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Solar Power Cost & Payback

The nice thing about installing a solar power system is that it can reduce or even eliminate monthly utility bills.  When exploring a little further, though, people will find that the upfront installation cost of solar power can be significant and should be considered.

There are three main reasons for installing a solar power electricity system:

  1. To be energy independent and self sufficient
  2. To save money in the long run when building a home, business, or workshop in a remote location
  3. To have a backup energy source in case of emergency

Those who are building in remote locations and who are concerned about their finances should conduct a financial payback investigation.  How much money will your system save you versus a grid connected installation?  As a general rule of thumb, if one’s location is further than a mile from the existing electrical grid, then this in itself may justify a solar power installation.

In ballpark figures one can expect to pay $3,000 - $5,000 for a simple small scale solar power system (i.e. direct DC lighting, DC pumps, and DC fans).  Medium capacity systems with inverters may cost $10,000 - $15,000, for smaller cabins, workshops, or homes that conserve energy.  High usage solar power systems for residence or business will likely exceed $20,000, and on up to $50,000 or more depending on the size and complexity.  

It can be difficult to generalize the solar power cost of installation, however, since each user’s system will be different.  The overall cost also depends on whether one does it on their own or hires a local company.

Something to consider in addition to the upfront installation costs is the savings from monthly utility bills.  With solar power there are no fees for being connected to the electrical grid or escalations based on electrical consumption rates.  The energy source – the Sun – is free.

There are economic formulas for estimating the equivalent cost savings (in today’s money) from a set of future monthly payments, and this is one of the ways to predict the impact of monthly utility bills.  Apply a rough guess of what the monthly bills would normally be, and estimate how much is paid out over the course of twenty years.  Add this cost to that of the initial grid connection and transmission cable fees and you’ll have the total cost of a grid installation to compare to. 

In reality fuel rates are subject to fluctuation and one never knows what the government has up its sleeve when it comes to inflation and taxation.  If you are expecting rising fuel prices and high rates of currency inflation, then the numbers will work much more in your favor and these factors should be included in the monthly cost investigation.

In conclusion, if one is considering solar power electricity for economic reasons then there should be a payback investigation.  The total solar power cost of installation will have to weighed against the alternative, which is connection costs and monthly payments to the local electric utility grid.

MicroGrid Living

- MicroGrid Power Systems
- Benefits of the MicroGrid
- Running on DC Electricity
- Things to Think About
- Sizing Your Microgrid Power System
- Energy Conservation Strategies
- Hybrid Power Systems

MicroGrid Solar Power

- Solar Power Applications
- Photovoltaic Solar Panels
- Increasing Solar Panel Performance
- Mounting PV Solar Panels
- Solar Power Tracking Systems
- One Axis Solar Panel Tracking (Passive)
- Solar Power Cost & Payback
- Sizing your Solar Power System

MicroGrid Power Devices

- Wind Turbines
- Wood Burner Systems
- Thermal Power Systems
- DC Thermal Generators
- Hydro Turbines

MicroGrid History

- Nikola Tesla Source of Human Energy
- Nikola Tesla Energy from the Medium
- James Watt & the Steam Engine
- Marcellus Jacob Wind Turbine

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