Everything You Need To Know About Residential Solar Systems

Written by: Samuel Gregoth

Clean and renewable energy sources have a variety of advantages, the most important of which is the survival of humankind and longevity of our planet.  One of the most popular and easily accessible sources of renewable energy for the average American is solar power, usually obtained via solar panels installed on the roof of your home.

Most people are unaware of the accessibility of solar energy for the average person. Residential solar systems are an incredibly lucrative investment that almost anyone can make, provided you have the funds to invest.  And with the tax credits and money that you’ll save over the life of your residential solar system, that investment will be well worth it.  Here’s what you need to know about residential solar systems:


The cost of installing residential solar systems is now less than half of what it was in 2009 thanks to technological and manufacturing advances from Tesla, SolarCity, and SunEdison.  The ITC is a 30% federal solar tax credit where 30% of the installation fee is taken out of your taxes at the end of the year.  This credit will be reduced to 26% in 2020 and gone entirely by 2022; so the sooner you install, the better.

With the inclusion of this credit, installing a residential solar system can cost you an average of anywhere from $6,800 for a 3,000-watt system to $17,700 for an 8,000-watt system.  The cost of installation varies depending on area, so you may find the cost of installation to be lower depending on where you live.


The cost of installation is drastically offset by the amount of money that you’ll save on energy. The higher the wattage of the system you install, the more you’ll save over the life of the system.  25 years is the average lifespan of a residential solar system, although that number is increasing every year. Over the course of 25 years, you could stand to save as much as $23,000 on electricity depending on the amount of sunlight your roof gets (the more sunlight, the more energy).

There are also a variety of rebates and tax exemptions offered by different states to encourage the installation of these solar systems.  These include feed-in tarrifs (payments you receive for the solar power your system produces), rebates offered by local utility companies that help with the purchase of renewable energy systems, and property and sales tax exemptions for renewable energy systems.


Every state has a Renewable Energy portfolio that includes an outline of the state’s goals for the amount of solar energy produced every year.  This is measured in units called MWh’s.  Utility companies have to meet these goals of a certain number of MWh’s or be charged a fine.  When your solar system produces one MWh (with the average 5kW system producing 5-6 a year), the state awards you one SREC that you can sell to utility companies in order to help them meet their quota.  An SREC can sell for anywhere from $200-$400 each.

Net Metering

Net metering is a way for homeowners to earn money for the excess power produced by their solar panels.  Your local power company will install a net meter on your property to track the energy consumed by your home and the electricity generated by your solar system, feeding the excess energy directly into the grid.  At the end of each month, you receive utility credits to be applied to your next power bill.  Although several states have outlawed it due to the perceived unfair disadvantage for homeowners who cannot afford to install solar panels, net metering can be a great way to let your residential solar system earn you money if you live in a state that still offers it.

Maximizing The Amount Of Solar Energy You Get

Not all houses are equally equipped to receive solar energy.  The slope and direction of your roof has a huge effect on the efficiency of the solar panels to receive energy.  A south-facing roof has the maximum potential for direct sunlight, whereas east or west-facing roofs only receive direct sunlight for a portion of the day.

The sunniness of your local climate has a large effect on how much energy your solar system takes in.  Sunnier climates such as Los Angeles are much more optimal for solar energy than cloudy climates such as Buffalo.  Snowfall can also reduce the effectiveness of solar panels in the winter as snow blocks the panels from receiving sunlight.

How To Install A Residential Solar System

Like anything that costs money, the first thing you should do is shop around for the best deal. Getting multiple quotes from different solar system installers gives you the best chance of finding a rate that’s affordable and increases the amount you’ll end up saving in the long run. Ensure that the solar system that’s installed is compatible with your local utility company or else you won’t be able to effectively utilize solar power.

If you’re unable to install a solar system on your roof, you can invest in a community solar garden. All you have to do is buy or lease some of the panels in your local community solar garden and you’ll be given a credit on your monthly power bill for the electricity produced by those panels.  This is a great option for people who either don’t live in a home that they own or live in an area that doesn’t get a lot of direct sunlight.  You don’t have to be a wealthy homeowner to invest in solar energy; it’s now something that’s become accessible to almost anyone.

Investing in solar energy is a great way to pay a chunk of money up front to minimize or eliminate your energy bill.  Like with any investment, you have to spend money to make money, and energy is something that everyone needs.  Why not invest in something that is good for the environment and for your wallet?


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