How Home Solar Power Can Help You Avoid Volatile Energy Prices

You have most likely seen in the news that the US is facing the highest inflation in 40 years, and the energy sector has been one of the most affected. Between April 2021 and 2022, energy costs in general increased by 30.3%, according to the latest Consumer Price Index data from the US Bureau of Labor Statistics.

Here is a summary of the 12-month cost increase for energy products and services used by homeowners every day:

  • Electricity prices have increased by 11%
  • Piped natural gas prices have increased by 22.7%
  • Gasoline prices have increased by 43.6%

Solar panels can operate independently from these energy inputs. After the initial investment is covered, they can last for over 25 years with minimal maintenance, and many brands are now offering long-term warranties.

PV Solar Panels on a Zero Energy Home

When using solar power, you are not only saving electricity at the current price, but also the impact of any kWh price increases during the following decades.

If you plan to build a new home or own a property that needs a roof replacement soon, you can also consider a solar roof.

With BiPV solar shingles and tiles, photovoltaic cells are built into the roof shingles or tiles, and there is no need to install separate solar panels.

Solar roofs may seem expensive when compared with solar panels alone, but they can actually have a lower cost than a new roof installation, plus separate solar panels.

How Expensive Fossil Fuels Affect Your Monthly Expenses

Renewable energy technology has evolved at a rapid pace in recent decades, but fossil fuels still account for the largest share of energy used by modern civilization. When oil and natural gas prices are high, they affect homeowners in several ways:

  • When refueling cars at gas stations, which is probably the first scenario that comes to mind when high fuel prices are mentioned.
  • When using electricity. Consider that 60% of generation still comes from fossil fuels, according to the US Energy Information Administration.
  • When using space heating and hot water systems that run with natural gas, heating oil, propane, or other fossil fuel products.

Most homeowners and businesses who own solar panels use them to save on electricity bills. However, solar panels can also provide energy for space heating and transportation, when combined with other emerging technologies.

Solar electricity can be used to charge electric vehicles, and it can also be used to power heat pumps, which provide space and water heating with zero fuel consumption.

Solar and wind power can now achieve lower electricity costs than fossil fuels, but there is a reason why fossil fuels still dominate the energy supply. When using solar panels and wind turbines, their energy inputs are free but impossible to control.

In other words, you cannot force them to generate more electricity than what is possible with the available sunlight and wind.

On the other hand, fossil fuels can be stored and used on demand, and they improve the reliability of power grids (at an environmental cost, unfortunately).

Energy storage can help solar and wind power become the dominant sources, since it removes their main limitation: an uncontrollable power supply.

Surplus generation from solar panels and wind turbines can be used to charge storage systems, and this electricity can be supplied when renewable generation alone cannot meet consumption.

Energy storage systems can also help stabilize the grid, just like traditional power plants with spinning turbines, by regulating voltage and frequency.

Using Solar Power for Space Heating and Domestic Hot Water

Burning natural gas is the most economic heating option for most homes and businesses in the US.

Electric resistance heaters have a high operating cost, especially during the coldest days of winter, and they are rarely used for this reason.

Even with solar power, you would need a very large array to compensate for the high consumption of an electric resistance heater.

Thanks to the development of heat pump technology, fully electric heating has now become a cost-effective option.

In simple words, a heat pump can be described as an air conditioner operating in reverse:

  • An air conditioner uses a refrigeration cycle to move heat from a cooler interior to a warmer exterior, opposite to the direction of normal heat flow. The refrigerant is repeatedly compressed and allowed to expand, capturing indoor heat, and releasing it outside.
  • A heat pump uses the opposite process to provide indoor heating during winter, capturing heat from outdoor air even when its temperature is lower. Some units are reversible, which means they can operate as air conditioners during summer.

Since heat pumps are fully electric devices, they can run with a combination of solar power and grid electricity.

Compared with a resistance heater, a heat pump reduces power consumption by 50% or more, and this means that both electricity sources are used more efficiently.

There are also water heaters that use heat pump technology, and they can achieve similar savings with respect to resistance-based water heaters.

By combining a solar power system with a reversible heat pump, you can reduce your energy costs all year long. Solar electricity will reduce your air conditioning costs during summer, and space heating costs during winter.

You also get to save on HVAC equipment and the associated installation costs since the same heat pump is used for both heating and cooling.

There are many heat pump designs, but they can be classified into two main types: air-source heat pumps and ground-source heat pumps.

The first type uses outdoor air as a heat source or heat sink, while the second type takes advantage of the more stable underground temperatures.

Ground-source heat pumps are also known as geothermal heat pumps, and they have a higher price but also superior efficiency.

You can find air-source heat pumps, geothermal heat pumps, and heat pump water heaters with ENERGY STAR labels. By combining them with solar panels, you can meet the space heating and hot water needs of a building without burning fossil fuels, and with a minimal consumption of electricity from the grid.

Using Solar Power for Transportation

Electric vehicles are becoming more popular each year. According to the US Energy Information Administration, electric and hybrid vehicles now represent over 10% of light-duty vehicle sales in the US, and they could reach 31% of the global market by 2030. — This is equivalent to more than 672 million EVs in circulation, considering both all-electric (EV) and plug-in hybrid electric vehicles (PHEV).

Solar power can also be used for EV and PHEV charging, as long as homes and businesses are equipped with charging infrastructure.

An electric vehicle charged by solar panels can be an excellent investment for homeowners who also work remotely. They can leave their EVs plugged in during the day, when solar panels reach their maximum productivity.

Normally, surplus electricity from solar panels gets exported to the grid, and many power companies only offer partial credit for those kilowatt-hours. EV chargers make this electricity much more valuable since it can be used for transportation.

Depending on your EV brand and model, you may qualify for a federal tax credit of up to $7,500. The incentive has a vehicle limit per manufacturer, and it has already been depleted for Tesla vehicles as you might guess.

However, the benefit is still available for multiple EV models. If you also install solar panels, you may qualify for two tax credits at once.

  • For example, if you install a 6-kW home solar system for $18,000, the 26% federal tax credit is equivalent to $4,680.
  • If you purchase an EV model that qualifies for the full benefit of $7,500, you have earned a total tax deduction of over $12,000 for using clean technologies.

If you’re considering a home battery, it can also qualify for the 26% federal tax credit, but only if you charge it exclusively with solar panels.

Any battery that gets charged with a combination of solar power and grid electricity is not eligible, even if the grid charging percentage is small.

The federal tax credit is also available for solar roofs, but it only applies for roof sections with photovoltaic cells, and any other components necessary for electricity production. In other words, you don’t get 26% of your total roof replacement cost as a tax credit.

Are Solar Panels Becoming More Expensive with Inflation?

Inflation is currently affecting all sectors of the US economy, and this includes renewable generation equipment. However, home solar systems have only suffered a minor price increase.

The quarterly Solar Market Insight Report published by the Solar Energy Industries Association (SEIA) provides updated pricing data for all market segments, ranging from small home installations to utility-scale solar farms.

According to the latest SEIA report published in March 2022, the average price of home solar systems increased from $2.97 per watt to $3.10 per watt, between the end of 2020 and 2021. –This represents a price increase of only 4.3%, which is small compared with the increase in electricity and natural gas prices (11% and 22.7%, respectively).

Solar panels are slightly more expensive than one year ago, but the electricity they save has become over 10% more expensive. This means going solar is still a great investment, despite inflation.

Also keep in mind that electricity prices vary depending on your state, and some regions have experienced higher volatility.

Even higher electricity prices can be expected during summer since there is a higher demand due to air conditioning. However, solar panels are also more productive during summer, and they can reduce your cooling costs and power bills in general.

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