How Much Does It Cost To Install Solar On A Roof Top?

How Much Will It Cost to Install Solar Electric (PV) If My Goal Is To Maximize My Available Roof Space?

If your goal is to eliminate your electric bill but don’t have enough roof space or land to build a ground mounted system, then the next best thing to do is maximize your available roof space with southern exposure. Taking this approach we can tell you what percentage of your electric bill will be off-set by the power produced from the solar array.

The first thing you’ll want to do is determine your last 12 months of kWh (kilowatt hour) usage (see Part 1 and Part 2 of our last Blog Post for instructions on how to determine this).

The next order of business is to measure the roofs dimensions, tilt and orientation
(we do this during our site analysis). The roof dimensions will determine the size of the solar system, while the tilt and orientation will determine how much power (electricity) the system will generate given its size.

It’s important that your roof have at least some southern exposure. If yours does not, this does not mean you shouldn’t install solar… it simply means that your system will not produce as much power and therefore your return on investment will not be as great. The ideal orientation for a roof is 168 degrees from north. However, anything from 135 – 205 degrees from north will yield 95% optimal results; and from 115 – 225 degrees will yield a minimum of 90% of the optimal results. Whereas, if you have a roof that faces directly east then your system will only produce at 78% of the optimal level. Likewise, if your roof faces due west then it will only be 69% of the optimal level. So as you can see, just because you don’t have a south facing roof, doesn’t mean your solar system won’t produce… it just means it won’t produce at the optimal level. However a north facing roof line is not well suited for solar here in the northern hemisphere.

The optimal tilt for solar panels in Northern Colorado is a 40 degree pitch. Most roof tops aren’t this steep but even a 20 degree pitch will provide very good results. Unless your roof is fairly flat, we typically recommend a flush mounted system since the incremental increase in electricity production usually doesn’t justify the additional cost associated with increasing the tilt of the panels. However, if your roof is fairly flat then it definitely makes sense to use a tilt-up racking design.

Once the roof dimensions, tilt and orientation are established we can then determine how many solar panels your roof will hold and how much power the system will produce. Depending on the tilt and position of the solar panels, each kW (kilowatt) of solar panels put in Colorado will create approximately 1,300–1,600 kWh per year.

The cost of installing solar on your home or business is determined by a number of factors. However, one of the most crucial points to remember is that solar pricing is not linear. Generally speaking, the lower the cost (per watt), the larger the system. A solar system with a capacity of 10kW (10,000 watts) will cost significantly less per watt than one with a capacity of 4kW (4,000 watts). Of course, the total cost of a 10kW system will be more than a 4kW system, but the lower the cost per watt and the higher the return on investment, the larger the system.

Other factors that influence the cost of installing solar, such as the breaker panel and electric service, roof structure and material, rafter/truss system, meter position, point of grid connectivity, conduit runs, and so on, are all evaluated during our site analysis. However, to get to the heart of the matter, the entire turn-key cost of installing solar on your home or company would normally range from $2.50 per watt for bigger solar PV systems to upwards of $4.50 per watt for smaller systems. Anyone who installs solar on their house or company, on the other hand, is eligible for a 26 percent federal tax credit (this is not a tax deduction; it is a tax credit… a dollar-for-dollar decrease in the taxes you owe Uncle Sam), lowering their installation cost by 26 percent. Many utilities also provide rebates and/or REC (Renewable Energy Credit) payments based on the size of the solar system and the amount of energy it generates. These utility incentives can also significantly lower the cost of solar installation. If you wish to find out what incentives your utility offers, please call us at 970.482.SOLAR (7652).

Putting it all together… we’ll use an example addressing everything we’ve discussed in this article, using the following assumptions: your kWh usage over the last 12 months was 15,325kWh’s and you don’t anticipate any change in your future usage; your roof, which faces due south (180 degrees from north), has 625 S.F. of shade free space available and has a 24 degree pitch; and of course you want to maximize the available roof space and determine how much of your electric bill will be off-set by the electric produced from the solar system.

Using 250 watt solar panels (approx. 18 S.F. each) we can determine that your available roof space will comfortably hold 32 solar panels (32 x 18 = 576 S.F. total), which equates to an 8kW system (250W x 32 panels = 8,000 watts or 8kW). Next, using our power production tools (based on 40 years of solar irradiance data collected in Colorado) we can determine that an 8kW system will produce approximately 11,859kWh’s per year (based on the roof tilt and orientation assumptions from above). Therefore, this system will reduce your on-grid electric usage by a little more than 77% (11,859kwh’s produced divided by 15,325kWh’s consumed = 77.4% reduction in your electric bill)

An 8kW roof mounted solar PV system installed by Alt E would cost less than $28,000, depending on the dynamics of the roof.

Taking the next step, using $28,000 as the installed price, you will receive a federal tax credit of $7,280, thereby bringing the cost down to $20,720. Now let’s assume your electric rate is $.12/kWh (this is Xcel Energy’s approximate residential electric rate). Your solar system will save you $1423/per year at today’s electric rates (11,859kWh’s produced x $.12/kWh = $1423.08 annually). Therefore the total annual financial benefit to you is $1423/year.

Using $28,000 as the installation price, you will be eligible for a $7,280 federal tax credit, bringing the total cost down to $20,720. Assume your electric rate is $.12/kWh (this is the estimated household electric rate from Xcel Energy). At today’s electric rates, your solar system will save you $1423 per year (11,859kWh produced x $.12/kWh = $1423.08 yearly). As a result, you will receive a total annual financial advantage of $1423.

If you want to calculate your genuine payback period from a financial standpoint, you’ll need to know what your actual return on investment (ROI) is, which means you’ll need to include in the tax implications of your solar investment. Because savings on your electric bill are not taxable, you must ask yourself, “What would I need to earn on a $20,720 investment in order to net $1423 annually after taxes?” To compare the true R.O.I. with other taxable investments, you must ask yourself, “What would I need to earn on a $20,720 investment in order to net $1423 annually after taxes?” Let’s pretend you’re in the 25% tax bracket to answer that question. If that were the case, you’d need to earn $1,897.33 on the $20,720 investment to net the same $1423 (after taxes) from your solar system ($1897.33 minus $474.33 tax). A simple calculation shows a payback timeline of 10.92 years ($20,720 divided by $1897.33 =10.92 years) when looking at it this way (which is the right approach of calculating true R.O.I. on your solar investment). After accounting for electric rate increases, the true payback duration is roughly 8.92 years, with a first-year return on investment of over 11.2 percent… and as your utility rate rises each year, your ROI rises as well, because you are saving more and are not susceptible to those rate hikes. Where else are you going to get a risk free (a contract with a utility company is about as safe of an investment as there is) return on your investment that’s anywhere close to that? Why isn’t everyone doing this?

Please check out our website at www.altewindandsolar.com and our Facebook page at http://www.facebook.com/pages/Alt-E-Wind-Solar-Ltd/196202797091314 or give us a call at 970.482.SOLAR (7652).