Are you an Alaskan resident wondering if solar panels are a worthwhile investment for your home or business? As a solar energy expert and digital technology enthusiast, I‘m here to shed some light on the true costs and benefits of going solar in The Last Frontier.
Alaska may not be the first place that comes to mind when you think of solar energy, but the truth is that Alaskans have more to gain from installing solar panels than residents of almost any other U.S. state. With some of the highest electricity prices in the country, solar offers Alaskans a path to long-term energy savings and independence.
In this comprehensive guide, we‘ll break down the average costs of solar panels in Alaska, explore the factors that impact pricing, and crunch the numbers on the potential long-term savings. We‘ll also highlight the top solar incentives available to Alaskans and share our picks for the best solar installation companies in the state.
Average Solar Panel Costs in Alaska: A Detailed Breakdown
According to the most recent data from the Solar Energy Industries Association, the average cost of solar panels in Alaska is $2.80 per watt as of 2021. This is slightly lower than the U.S. average of $3.00 per watt, but still higher than the costs in some of the nation‘s sunniest states.
For a typical residential solar energy system in Alaska, the total cost before incentives varies based on the size of the system. Here‘s a breakdown of the average costs for common system sizes:
| System Size (kW) | Average Cost (before incentives) |
|---|---|
| 3 kW | $8,400 |
| 6 kW | $16,800 |
| 10 kW | $28,000 |
Keep in mind that these are average prices and your actual costs may be higher or lower depending on factors like your location, roof type and condition, choice of equipment, and the installer you choose.
After applying the 26% federal solar tax credit (more on that later), the costs come down significantly:
| System Size (kW) | Average Cost (after 26% tax credit) |
|---|---|
| 3 kW | $6,216 |
| 6 kW | $12,432 |
| 10 kW | $20,720 |
So while the upfront investment in solar may seem steep, the combination of lower installation costs and generous incentives can make going solar a surprisingly affordable option for many Alaskans.
What Makes Solar So Expensive in Alaska?
You might be wondering why solar panel prices in Alaska are higher than in some other parts of the country. There are a few key factors at play:
1. Transportation and Logistics
Getting solar equipment shipped to Alaska can be a costly and logistically challenging process. While prices have decreased in recent years thanks to falling hardware costs and increasing competition among manufacturers, transportation expenses remain a significant component of the final price tag for an Alaskan solar installation.
2. Harsh Weather and Challenging Installation Conditions
Installing solar panels in Alaska presents some unique challenges compared to installations in more temperate climates. The state‘s harsh winters, heavy snowfall, and limited daylight during certain months of the year can all add complexity and expense to the installation process.
Alaskan solar installers also have to take extra precautions to ensure that panels and mounting systems are engineered to withstand high winds, heavy snow loads, and extreme temperature fluctuations. All of this specialized equipment and extra labor adds to the total cost of the project.
3. Limited Local Competition
While Alaska‘s solar market has grown rapidly in recent years, it‘s still small compared to other states. According to the SEIA, Alaska had just over 8 megawatts of installed solar capacity as of Q2 2021 – compared to more than 37,000 MW in California.
With fewer solar companies operating in the state, there‘s less price competition and consumers may have fewer options to choose from when shopping for an installer. However, this is starting to change as more local companies enter the market and national installers expand their presence in Alaska.
4. Higher Cost of Doing Business
Finally, it‘s important to remember that the cost of doing business in Alaska is higher than in many other parts of the country. Solar installers have to account for expenses like employee salaries, office space, insurance, and taxes – all of which tend to be steeper in The Last Frontier.
These overhead costs get passed along to consumers in the form of higher prices for solar installations. However, as Alaska‘s solar industry continues to mature and achieve greater economies of scale, these costs are likely to come down over time.
The Long-Term Savings Potential of Solar in Alaska
Now for the good news: despite the higher upfront costs, Alaskans who install solar panels stand to save more money on their electricity bills over the long run than residents of almost any other state.
According to data from the U.S. Energy Information Administration, Alaska had the second-highest residential electricity prices in the nation as of 2020, behind only Hawaii. The average price per kilowatt-hour (kWh) in Alaska was 23.14 cents, nearly 50% higher than the U.S. average of 13.20 cents/kWh.
For a household using 500 kWh of electricity per month, that translates to an average monthly bill of $115.70. Over the course of a year, that same household would pay approximately $1,388 for electricity.
Now let‘s say that household decides to install a 6 kW solar system on their roof. Based on Alaska‘s average annual sunshine, a system of that size would generate approximately 7,200 kWh of electricity per year – more than enough to offset the household‘s entire annual usage.
By generating their own electricity with solar, the household would avoid paying the utility for those 7,200 kWh at a rate of 23.14 cents/kWh. That‘s an annual savings of $1,666 – and that‘s just in the first year!
Over the 25+ year lifespan of a typical solar panel system, the savings really add up. Assuming a conservative 2% annual increase in electricity rates, our example household would save a total of more than $60,000 on their electricity bills over 25 years by going solar.
Here‘s how the lifetime savings break down:
| System Size | Estimated 25-Year Electricity Costs (Without Solar) | Estimated 25-Year Electricity Costs (With 6 kW Solar System) | 25-Year Savings |
|---|---|---|---|
| 6 kW | $62,500 | $2,432 | $60,068 |
Of course, these are just estimates and your actual savings will depend on factors like your energy usage, the size and performance of your solar system, future electricity rates, and the availability of incentives. But there‘s no denying that solar presents an incredibly compelling long-term investment for Alaskan households and businesses.
Solar Incentives & Tax Credits for Alaskans
Speaking of incentives, there are several key programs that can help make going solar more affordable for Alaskan residents and businesses. Here‘s an overview of some of the most significant incentives:
1. The Federal Solar Investment Tax Credit (ITC)
The ITC is a federal tax credit that allows you to deduct 26% of the cost of installing a solar energy system from your federal taxes. The credit is available for both residential and commercial systems, and there‘s no cap on its value. The 26% rate is in effect through the end of 2022, after which it will step down to 22% in 2023 and 10% for commercial projects (0% for residential) in 2024 and beyond.
For a 6 kW residential system in Alaska at an average cost of $16,800, the 26% ITC would result in a tax credit of $4,368. That brings the net cost of the system down to just $12,432 – a savings of more than 25% right off the bat.
2. The Alaska Renewable Energy Grant Program
Administered by the Alaska Energy Authority (AEA), this program provides grant funding for renewable energy projects in Alaska, including solar PV installations. The program is open to utilities, local governments, tribal entities, and non-profit organizations. While it doesn‘t provide direct funding for residential projects, the grants help support the growth of Alaska‘s solar industry and may indirectly benefit consumers by increasing access to solar and driving down costs.
3. Net Metering
Net metering is a policy that allows utility customers with solar panels to earn bill credits for excess electricity they send back to the grid. While Alaska doesn‘t have a statewide net metering mandate, some utilities like Golden Valley Electric Association and Chugach Electric Association offer voluntary net metering programs for their customers. These programs can help solar owners maximize the value of their solar investment by ensuring they receive fair compensation for their excess generation.
It‘s worth noting that the availability and terms of these incentives are subject to change over time based on legislative and regulatory action. Be sure to check with your local utility and tax professional for the most up-to-date information on solar incentives in your area.
Choosing a Solar Installer in Alaska
Once you‘ve decided that solar is right for you, the next step is to find a reputable installer who can design and install a high-quality system that meets your energy needs and budget. Here are a few of the top solar companies to consider in Alaska:
1. Alaska Solar
Founded in 2015, Alaska Solar is one of the state‘s leading solar installers, with a track record of successful projects across the residential, commercial, and industrial sectors. The Anchorage-based company offers a full range of solar services, including grid-tied and off-grid systems, battery backup solutions, and solar maintenance and repairs. Alaska Solar is a licensed electrical contractor and a member of the Renewable Energy Alaska Project (REAP).
2. Arctic Solar Ventures
Arctic Solar Ventures is a Fairbanks-based solar installer that specializes in designing and building solar PV systems for homes, businesses, and remote industrial sites across Alaska. The company has installed some of the largest solar arrays in the state, including a 100 kW system at the Cold Climate Housing Research Center in Fairbanks. Arctic Solar Ventures is a member of the Alaska Solar Energy Association and the Solar Energy Industries Association (SEIA).
3. Renewable Energy Systems
Based in Anchorage, Renewable Energy Systems is a full-service solar installer that offers a range of residential and commercial solar solutions, including grid-tied and off-grid systems, battery backup, and solar thermal. The company is committed to using high-quality, American-made solar equipment and provides a 10-year workmanship warranty on all installations. Renewable Energy Systems is a member of the Amicus Solar Cooperative, a national network of independently owned solar companies.
When evaluating solar installers, be sure to consider factors like their experience, certifications, and customer reviews. Look for a company that is licensed, insured, and has a proven track record of delivering high-quality work and excellent customer service. Don‘t hesitate to ask for references and case studies of previous projects similar to yours.
The Bottom Line
While the upfront cost of solar panels in Alaska may be higher than in some other parts of the country, the long-term savings potential is enormous. With some of the highest electricity prices in the nation, Alaskans who invest in solar today can lock in decades of clean, affordable energy – all while reducing their carbon footprint and supporting local jobs.
Thanks to the federal solar tax credit, state incentives like the Renewable Energy Grant Program, and the growing availability of competitive financing options, going solar has never been more accessible or affordable for Alaskans. Whether you‘re a homeowner looking to reduce your energy bills or a business owner seeking to lower your operating costs and improve your bottom line, solar is a smart investment that can pay dividends for years to come.
As an expert in solar energy and digital technology, I believe that the future of energy in Alaska is bright. By embracing solar and other renewable energy sources, we can build a more sustainable, resilient, and prosperous future for our state – one that benefits everyone from the biggest cities to the most remote villages.
So if you‘re an Alaskan considering making the switch to solar, I encourage you to explore your options and talk to a reputable installer today. With the right system and the right partner, you can start harnessing the power of the sun and enjoying the many benefits of clean, affordable energy for decades to come.
