Cost > How Much Does a PV System Cost?

Solar photovoltaic systems

There are a few ways to price a photovoltaic (PV) system. A commonly used benchmark is $10 per watt of installed solar power panels. Photovoltaic systems are not cheap; they represent a real capital investment. They also, however, represent a way to add real value to your home, and should be thought of like any major systems upgrade to a property. Solar panels typically carry a 25-year warranty, and may have a useful life well beyond that.

A typical residential solar system has about 3500 watts, with a price tag (before rebates and subsidies) of about $35,000 ($10 x 3500 W). The actual, upfront price of the system is usually lower than this. From this installed price, you can apply various state and federal rebates and incentives to lower the purchase price of the system depending on where you live.

In the state of California, where an aggressive solar rebate plan has been put in place (see California Solar Initiative), a typical 3.5 kW residential system would receive a rebate of $2.50 per watt (AC). This comes to a total of $8,750, plus a federal tax credit of up to 30 percent of the system cost, not to exceed $2,000 total credit (see federal and state incentives). This brings our system cost down to $24,250. (Disclaimer: your mileage may vary by region, local market, and supply and demand. The simple payback on this California system is between 11 and 12 years.) Over the 25-year a life of the warrantee, typical savings would be around $64,000, including any renewal energy credits and maintenance costs.

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