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Solar Electricity


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As a general rule of thumb, an installed, grid-tied residential solar electric system without batteries costs approximately $5,000 to $7,000 per kilowatt (kW). Using watt units, $5 to $7 per watt. Larger systems typically cost less per installed kilowatt. An “installed kW” price includes the purchase and installation costs. Using the Helena home system sizing worksheet example, a 2.5 kW system that provides 50 percent of the home’s electricity would cost about $15,000. (2.5 kW x $6,000 = $15,000)

Note: Be prepared to pay or finance the full purchase price because some incentives that lower the final cost are received after the system is installed.

Incentives That Lower Costs

There are a variety of federal, state, and local government and utility incentives for energy efficiency and renewable energy. These incentives vary by state and in the length of time they are available. The Department of Energy’s Database of State Incentives for Renewables and Efficiency (DSIRE) — http://dsireusa.org — keeps track of tax credits, rebates and other incentives available to reduce your system’s final cost.

Estimating Cost Savings and Simple Payback for a Net-Metered System

First, calculate the yearly cost savings of your PV system using the formula:
(PV system size) x (Energy Production Factor) x (Electricity Rate) = $/year saved

For the Helena example:

Simple Payback is calculated by dividing the system price by the amount saved per year. Examples below use the Helena home numbers.

Without Incentives

With Current Incentives

NOTE: Payback times decrease when electricity costs increase. Some conservation and efficiency measures (that can reduce PV system size) also qualify for a tax credit. Visit the DSIRE website for complete and up-to-date information.


Montana currently provides property tax exemptions for renewable energy systems, but some have expiration dates. Contact the Montana State Department of Revenue for current and applicable information.

PV System Financing

There are a variety of financing options for solar electric systems:


Department of Energy’s Database of State Incentives for Renewables and Efficiency (DSIRE). (2011, February). Residential Renewable Energy Tax Credit; Residential Alternative Energy System Tax Credit; and Northwestern Energy-USB Renewable Energy Fund. Retrieved May 19, 2011 from http://dsireusa.org/incentives/index.cfm?getRE=1?re=undefined&ee=1&spv=0&st=0&srp=1&state=MT

(National Renewable Energy Laboratory Engineer and Montana-based NABCEP-certified PV system installers, personal communication regarding current PV system purchase and installation costs, April 12, 2011).

Solarbuzz: Solar Market Research and Analysis. (2011). Solar Electricity Prices. Retrieved April 11, 2011, from http://www.solarbuzz.com/facts-and-figures/retail-price-environment/solar-electricity-prices

U.S. Dept. of Energy. (2011, Feb.). Estimating Energy Cost Savings for a Net-Metered Photovoltaic System. Retrieved March 11, 2011, from http://www.energysavers.gov/your_home/electricity/index.cfm/mytopic=10860