Montana offers relatively low electricity costs. For various reasons, residents of Montana don’t use that much power, and annual fees are also pretty low.

That said, energy costs are on the rise, increasing by as much as 3% annually. So even if Montana is well below the national average in energy expenditures, it still adds up over time. Due to increasing costs, Montanans are looking for more affordable ways to power their homes. On that same note, people are also becoming far more environmentally conscious.

Solar power is an excellent investment in terms of economics and the environment. However, is investing in solar energy in Montana worth it? Montana is a sunny state, which bodes well for solar panel output. However, there are other factors to consider. 

The end goal is to determine the payback period for solar panels in Montana; in other words, how long will it take to break even on your investment? There are several figures we need to determine for our final equation.

We need to know how much power Montanans use and how much it costs. We also need to know the average cost of solar panels in the state. Then, we need to know how much peak sunlight solar panels in Montana get. Once we have those figures, we can plug them into our final equation to determine the payback period.

Average Montana Energy Usage and Expenditures

The first step is determining how much electricity Montanans use and what they pay for it. In Montana, the average household uses 842 kilowatt-hours of electricity per month. That comes in at 31st in the nation, almost 7% below the national average of 903 kilowatt-hours per month.

In terms of rates, Montanans pay just 10.08 cents per kilowatt-hour. This ranks 39th in the US. It is about 15% less than the national average of 11.88 cents per kilowatt-hour.

When it comes to monthly costs, Montanans spend $85 on electricity. That is significantly lower than the $107 monthly electricity bills that the rest of the nation pays, 20.56% lower.

Based on these somewhat low energy costs, the economic feasibility of solar systems in Montana may seem questionable. However, remember that energy costs increase by 3% annually.

Average Cost of Solar Panels in Montana

We now need to determine how much money you will spend on solar panels in Montana. The good news is that solar panels in Montana are significantly more affordable than the national average. In Montana, the average cost is $2.42 per watt of solar panel installed, well below the national average of $3.00 per watt.

In addition, you can take bulk pricing into consideration. The larger the solar system, the cheaper it will be for each watt. For example, a 6kW solar system will cost more than a 5kW solar system, but the 6kW system is more economical on a per watt basis. So, how much do solar panels in Montana cost (not accounting for incentives)?

Federal Incentives in Montana

Although the costs listed above may seem high, the good news is that incentives are in place. For instance, the biggest is the ITC or Investment Tax Credit. This is also known as the Federal Solar Rebate Program.

Right now, this provides 26% off of your initial cost. This means that you pay only 74% of the upfront cost. However, keep in mind that this 26% rebate lasts until the end of 2022. Then, until the end of 2023, the rebate is 22%.

After 2023, there are no plans yet to extend the rebate program. Therefore, to get the best deal, time is of the essence. As it stands, how much will those solar panels in Montana cost accounting for this rebate?

The Montana State Tax Credit (And Property Tax Exemption)

The savings don’t end there because Montana also has a state tax credit. This state tax credit provides a tax credit on 100% of the cost of the solar panels, up to $500.

If two taxpayers are in the home, this can be up to $1,000. Assuming that there is only a single taxpayer in the house, how much do solar panels cost after this credit?

Moreover, although it won’t help save on the upfront cost, there is also a property tax exemption. Up to $20,000 of the solar system’s value is 100% exempt from property taxes for ten years. Property taxes are astronomically high, leading to significant savings over the next decade.

Peak Sunlight in Montana – How Much Energy Do Solar Panels in Montana Produce?

The most common is a 5kW solar panel installation, so we will work with this size.  In addition, keep in mind that the energy amount a solar panel system produces depends on peak sunlight.

With 4 hours of peak sunlight, the standard used in the output calculation, a 5kW system produces 20-kilowatt hours per day. This equates to 600-kilowatt hours per month.

However, Montana gets more sun than 4 peak hours – 4.5 hours. Therefore, based on peak sunlight, a 5kW system in Montana would produce roughly 22.5 kilowatt-hours per day. This equates to 675-kilowatt hours per month.

Solar power investment becomes more economical based on this amount of sunlight Montanans get.

Solar Systems Savings vs. Costs in Montana – The Payback Period

We now have the figures we need for our final equation. Remember, the end goal is to determine how long it will take for you to break even. There are four important figures we need for this calculation:

So, 675-kilowatt hours produced by a 5kW system is 80.2% of 842-kilowatt hours used per month. This means that you can save 80.2% of your annual energy costs. This equates to annual savings of $810.02. As the price of a 5kW system is $8,898, the payback period would be 10.98 years.

To Fully Meet Your Energy Needs

You would need a 7kW system to fully meet your energy needs in Montana. A 7kW system would cost $11,710. This fully meets your energy needs and allows you to save 100% of your monthly electricity bill. Based on annual savings of $1,020, the payback period would be 11.48 years.

As you can see, the payback period for a 7kW system is longer in Montana than for a 5kW system. However, if you look at the long run, a 7kW system would still help save money.

It will take longer to break even for a 7kW system than for a 5kW system. However, once the payback period is over, a 7kW system will allow you to save more than $200 per year compared to a 5kW system.

Is Solar Worth it in Montana?

The bottom line is that, yes, solar is worth it in Montana. The payback period may not be very fast, but eventually, you will break even. Solar is always an attractive investment for your wallet and the environment.

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