Are Solar Panels Worth It in Alaska?

7 factors to consider before getting solar panels in Alaska

ConsumerAffairs has heard from thousands of solar customers who have already gone through the installation process. Here’s what to consider before making the switch.

1. Solar panel installation costs

2. Your energy consumption

3. Seasonal production variation

4. Alaska solar incentives

5. How long you stay in your house

6. How you pay

7. The solar company you hire

1. Solar panel installation costs

Average solar panel costs in Alaska are comparable to the national average. A typical A 6-kW solar panel system costs about $18,840. That doesn’t include a solar battery, which can add $7,000 to $18,000 to your total system costs.

Most installers set the price according to the system's wattage, with a typical cost between $2.50 and $5 per watt. “Cost per watt” is a little like looking at the price per square foot when you buy a house. It helps you compare the value of solar energy systems in different sizes. In Alaska, the average cost per watt is $3.14.

Solar panel costs by system size in Alaska

2. Your current energy consumption

A typical Alaska household needs a 5.1 kW system to offset its electricity needs with solar energy. You might need a larger or smaller system, depending on your current energy consumption.

You get the most out of solar if most of your appliances are electric. If you also have an electric vehicle, solar panels will save you even more. (This may seem obvious, but solar panels only generate electricity; they won’t save you money on gas bills.)

It’s smart to get your electrical loads as low as possible before going solar. That way, you can get a smaller system, which will be cheaper overall. If you have older, inefficient appliances, consider upgrading them before sizing your solar system.

Once you know your energy consumption, you can calculate your potential savings and the time it should take for your solar installation to pay for itself.

3. Seasonal production variation

For Alaska homeowners, the biggest question isn’t whether solar works in cold weather — it does. What matters more is whether strong summer production can make up for low winter output and whether the long-term savings justify your total system cost.

To see if it’s worth it, pull 12 months of electric bills and ask installers for a month-by-month estimate of how much power your system would produce.

Then compare your expected yearly savings with the total system cost, including financing, batteries and any roof work.

4. Alaska solar incentives

Compared with some other states, Alaska has relatively few solar incentives. Still, some homeowners may qualify for a local property tax break, so adding solar won’t necessarily increase their property taxes. Eligibility and savings depend on where you live.

Alaska also has solar loan and grant programs, but these are mainly for utilities, local governments and other organizations rather than individual homeowners.

What to know about net metering in Alaska

If your solar panels produce more electricity than you use, Alaska net metering lets you send the extra power to the grid and earn a bill credit.

Under standard rules, excess solar power is generally credited at your utility’s lower avoided-cost, or non-firm power, rate rather than the full retail electricity rate. For example, Golden Valley Electric Association (GVEA) uses a net metering rate that changes quarterly.

Some Railbelt customers may receive higher compensation through a temporary Alaska Energy Authority incentive program, depending on whether their utility participates.

» MORE: Solar incentives in Alaska

5. How long you stay in your house

It takes years for electric bill savings to make up for the initial cost — about 12.6 years on average in Alaska. If you sell your house and move before then, you might not fully realize the financial benefits of your solar investment.

It’s true that solar panels can increase the value of your home. But they can also complicate a sale. This is especially true if you lease your system, since the buyer may need to take over the contract.

If you think you’ll move in the next couple of years, you may want to consider a home improvement project with a better return on investment, like a kitchen or bathroom remodel.

6. How you pay

It’s great if you can pay for the whole thing upfront. You own the system from day one and don’t have to pay interest on a loan. Of course, cash isn’t always an option. That’s when loans, leases and other agreements come into play.

• Solar loans work like any other type of home improvement loan. There’s an application and approval process. You pay it back over time (with interest) each month.

• Leasing solar panels lets you set up a system without the high upfront costs. Monthly payments usually range $150 to $250. Agreements last 20 to 25 years.

» SOLAR PANELS: Lease vs. buy

7. The solar company you hire

There are good and bad solar companies in Alaska. In the best-case scenario, it’s easy to make the switch and you’re happy with your system’s performance. In the worst-case scenario, you end up paying thousands for mid-tier solar equipment from a company with poor customer service and no follow-up or support.

A common complaint is pushy salespeople making promises that don’t pan out. Before signing anything, verify what the salesperson tells you and make sure the details are in the contract.

Use NLR’s PVWatts Calculator to estimate how much electricity a solar panel system can produce over a year on your house.

Is my house a good candidate for solar panels?

Going solar ends up being worth it for many homeowners as long as their house is a good candidate to support the panel installation. Here’s what to think about before you commit:

• How much sunlight do I get? Solar panels need regular exposure to sunlight to produce the most energy possible. Alaska averages 2 to 3 peak sun hours each day. However, lots of shading — like trees or tall buildings above your roof — could make your solar system less efficient.

• What is the size and angle of my roof? South-facing roofs usually produce the most solar power. If your roof faces north, you may need more panels to generate the same amount of electricity.

• What is the condition of my roof? If you have to replace your roof, do that before you install solar panels. Solar panels are designed to last up to 30 years, so you want your roof to last just as long. Otherwise, it could cost thousands to remove the panels, fix your roof and reinstall the panels again.

Pros and cons of solar panels in Alaska

It’s a common misconception that solar panels will completely eliminate your monthly power bill — this is not always the case. Still, you’ll likely be paying much less than you would for traditional utility bills.

Why solar can be worth it in Alaska

• Lower electric bills: Electricity can be expensive in Alaska, so producing more of your own power can lead to meaningful savings. How much you save depends on your utility rates, energy use and what your utility credits you for excess solar power.

• Strong summer production: Alaska’s long summer days can give solar panels plenty of time to generate electricity. Production drops sharply in winter, though, so it’s important to look at expected output over a full year.

• More predictable energy costs: Buying solar lets you replace some of your future utility spending with a more predictable system or loan payment. That can provide some protection from rising electricity prices.

• Backup power with a battery: Pairing solar with battery storage can keep certain appliances running during an outage. This may be especially valuable in areas where outages are frequent or take longer to repair.

• Lower environmental impact: Solar lets you generate electricity without burning fuel at your home, reducing your reliance on fossil-fuel-generated power.

Reasons solar may not be worth it in Alaska

• High upfront cost: A solar system can cost tens of thousands of dollars, and adding a battery makes it considerably more expensive. Solar batteries generally cost about $7,000 to $18,000.

• Very little winter production: Short winter days mean your panels may produce much less electricity during part of the year. Your location, roof angle and shading all affect how much this matters.

• Snow can temporarily reduce output: Panels still work in cold weather, but snow covering the panels can stop or reduce production until it slides off, melts or is safely removed.

• Your roof matters: Solar panels need to stay in place for decades, so an older roof may be worth replacing first. Improper installation can also cause leaks or roof damage.

• Selling can be more complicated: Owned panels may add value to your home, but leased or financed systems can complicate a sale if the buyer has to take over an agreement.

• Solar alone won’t keep the power on during an outage: Most grid-connected systems shut down when the grid goes out. You generally need a compatible battery or other backup setup if outage protection is a priority.

» MORE: Solar energy pros and cons

Find solar companies in Alaska

A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our picks for Alaska’s top solar companies to learn more.

Alaska solar FAQ

Bottom line: Is going solar in Alaska worth it for you?

For Alaska homeowners, the key is whether strong summer production can make up for low winter output. Look at a full year of your electricity use, get a month-by-month production estimate and compare your expected savings with the total cost of the system.