Texas claims cheapest solar installations, as prices drop nationwide

The cost of solar panels is continuing to fall, making them competitive with the costs of some electricity rates.

A new report from the U.S. Department of Energy’s Lawrence Berkeley Laboratory showed that the cost of buying and installing solar panels fell 14 percent between 2011 and 2012 for the average residential system.

The national median price for a typical residential solar system was about $5.30 per watt of power generating capacity installed in 2012, a figure that has fallen with higher production and sales of panels worldwide, the July report said.

Texas has the lowest median price at about $3.90 per watt of power generating capacity installed, without taking into account any incentives or rebates, the report said.

The lowest costs are in Austin, where the municipal utility offers a $2 per watt rebate for residents who install solar panels, which help add power to the electric grid during periods of peak demand, said Garrett Gordy, owner of Texas Solar Outfitters.

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There are no rebates or incentives specific to Houston, though residents here do benefit from a federal tax incentive of 30 percent of the purchase and installation costs for a system, Gordy said.

Gordy’s company sells and installs solar panels for less than $4 per watt, with systems often costing around $3.60 per watt, he said.

Most residential buyers get systems averaging about 6 kilowatts, Gordy said.

For a 10-kilowatt system, which would be more than enough power for most well-insulated homes, the up-front cost would be about $36,000 in Houston. After taking into account the federal tax incentive of about $10,800 and electric plans that allow customers to sell unused power back to electricity providers, the panels pay for themselves within 12 years, Gordy said.

The average Texas household pays $147.32 for electricity each month, according to the U.S. Energy Information Administration.

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Another way to think about the current panel costs, would be to compare them to current electricity rates by calculating the cost based on power usage.

With a solar installation, Gordy said, a customer would be securing a rate of 10 cents per kilowatt-hour for the next 25 years. Twenty-five years is the warranty-backed period for solar-panels, though they will likely generate power for many years longer, he said.

Some Houston providers now offer electricity rates  lower than 10 cents per kilowatt-hour, but many experts expect rates to rise as power demand grows and generation capacity becomes strained.

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