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With our current economic melt down and energy prices fluctuating daily, many of us are thinking of installing solar panel power to contribute to our homes' energy needs, and reduce our power bills.

But how much solar panel watt power do we need to say halve our power bills? And how much will that power cost us to install?

Here is a simple 4-step formula to help you calculate your home's solar panel watt requirements and costs:

1 - What Is Your Daily Power Consumption?:

Your first step is to work out the average daily kilowatt hours (kWh) used. This can be done by looking back at your last twelve months power bills, and see how much power used per month, and get the monthly average. This will give you a better estimate of your average power needs by eliminating the effect of the seasons. It is calculated by adding up all 12 bills and dividing the total power used by 12. If you do not have the the past year's bills, then look at your most recent one.

Now take your average kwH per month and divide that by 30 to get your average kWh per day.

- So for example: If you have a monthly power consumption of 800 kWh, then your daily amount is 800/30= 26.7 kWh per day.

- So if you want to cut your bill by 50%, then the amount of solar power needed is 26.7/2 = 13.4 kWh per day.

2 - Calculate Total Solar Panel Watt Needs:

To do this, you first need to determine how many usable hours of sunlight your area receives per day. This is where a solar insolation map comes in handy - you can view one from our original article on our website.

Now take the average daily kWh calculation and divide that by the number of daily usable sunlight hours, then multiply that by 1.25 (to take into account the wasted energy from wiring, charge controllers. batteries, and inverters).

- Continuing from our example: Our solar panel watt needs equal:

13.4 kWh required / 5.5hrs of insolation x 1.25 = 3.045 kW or 3045 Watts daily.

This indicates that our home solar power system must have the minimum capacity to produce 3045 Watts of power.

3 - Calculate Solar Panel Watt Costs:

Now you you need to calculate how much these solar panels will cost you. At the moment $4.85 per Watt is the highest average cost in the United States.

- In our example: It will cost us at the most 3045 x 4.85 = $14,768 to install solar panels to halve our power bill. And that's before wiring, charge controllers, batteries, inverters, and electrician costs.

4 - Take Government Rebates and Credits Into Account:

Before you think you are going to have to fork out at least $14,768 for only 3045 Watt of solar panel power, you need to consider the effect of government subsidies and incentives.

With the new renewable energy tax credits going into effect from January 1, 2009, and state-side rebates from states such as New York, Connecticut, New Jersey or California, our solar installation costs will be much lower than expected.

- Using the same example: For a Californian to buy the solar panels, they would receive a state tax rebate of 20% of the cost, and a federal tax subsidy of 40% of the remainder. So, the investment in the solar panels would only be:

$14,768 - $14,768 x (20%) - $14,768 x (1 - 20%) x 40% = $7,089.

Just remember that this formula is basic way for you to get an idea of what home solar power will cost you. Some things could not be factored in - such as the state or country you live in, the special offers of local solar companies and the cost of the other parts (inverters, charge controllers, batteries, installation fees).

Anyway, from what you can see it would cost us around $7,089 to buy enough solar panels to halve our power bill. We, instead, either get our solar cells at cost or source them for free, and wire up our own solar panels, which obviously saved us a lot of money. The good news is, anyone can learn to find cheap solar cells and make their own solar panel watt power.