Solar electricity for homes

If you’re serious about cutting your carbon footprint, solar electricity for homes is one way to accomplish your goal.

Fifteen years ago, solar electricity for homes was a serious investment, with either a long payback period (8-10 years) if government subsidies were available, or no payback at all. These days, there’s a very good chance you’ll pay your system back in five to eight years, and after that, your electricity (or the part you generate yourself) is basically free.

Even twenty years ago it made sense in some situations. My aunt and uncle, for example, had a cottage with only a propane generator for electricity; they paid $20,000 to bring in utility lines, and for that they could have had a decent solar electric system with battery storage, with no monthly utility bills to pay.

Here are the main topics I cover on solar electricity for homes below:

• When does installing your own solar electric system make sense?
• Assess your motivation first
• Sizing a home solar electric system
• Installation: do it yourself or hire a pro?
• How much electricity will your solar electric system produce?
• Systems and choices for solar electricity
• Solar shingle roofing
• Tax credits, rebates, and other financial incentives
• So, should I install a solar electric system?

When does installing your own solar electric system make sense?

In 2010, there were limited situations where solar electricity for homes made sense – if you were off the grid, if you’d already reduced your energy usage as much as possible so a modest system would do; or if you had certain loads you could power with solar electricity while keeping the house mainly on-grid. But with the rapid drop in the prices of photovoltaic panels and associated components, it’s now cost-effective to go solar in many situations. When does it NOT make sense to go solar?

• When you haven’t yet taken an active interest in cutting your electricity usage – upgrading appliances, switching to LEDs, eliminating resistance-electric heaters. If you are still burning 25-50 kWh/day of electricity, there’s no way a solar electric system will come close to meeting your needs. It will be more profitable for you, and better for the environment, to save electricity first.
• When you don’t have good exposure to the sun, for instance, no southern or southwestern exposure in the northern hemisphere, or trees or buildings blocking your roof. (Although in the last couple of years it’s become affordable to put solar panels even on the more shady side of your roof, as long as it’s not pointing due north.)

In almost all other cases, generating your own solar electricity makes economic and environmental sense. In rural Ontario, for example, where electricity prices can be quite high, installing solar panels will definitely save you money within a few years of installation.

If you are building a new house or re-roofing an existing one, a solar shingle installation may be one option. More on solar shingles below.

It used to be only worthwhile to install solar electric systems when there were government or utility subsidies – grants, interest free loans, buy-backs of your power at a rate higher than the metered rate for what you consume. As panel prices have continued to fall, solar electricity for homes has become cost effective even in locations with no public subsidies available.

As the full costs of burning fossil fuels are increasingly incorporated into fossil energy prices (for example, the costs of climate change and smog, through carbon taxes or other such measures), solar electricity for homes has become both an environmentally attractive option and a more affordable one.

Assess your motivation first

Think through your motivations before you seriously consider solar electricity for homes. If you’re building off-grid, I’ll assume your motivation is that you want to power your home and the grid just isn’t convenient or cost effective. But if you are already grid-connected, I’d guess your motivation is either independence (from your utility’s pricing, ‘dirty’ electricity, or service interruptions) or a desire to be a good environmental citizen at any cost. Let’s examine possible grid-connected motivations for solar electricity for homes.

Independence from utility pricing

It’s probably a given that utility electrical prices will continue to rise above the cost of inflation into the foreseeable future. Energy demand is projected to grow steadily over the next several decades, and supply will become more constrained (or expensive) as governments around the world start building the cost of CO2 emissions into the cost of generation from fossil sources. But remember that the same market forces that are driving overall energy prices up will help drive solar prices down, as increased demand creates greater innovation and greater economies of scale. (We’ve already seen this, with solar electric power at utility scale now cost-competitive with fossil-fuel electricity generation.) So you might be better off investing a smaller amount of money now on making your home as energy efficient as possible (lots of information on Green Energy Efficient Homes about that!), and saving some of the money you would have spent on solar electricity for homes, in order to spend it later when the prices have come down.

Independence from dirty electricity

I can understand this motivation, as it’s what made me look into solar electricity for homes a few years back, and get several quotes for installing a system in my home. But as I explain in How to save electricity, my solar engineer convinced me to cut electricity usage first – which you’ll want to do for any application of solar electricity for homes, since it’s far cheaper to cut electricity use and install a smaller system, than to install a larger system to match current use patterns. I wound up waiting another ten years to install the solar panels on my roof, after prices had dropped by over 50%.

Once the idea of saving electricity hit home for me, it made green electricity a more affordable option. For no up front cost (and no increase in overall cost, since I cut my electricity usage when switching), I was able to become independent from dirty electricity by switching to a green electricity supplier. So look carefully at a combination of energy efficiency measures and switching to green electricity as another option to solar electricity for homes.

Independence from service interruptions

If you live in a remote area where service interruptions are frequent, solar electricity for homes certainly makes sense as a backup option. At the very least you’ll want a system with the capacity to keep your refrigerator, freezer, and a few energy efficient lights running for one to several days. This may mean a larger battery bank charged by the grid, with a small solar system to extend the life of the battery charge; or a small battery bank with a larger solar system. And if a solar backup system makes sense, you will already be investing much of the money for the installation, a controller, inverter, and other equipment, so you might find it easier to justify the additional cost of a solar power system to meet all your electricity for needs while you’re at it.

Being a good environmental citizen

Solar electricity for homes is one way to cut your carbon footprint and show others that independence from fossil fuels is possible. Symbolically, solar energy for homes is a great step to take. But is it cost effective? If you want to spend $10,000 of your own money on something that will make a major difference to the environment, look closely at other options first that may give you a bigger bang for the buck. For example, converting your heating and hot water to a solar thermal system; doing a major energy efficiency retrofit of your home; or even donating the money for the energy retrofit of a local communal space such as a church, school, community center, co-op, non-profit day care, or the like.

I know of one fellow, featured in a community newspaper in my neighborhood, who offered to pay the first $50 on the electricity bill of anyone who switched from the local electric utility to a local green electricity supplier. (The supplier threw in an additional $25 credit.) Hundreds of people signed up as a result. If you spent $10,000 on an initiative like that, you could be converting 200 people to green electricity, which could mean an annual cut in dirty electricity consumption of 2.4 million kilowatt hours. Assuming even just 20% of that electricity came from coal, that’s over 680 tons of CO2 emissions saved.

Because the payback period on solar electricity for homes is relatively long, while the payback for energy efficient heating, air conditioning, lighting, home energy saving projects, and even geothermal heating and cooling, is so much shorter, your money will have a bigger overall impact if spent on these types of upgrades. The catch is, if you spend your energy-saving money on a public good, or on upgrades to your own home that just reduce your energy costs, you won’t get the satisfaction of those solar panels on your own roof, and watching the electricity meter spin backwards! (But you’ll have the satisfaction of contributing to a public good, or of spending less on your utilities.)

Sizing a home solar electric system

If you’ve made it past the Motivation section above (or skipped over it), you’re probably already committed to going solar – or at least curious about what a properly sized system for your home might cost. How do you size solar electricity for homes so that your system provides enough power to meet your needs?

Sizing estimates for your particular site should be done by an experienced solar engineer or solar installer. There are plenty of solar company websites that provide spreadsheets or calculators to assess how large a system you will need, but going with a local professional is the best way to ensure you get good service, good advice for your climate, and proper sizing, siting, and orientation of your system, as well as a system designed and installed according to building and electrical codes. You may also discover that your local utility limits the size of your system based on the power consumption in your home.

But in general terms, to size solar electricity for homes, you’ll need to start with these steps.

1. Cut your electricity use as much as possible up front. Every dollar you spend reducing your electricity use up front will save you $2 to $10 in the cost of your home solar electric system, or in terms of extra capacity you can sell back to the grid. Follow the tips throughout this website – including How to save electricity and the electric appliance pages off my main Energy saving household page – and you’ll have no problem making major cuts in your electricity use.
2. Determine available grants, standard offers, and rebates. See the Credits and rebates section below.
3. Decide how many kilowatt hours a day you want to generate. Do you need to fully supply all your electricity needs (for example, you’re already off-grid or want to go off-grid)? Or will generating part of your electricity needs accomplish your goal?
4. Determine how many hours of full sun you can count on to figure out how much electricity you can generate. Your local solar engineer or installer should be able to help you with this task.
5. Have a site assessment done. Determine likely kilowatt hours of energy generated per day through the year for a range of system sizes, based on the site characteristics and available daylight. (Remember that the cost per kilowatt decreases substantially as you move from a 1 kilowatt system to higher capacity systems.)
6. If your solar electricity for homes system is going to be roof-mounted, consider re-roofing before the installation if the roof is nearing the end of its serviceable life. There’s no point putting solar panels on your roof one year, and then having to take them off temporarily the next year to re-roof.
7. For off-grid connections, determine your backup generation system. Remember that in winter you’ll have considerably fewer hours of full sunlight from which to generate electricity. You’ll need to consider both average daily hours of sunlight, and minimum daily hours for the shortest days. You’ll also need to factor in cloudy / rainy days when no generation takes place. (For an off-grid cottage used only in the summer this is less of a concern.)
8. Determine the payback period for each installation being considered. Include the grants, standard offers and rebates available in your calculation. Decide if the investment makes sense to you. If it does, sign with your installer and let the work begin!

Installation: do it yourself or hire a pro?

Should you install your own solar electricity for homes, or hire a pro?

My own advice would be that unless you’re buying a very simple emergency backup system, or unless you’re an electrician or electrical engineer yourself, and an experienced roofer, you should hire a pro. The bulk of the costs are in equipment, not labor, and there’s nothing like watching the money you saved on installation evaporate because you damaged a component. You’ll also want to give the pros the responsibility for ensuring that the installation is done according to local building and electrical codes. As more and more installations of solar electricity for homes go live, installations are being inspected more and more carefully by electrical safety authorities and city building departments.

Many solar electricity for homes installations are roof-mounted, so you’ll want your installer to ensure that your roof is not damaged by the installation.

You’ll want your installer to commit to securing all the necessary building and electrical permits in advance, arranging inspections, and correcting any problems the inspectors find. These commitments need to be spelled out clearly in the contract you sign with the installer.

You can try to do all the permit and inspection work yourself, but having someone who has already navigated the perilous waters of permits and regulations will get you to your destination faster. (Also, you can’t sign off on the work!) Don’t pay your installer the full amount until your system has passed all its inspections and has proved to you that it works as intended; I’ve heard of cases where the system was installed and could not legally be turned on for months because of a failed electrical inspection that the installer took his time correcting.

If you do decide to go it alone, make sure you patronize either a reputable online solar power supplier, or that you hire an experienced solar electricity for homes retailer/installer in your area, at least to help you size and design your system. One advantage of a local solar energy provider is they can do a site assessment for you. Another is that they are more familiar with the solar profile of your area and can provide a more accurate estimate of your generating capacity.

How much electricity will your solar electric system produce?

Beware of overly optimistic estimates of solar output from people who have a vested interest in selling you solar electricity for homes. After your solar installer gives you an estimate of generation capacity, ask for referrals to customers who have already installed a system nearby and find out what the ratio of kilowatt hours generated per year to watts of installed power is. (Many people who install solar electricity for homes become fanatic about measuring their generation and consumption.)

If the ratio of kwh generated to watts of capacity installed is substantially lower than what your installer estimates, ask your installer why this might be. It could be that the referral customer has problems with their site (shadows on the panels, suboptimal orientation or angle, poor ventilation under panels causing heat buildup in summer). Also remember that predicted hours of sunlight per year is an average, and some years are sunnier than others. But it could be that the salesperson is giving a best-case scenario estimate to make it easier for you to cost-justify the installation. Use your judgment.

Remember that solar electricity for homes is only fully efficient when every photovoltaic cell in every panel in your system is exposed to full sunlight. Even the tiniest shadow of a tree branch on one photovoltaic cell can dramatically decrease the efficiency of a given panel, and shade on a single panel affects the output of the overall system. So make sure your sizing takes into account all shading from chimneys, other buildings, utility poles, satellite TV dishes, and trees.

Will your solar electric system produce more energy than it takes to manufacture?

What is the energy payback time on solar electricity for homes? There is a lot of misinformation on this topic – hearsay most likely, or obsolete information – suggesting that it takes more energy to manufacture a solar panel than it will ever produce.

The idea that solar electricity for homes uses more energy to manufacture than it ever generates just isn’t true, for a system that is properly sized, sited, and installed. Depending on the type of panel used, payback periods range from modest (5-10 years) to very short (6-24 months). Since most solar panels are expected to last twenty years or more, that means the amount of energy they produce will be somewhere between double, and 40 times, the amount of energy used to produce them.

Systems and choices for solar electricity

Grid interconnect systems are among the most common types of solar electricity for homes being installed today, because no batteries are required, you can sell your excess power to the grid, and you can obtain extra power from the grid when your solar panels are not producing enough.

Battery backup solar systems are popular in areas with frequent or lengthy power interruptions, but batteries add considerably to the cost, require more frequent replacement than other components, and reduce overall efficiency (you get less than one amp hour of power out of a battery for every amp hour you put in). For these reasons battery backup solar systems are falling out of favor in places where the grid is accessible and utility service is reliable. I think it is helpful to differentiate between two types of battery backup solar systems, in terms of configuration and cost:

1. Systems where the main purpose of the system is to provide power to critical devices (usually refrigerator, freezer, and some lights) during an extended power outage (we can call these emergency power battery backup solar systems)
2. Full-fledged grid interconnect solar systems where the battery backup power addresses the grid power interruptions but the main purpose of the system is to generate a large percentage, or all, of your usual home electricity needs (we can call these grid interconnect systems with battery backup, since it is really just a variant of grid interconnect systems, which are described in more detail below.

For emergency power backup systems, the motivations for going solar are: less noisy and less polluting than a gas-powered generator; and the fact that no fuel is required (although you can run out of ‘fuel’ if you draw more current out of your batteries than the solar panels put in – remember, many power failures happen in inclement weather when the sun is not shining).

Off-grid systems are often very minimal systems in terms of generation capacity, because if your home does not already have access to the grid, you are starting from scratch in installing electrical devices, and so you have the option of installing the most energy efficient lighting and household appliances and installing a smaller amount of generation capacity. You also have the option of sticking with a lower-voltage, DC system, particularly if you are only going to use the system for lighting, and this can save on the cost.

I do not cover off-grid systems in this article, as for most homeowners, who come to Green Energy Efficient Homes for home energy efficiency tips, a grid-connected system is the more likely choice. See Off grid or standalone systems from the EERE (Energy Efficiency and Renewable Energy agency of the US DOE) for a good overview of off-grid solar electricity for homes.

Grid interconnect systems

In some jurisdictions, you can get paid more for the power you produce, than you pay for the power you consume from the grid. In Ontario, Canada, for example, the provincial government for many years provided a ‘standard offer contract’ (a contract that has the same standard offer for all solar electricity for homes installations) in which the government agreed to purchase electricity generated from the solar panels at a set rate over the expected 20-year lifetime of the panels, while you pay the regular rate for electricity you consume. One friend signed on when the rate was $0.59 per kwh and power cost $0.10 per kwh, so he was getting paid quite a bit more for the power he was producing (on one meter) than the power he was consuming on another. I waited a couple of years after him, and the rate I got was $0.39 per kwh. Why was it lower? Because the panels were substantially cheaper by then; the whole program was designed so that the rate you sign on at delivers on average an 8-year payback period on your investment. Each of us will get that agreed-on rate for 20 years for all the power we generate, while we pay regular consumer rates for the power we consume.

Three types of grid interconnect system are available, and which one you install depends on regulatory rules governing how you resell power you generate to the local utility.

Initially, many governments and utilities were unwilling to allow grid connection of solar electricity for homes systems, or at the very least were unwilling to offer any kind of payment for electricity a home solar electric system put on the grid. The initial reservations were partly because solar electricity for homes, in its early stages, had trouble generating power that conformed to the utilities’ strict requirements in terms of power phase (alternating current cycles). But inverters, which convert the DC current from solar panels into properly phased AC current compatible with the electricity grid, have improved significantly and utilities should not use this argument to prevent solar electric grid interconnects.

Later, when grid interconnect systems became more accepted by government agencies and the utilities, the utilities charged the retail rate for electricity consumed, but were only willing to pay the wholesale rate for electricity produced by the solar electricity for homes (the rate they paid third-party generation sources, or the rate they charged for bulk industrial users). Therefore, two meters were used, one for consumption and one for excess production. So if you produced 3 kwh in the middle of the day and consumed 3 kwh overnight, you might earn 4 cents per kwh for what you produced (i.e. 12 cents), and pay 10 cents per kwh for what you consumed (i.e. 30 cents). Because electricity was cheaper to produce than to consume, many of these systems were installed with a battery backup, since it made more economic sense to store your excess generation capacity than to sell it to the utility at wholesale prices and then buy it back later at retail prices.

This arrangement did not encourage many people to install solar electricity for homes. A more sensible approach was to have a single, reversible meter. In this arrangement, when the solar panels produce more electricity than the house consumes, the meter runs backwards, earning the homeowner a credit at retail prices. This did away with the need for battery backup in places where the grid is relatively reliable. But with retail electricity prices set by cheap, environmentally harmful sources such as coal and nuclear and large-scale hydro, and solar photovoltaic cells putting the cost of a kilowatt hour of solar electricity far above the rates for utility sources, even the reversible meter made solar electricity for homes too expensive to appeal to most homeowners. As of about 2020 this is no longer true – it’s now more affordable (if you have the right site characteristics) to go solar.

In the 1900’s and early 2000’s many countries and regional governments began seeing the value of solar electricity for homes, and instituted very progressive pricing for generated electricity, so that you can in many jurisdictions get paid more per kilowatt hour generated by your system than you pay for the kilowatt hours you consume from the grid. With the introduction of these incentives, the two-meter system became popular again, only this time the meter measuring generation was a good thing for the consumer. Getting paid twice, three, or four times as much for what you generate as for what you consume from the grid makes the payback period on solar electricity for homes much shorter and has motivated many to install these systems.

Solar shingle roofing

The solar shingle is a roofing shingle with a built-in photovoltaic module. Solar roofing shingles have been on the market for quite a few years already, but their prices have been sky-high, making them an attractive option only for people who were dead-set on solar electricity for homes and who wanted the aesthetics of a regular roof, without all those awkward solar panels. Even today (2023) a solar shingle installation will cost several times more than regular photovoltaic panels for a given amount of electrical output.

If you’re planning to build a new home, and you can orient the home so that one slope of the roof gets maximum sun exposure, and you can control the slope of the roof to optimize it for solar electricity for homes, solar shingles may well make sense. You have to buy new roofing material anyhow, and with the perfect orientation and slope for your location, you will get maximum electric output from your solar roofing shingles. (For new home construction, you should consider orienting your home and choosing your roof pitch to be optimal for a solar shingle installation, if possible, even if you don’t install the system initially. Solar shingle roofing systems will become more affordable, and it would be great to have a home that’s solar-shingle ready!)

But solar roofing shingles are still a long way away from being the right choice for retrofits, unless the existing roof orientation and slope happen to be perfect, or near-perfect, for solar electricity for homes. If the roof isn’t facing close to due south (Northern hemisphere) or sloped to the correct angle to get the year-round maximum solar input, you’ll get considerably less electricity per watt of rated power than you would by installing correctly oriented and angled photovoltaic panels. Other disadvantages of solar roofing shingles as your choice for solar electricity for homes are the difficulty of replacing a shingle that no longer works (more complicated than just replacing a malfunctioning solar panel), and the fact that roofing, unlike mounted solar panels, has poor air circulation behind it and so tends to heat up more. The hotter a photovoltaic cell is, the less efficient it is, so a hot solar roof may have much lower electrical output than a similarly rated solar panel array with adequate ventilation underneath each panel. In general you can expect to pay roughly 5-6 times more for a given solar power output, when buying solar shingles instead of a regular solar photovoltaic system.

Tax credits, rebates, and other financial incentives

For a full list of rebates available in the US by state (and including federal), see DSIRE: Database of State Incentives for Renewables & Efficiency. From there you can choose the Federal information or the state information for your state, and then see detailed information about each available program. The tool includes filters that let you select specific factors such as the technology (e.g. renewable energy, and from there solar, or wind, or biomass etc.) and eligible sector (residential vs. non-residential).

Financial incentives – general characteristics

There’s a good chance that, if you live in Europe, North America, or other developed countries, you’ll find financial incentives for solar electricity for homes such as those mentioned above. The main types of incentives are:

• Standard offer contracts, where you get paid more for what you generate from solar electricity for homes than what you consume
• Retail sales tax exemptions on solar electricity for homes installations
• Income tax credits on solar electricity for homes, where the cost of installation (up to a maximum amount) can be deducted from income tax paid in the year of installation
• Interest-free or low-interest loans on solar electricity for homes installations
• Cash rebates from local, state, and national governments and utilities.

For a list of financial incentives available in Canada for solar electricity for homes, see the Canada Greener Homes Initiative, and consult your municipal and provincial government websites and your electrical utility website for specific incentives.

So, should I install a solar electric system?

If you have a good roof orientation, have little to no shade on the roof, local utility regulations and building codes are favorable, and you’ve already reduced your electricity consumption through careful conservation measures, going solar makes perfect sense. Even if you can’t generate all your electricity from your own solar panels, you can still achieve carbon neutral electricity use if you also switch to a green electricity supplier for the electricity you don’t generate.

If you are interested in a contrast of the advantages and disadvantages of solar electrical systems, see my Solar power pros and cons page.