In a recent June 2014 post, the owner of a solar company in Arizona goes over the economics of purchasing a solar pv system for his home in the state.
Note that only a couple years ago, it would have cost over $5/watt to install a solar facility. Though much of the cost reductions have come from an oversupply of solar panels that have driven costs down, improvements in technology, installation practices and permitting requirements have contributed to these changes.
Here’s the breakdown:
Home size: 2,000 sq ft
Utility bill: $250/mo
PV system size: 8kW
Installation Cost Breakdown
Total: $2.65/watt or $20,960 for an 8kW system
Total Installation Cost: $20,960
less 30% Federal Tax Credit: $6,288
less AZ State Tax Credit: $1,000
Total Cost: $13,672
Annual Electricity Savings: $3,000
Payback Period: 4.56 years
In summary, after state and federal tax credits, the solar system on his home will save him $3,000 a year in electricity bills for a cost of $13,672, allowing him to pay back the initial investment in under 5 years!