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What Does Renewable Energy Actually Cost?

Updated: Oct 12, 2022

Part 1: Solar Panels.

In this three-part series, I dive into the world of renewable energy costs. (FYI, this is my favorite topic, and I will talk about it forever. You've been warned!) In parts 2 and 3, I will cover electric vehicles and heat pumps. Please keep in mind that costs and rebates may change with policies and market conditions. You can join me and Green Maynard for an in-person seminar on heat pumps on October 18, 7 p.m., at the library.

In 2021, the average cost of solar projects in Maynard (that’s right—right here!) was $3.38 per Watt, and the average project was 7,910 Watts (7.91kW).* Using this as our example, that means the total cost of the project was $26,736 ($3.38 X 7,910). This would be a fairly large project, so if you have a smaller house or modest electricity consumption—say $100/month on average—you could do something half that size. (And this doesn’t even factor in tax incentives and rebates from both the federal and Massachusetts state governments, which can dramatically reduce these costs. More on that in a bit).

Which way the roof faces also affects price. The best-case scenario is a south-facing roof (we should all be so lucky), so looking at our example project, solar panels would produce around 10,300 kWh per year. (This will vary a bit from year to year based on the weather.) A north-facing roof is the worst orientation for solar energy. In this case, the project would only produce 6,700 kWh per year.

Ok, “So what?” you say. “What even is a kWh?” I’m glad you asked. I recently looked at my electric bill from Eversource and discovered that I’m paying more than $0.17 per kWh of electricity, plus a series of transmission and distribution charges (and a few other relatively small charges, such as one that pays for energy-efficiency programming). In total, it’s $0.32 per kWh. That number might sound small, but you probably use 300 kWh per month or more—especially for air conditioning in the summer and heat in the winter if it’s electric.

Our example project cost almost $27,000 and will produce somewhere between 6,700–10,300 kWh. Solar panels should last at least 20 years (more, really), but we’ll take 20 years and do a conservative calculation:

The initial cost divided by lifetime energy production means $26,736 ÷ (10,300 X 20) = $0.13/kWh for a south-facing system and $0.20/kWh for a north-facing system—both of which are lower than my $0.32/kWh.

So, any portion of your electricity needs covered by the project will substantially reduce your energy costs. And we haven’t even factored in tax rebates. If you’re able to maximize your tax rebates on your system (a combined 41% between state and federal), the cost of energy could be as low as $0.08/kWh—a 75% reduction from the full cost of electricity delivered to your home. Since the cost of electricity purchased from utilities will go up over time, your savings will grow each year.

If you don’t have the cash to install the system, there are low interest loans available that won’t add loads to the total cost of the project. You can also lease your roof to a solar company and buy the energy produced by the panels with no upfront cost (third-party ownership with a power purchase agreement), or buy a share in a community solar project nearby. EnergySage is a great company with a user-friendly website that can help you explore your options.

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