A few months ago, I seriously investigated installing a 2 kilowatt solar electricity system. I chose 2 kilowatts since that is the size system that would fit on my roof. We have a limited amount of space with the right orientation and access to direct sunlight. Here are vital statistics on the system that I was considering…
The 2 kilowatt system would have cost approximately $19,000 installed and have covered a 10′ by 15′ section of my roof. I would have received $2,000 back from the federal government when I filed my taxes and assuming I could get them, another $5,500 in rebates from the state. That would have put my out of pocket costs at $11,500. If I financed that amount using a home equity loan, my annual payments, net of taxes, would have run approximately $500 per year, almost exactly washing with the $500 in annual electricity cost savings I would have realized (2,900 kilowatt-hours generated x 17.2 cents/kilowatt hour at Massachusetts’s prevailing rates).
On the global warming front, for my effort, I would have eliminated 5,800 pounds of carbon dioxide emissions per year, or 2.6 metric tons. That sounds like a lot, but Carbon Offsets currently run approximately $5 per ton, making the total cost of achieving the same amount of carbon reduction about $13 per year.
This analysis isn’t meant as a condemnation of solar electricity. I think it is an important technology that will be increasingly critical as prices fall and it delivers real electricity cost savings. However, a home solar panel project is not easy to do. That is why today, as a way to help the environment, it doesn’t hold a candle to Carbon Offsets. In our new report, we take a look at the current state of the market for Carbon Offsets and discuss what it will take to take them to the mainstream. To download the report, click here.