Costs of Solar Energy

Energy from the sun is free. However, capturing and utilizing this free energy does have associated costs, such as installing and maintaining the equipment needed to harness the energy.

Residential System Pricing

Solar Thermal System Pricing
Solar water heating systems generally produce the biggest economic return on investment. A typical residential solar water heating system sized for a family of four costs about $6,000 to $8,000.

It would take approximately 18 years to get a return on your investment through savings on your electric bill. However, with tax incentives this investment can pay for itself in about 13 years. A 30% federal tax credit with a $2,000 maximum limit is currently available through 2016.

There are many factors that affect the initial cost and subsequent savings, including location and size of the solar panels, weather conditions, actual monthly hot water usage and maintenance.

Solar Electric System Pricing
The initial investment required to purchase a residential solar electric system can be significant. A turn-key system equipped to produce enough power for the average home can be as much as $100,000, which is why most homeowners choose a solar electric system that is designed to offset only a portion of the home's electrical energy consumption.

An average home in Mississippi consumes 1,156 kWh of electricity each month. A solar panel rated at one kilowatt will produce approximately 100kWh of electricity per month, which means the average house would require a 12-kilowatt system with battery back-up in order to meet 100% of the household electricity needs.

Installing a solar electric system averages between $7,000 to $10,000 per kW. Therefore, the average homeowner would have to make an initial equipment investment of $84,000 to $120,000 for a system.

In 2008, Mississippi Power's residential customer paid an average of $.117/kwh or 11.7 cents per kwh, and the annual electric utility bills for the average residential customer was $1,623.29.

Without incentives, it would take over 50 years to get a return on the investment of a whole-house solar electric system.

However, there are federal tax credits that can substantially reduce your return on investment years. A 30% federal tax credit with no maximum limit is available beginning in 2009 through 2016.

Tax Credits and Incentives
For a typical household, the prospect of paying up to $100,000 for solar panels is prohibitive; however, incentives in the form of tax credits and low interest loans can help offset the cost. A 30% federal tax credit is currently available through 2016 for installing a solar energy system.

Visit the Database of State Incentives for Renewables and Efficiency (DSIRE) website to view current state and Federal incentives available.

For More Information
For more information about solar thermal and electric system opportunities at your home or business, contact Mississippi Power at 800-437-6948.