Building a solar system is a substantial financial commitment. It has both fixed and variable costs. That’s why many people choose to start out with a small system and build on as they can afford to do so. The federal government offers modest tax credits for energy-efficient home improvements, including solar power, and many states also offer tax credits or other incentives, which can reduce your costs significantly. Even so, payback periods on solar power systems are long and extremely variable.Before you install a photovoltaic system, or any alternative energy system, make your home as energy-efficient as you can (link). Every dollar you spend on increasing your home’s energy efficiency will save you between three and five dollars on the cost of your solar power system.

A solar power system requires the following expenses:

• PV Modules (solar panels)

Insulation is material that essentially serves as a barrier between your home and the heat or cold outside. Good insulation will conserve the heat within your home in winter, and will help keep heat from entering your home in the summer. A material’s ability to do this is measured by its R-value. There are many types of insulation, and many places in your home to put it.