Is Solar Worth it in Kentucky?

Is Solar Worth it in Kentucky?

If you live in Kentucky, you might be considering installing a solar panel array. Residents spend a good deal of money annually on their electricity bills, probably more than they should. With energy costs rising every year, people are looking for more cost-effective ways to power their homes.

One attractive alternative is solar energy. However, many people have concerns about the economic feasibility of solar panels. Simply put, is installing a solar system in Kentucky worth it? The good news is that the cost of solar installations has dramatically decreased over the last few years.

However, if you invest in solar panels in Kentucky, how long will it take for you to break even? To determine this, we first need to examine several factors, including the average cost of solar panels in Kentucky, your current electricity needs and costs, and peak sunlight. Once we determine these, we can then put it all together. But, first, let’s figure out if investing in a solar system is economically feasible in Kentucky.

Kentucky Residential Energy Usage and Costs

One determining factor is how much energy you currently use and its costs. First, residents use an average of 1,130 kilowatt-hours per month. This ranks 7th in the US, with the national average being 903 kilowatt-hours. or 25% more electricity than the national average.

Kentuckians pay 9.43 cents per kilowatt-hour of electricity used, on average, over 20% less than the national average of 11.88 cents per kilowatt-hours. So, although Kentuckians use plenty of electricity, the cost per kilowatt-hour is relatively low.

Overall, Kentucky ranks 21st in the nation in electricity costs. The average Kentuckian pays $107 per month for their electricity, which is on par with the national average. This equates to $1,284 annually. Based on the cost of electricity for Kentuckians, it serves to reason that solar power is a reasonable investment.

Average Cost of Solar Panels in Kentucky

Now that we know how much your electricity costs, let’s determine how much a solar installation costs.

Solar panels in Kentucky are much more affordable than the national average. In Kentucky, expect to pay an average of $2.34 per watt of solar energy installed. It’s much lower than the $3.00 per watt national average. This bodes well for any Kentuckian looking to invest in solar energy for residential purposes.

In addition, a bulk pricing scale applies. This means that the larger the system, the less you pay for each watt.

So, a 10kW system will cost more than a 4kW system overall. However, the cost on a per watt basis is much lower for the more extensive system. So, let’s take a look at the average cost of solar panels on a per watt basis.

  • 4kW – $2.56 per watt – $10,240
  • 5kW – $2.45 per watt – $12,250
  • 6kW – $2.34 per watt – $14,040
  • 7kW – $2.32 per watt – $16,240
  • 8kW – $2.33 per watt – $18,640
  • 9kW – $2.27 per watt – $20,430
  • 10kW – $2.24 per watt – $22,400

Solar Incentives in Kentucky

Kentucky itself, as a state, does not have any incentives in place. However, there used to be a fantastic net metering program, although the rates per kilowatt-hour have dropped significantly.

However, Kentuckians are still eligible for the ITC or Investment Tax Credit. This is also known as the Federal Solar Rebate Program. The current rebate is 26%, so you pay only 74% of the cost of a solar installation.

Be aware that at the end of 2022, this rate will drop to 22% and then to nothing at the end of 2023. Whether or not a new rebate program will be created is yet to be seen. That said, what does the current cost of solar panels in Kentucky look like accounting for the ITC?

  • 4kW – $7,577.60
  • 5kW – $9,065
  • 6kW – $10,389.60
  • 7kW – $12,017.60
  • 8kW – $13,793.60
  • 9kW – $15,118.20
  • 10kW – $16,576

Peak Sunlight Hours in Kentucky: How Much Energy Will Solar Panels Produce?

One of the most important factors when determining the feasibility of solar panels is how much energy they can produce. The most popular installation size is 5kW, so this is what we will work with. The average 5kW solar system can produce 20-kilowatt hours per day or 600-kilowatt hours per month.

However, this calculation uses a standard 4 hours of peak sunlight per day. The issue is that Kentucky doesn’t get quite that much sunlight, closer to 3.5 hours of peak sunlight per day, which needs to be accounted for.

In Kentucky, a 5kW solar system would produce roughly 17.5 kilowatt-hours per day or 525 kilowatt-hours per month. So although solar panels in Kentucky might produce slightly less power than the average, they’re still feasible due to relatively low costs.

Solar Panels in Kentucky: Costs vs. Savings: The Payback Period

Our goal is to determine how long a solar panel system will take to break even on your investment. We now have all of the figures to determine this. However, there are four significant numbers we need to complete our calculation.

  • The average resident of Kentucky uses 1,130 kilowatt-hours of electricity per month.
  • Kentuckians pay $107 monthly for their energy bills or $1,284 annually.
  • In Kentucky, a 5kW solar system will cost you $9,065.
  • That 5kW solar system will produce 17.5 kilowatt-hours per day or 525 per month based on peak sunlight.

So, 525-kilowatt hours is 46.46% of the average 1,130 kilowatt-hours used per month. Therefore, with a 5kW solar system, Kentuckians can save more than 46% of their monthly and annual energy bills. So, 46.46% of $1,284 equates to yearly savings of $596.55. Seeing as the initial cost of a 5kW solar system in Kentucky is $9,065, the payback period would be 15.2 years.

However, a 5kW system won’t meet your energy requirements. A 10kW system in Kentucky would produce 1,050 kilowatt-hours per month based on peak sunlight. We realize that this still doesn’t fully meet your monthly energy usage needs.

However, pricing data for solar systems over 10kW is difficult to come by. We could estimate the cost of an 11 or 12kW system (which would meet your needs), but we don’t want to provide you with false info. So, let’s calculate the payback period for a 10kW system.

A 10kW system would produce 1,050 kilowatt-hours per month. This is 92.92% of your monthly energy needs. Therefore, this would allow you to save 92.92% of your annual energy costs. This equates to annual savings of $1,193.02. Keep in mind that the price of a 10kW system in Kentucky is $16,576. Based on this, the payback period for a 10kW solar system in Kentucky would be 13.89 years.

Economic Feasibility of Solar Panels in Kentucky

As you can see, the payback period for solar panels in Kentucky is quite long. However, keep in mind that a solar system adds to the value of a home. Therefore, if you are looking to sell your home in the future, a solar system can help increase the resale value. Therefore, solar systems are always worth it in the grand scheme of things, whether in Kentucky or not.

Hi there! I'm Ally, I can help you find out if solar makes sense for your home in 30 seconds!

See if your home qualifies and how much you could save with current programs available...

Hi there! I'm Ally, I can help you find out if solar makes sense for your home in 30 seconds!

See if your home qualifies and how much you could save with current programs available...