Solar Power: Is It A Better Deal Than We Think?

Many policy makers agree that the world needs breakthroughs in alternative technology to make them viable to the mainstream public. As necessary as they are for a future free of fossil fuel, the conventional wisdom on wind and solar energy is that they're just too expensive to be worthwhile for the average homeowner.

Still, some solar energy proponents argue that it might be a better investment than conventional wisdom would have you believe.

According to the Solar Reviews blog, one of the obstacles facing solar power adoption by many households is that it's difficult to accurately pin down its cost. Various government subsidies and rebates exist as incentives, but even calculating the number of kilowatt hours (kwh) a house needs to operate is an opaque process that leaves many confused. If that's the case, it's no wonder the majority of Americans turn to traditional energy utilities for their needs.

Not only do homeowners need to know much energy they need, they also need to find out how much power a solar system could generate. Solar review's Andy Sendy estimates that a five-kilowatt system, enough to power the average home, could generate about 8,200 kwh per year for a household in Southern California, leading to an eight-percent return on the investment. Before continuing with his assessment, he takes this calculation to its logical end.

"A consumer in California who is paying 15 cents per kwh for power would most likely think that their return would be 15 x 8,200 kwh per year, or $1,230 per year," he said. "If this person was looking at a 5kw system that cost $15,000, after rebates and the federal tax credit, then they would conclude that their return would be 8.2 percent."

Sendy concludes that this return isn't bad, but it's only an accurate evaluation of the first year the panels are in place. Since the cost of traditional utilities continues to climb every year, the 8,200 kwh generated by solar energy would be worth more to the owner with each passing year, too. If traditional utility prices rise by a conservative estimate of 3.5 percent each year, the real rate of return for solar energy would be 12 percent, not eight.

Worldwide use of solar energy has doubled over the last two years, so it's worth exploring the real-world possibilities the technology provides to the average consumer. To learn more about outfitting your house with these panels, check out eHow's solar guide.

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