate, the amount of kilowatt hours you expect to generate, and the state/local rebates/tax credits that may be available, the formulas for calculating the returns are pretty much the same.

For those who appreciate having the formulas, use the ones listed below to do a quick ballpark estimate of how much a solar photovoltaic system might cost you.

Retail Price for Solar Photovoltaic System
+ Building Permits
- $2,000 Federal Tax Credit
- State or Local Tax Credit or Rebate
- Utility Rebate or Other Incentive
= Net Investment

Kilowatts of electricity generated from PV per year
x Kilowatt hours used per year
= Annual Kilowatt energy from the PV system

Annual Kilowatt energy from the PV system
x Current Residential Electricity Rate
= Annual $$ Saved

Yearly Excess PV Energy Produced
x $$ credit applied per watt
= Annual Value from Net Metering

Of course, a more accurate assessment can be made by a pro. Work with a solar power contractor to size and price the right system for you. As is true with any major purchase, don't hesitate to ask for several bids from different contractors.

Many solar power providers will provide you with a comprehensive estimate. Helpful information to know includes:

- Total cost to make the system operational (labor cost for design and installation and equipment costs)
- Equipment (Make and Model)
- Warranty info
- Permit costs, if needed
- Tax, where applicable
- Federal tax credits
- State or local jurisdiction tax credits or rebates
- Utility rebates
- Expected Renewable Energy Certificates or Net metering credits
- Expected operation and maintenance costs
- Projected savings

Solar Thermal (also called Solar Hot Water)

Solar thermal systems capture the sun's energy to heat water and are one of the most cost-effective renewable energy systems. They are used to heat hot water tanks and/or a heating system. A solar pool heating system is another type of solar thermal system designed specifically to heat a pool or hot tub.

Generally it's worth investigating the economic viability of installing a solar hot water system if you have an electric water heater with utility rates of at least 5 cents per kilowatt hour and have tax credits or rebates available. (It may even be worth changing out a gas-powered water heater if your costs are at least $8/million BTU).

The formulas for costing out a solar water heater system are similar to estimating the cost for installing solar PV system. Many solar energy professionals can help you determine what system might work best for you.

Heating Your Swimming Pool with Solar Power

Although few jurisdictions provide financial incentives for using solar energy to heat a swimming pool or hot tub, in general, using solar power to heat your pool is a "no-brainer" from a return on investment standpoint.

The electricity used to heat a pool during the swimming season often amounts to the same amount of energy that homes-without-pools consume over a year. Combining a solar thermal system to generate heat for the pool with a solar thermal pool cover to retain the heat generated can further maximize efficiencies and extend your swimming season.

Most installers recommend that a solar collector used to heat a pool is sized at roughly half the square footage of your pool surface area. Solar thermal panels typically last 10 – 20 years and come with a 10-year warranty.

How long it takes to break even on the cost of your solar power pool system depends on where you live. In California or other parts of the Southwest, you'll break even in 1 to 3 years but places as "far north" as Canada, a solar pool heating system pencils out over a slightly longer period of time.