System cost depends on a couple of factors including: system location (sun light hours), building's energy usage, and how much electricity you want to offset. You can expect an average of $8,000-$9,000 per installed kW of system.
The average system installation size is around 4 kW which ends up being $32,000-$36,000 based on installation costs. This figure may seem extremely high, but if you factor in the savings you get every month from reduced electricity costs, the system will pay for itself in the long run. Let's look at an example.
The average household spends $175-$200 a month in electricity. That is a cost of about $2,400 a year in energy costs. Since 2001, energy costs have gone up an average of 3.75% every year. Over the lifespan of 25-year solar energy system, and using the average of 3.75% inflation of energy costs every year, today's $2,400 will end up being almost $6,000 in the 25th year (the warrantied lifetime of a solar energy system). A total of approximately $96,650 will be spent over the course of 25 years for electricity.
In Southern California, the approximate cost of a solar energy system, before incentives and rebates, to offset $200/month of electricity is $74,000 ($8,000/kW). Include the federal incentive and applicable state incentives, your costs for the system drops to about $52,000. It doesn't take a rocket scientist to see that the investment in a solar energy system easily makes up for the cost as well as saves you a large amount of money in the long run.
The above example is to illustrate the savings of a 100% offsetting system. Many consumers choose not to offset 100% of their electricity due to the high system costs as well as the return of investment is occasionally lower due to the tiered pricing structure of utility companies. Offsetting 50% of your energy consumption can sometimes net 60% or more of savings since you are eliminating the higher tiered energy costs. Talk to a local solar energy professional to determine what is the most cost effective solar energy system size is for you and be prepared for your solar energy installation.
