Are Solar Panels for Small Homes a Good Idea?

Solar panels and tiny homes seem like a match made in tiny heaven. The top motives for living in a tiny house - cost savings and lower environmental impact - also happen to be the top reasons that homeowners, in general, choose to go solar. 

Solar panels and tiny homes seem like a match made in tiny heaven.


The top motives for living in a tiny house - cost savings and lower environmental impact - also happen to be the top reasons that homeowners in general choose to go solar. 


In fact, for reasons we’ll soon go over, one could argue that solar is uniquely well-suited to power tiny houses as compared to other energy sources. 


That said, it’s important to note that solar panels do have their disadvantages. Give careful thought to each of them and assess how relevant they are to your situation; after all, with tiny homes, even the smallest of inconveniences can have a big impact. 


So without further ado, here is a comprehensive list of all the pros and cons of installing solar panels for your tiny home. 


Advantages of solar for tiny houses


Pros #1: Solar panels will slash your electric bills 


The ability of solar panels to reduce electric bills is the #1 reason that American homeowners choose to go solar. Tiny houses already have lower utility bills, but by installing solar panels it’s possible to eliminate most, or even all, of your electricity charges. 


A small solar system between 1 kilowatt and 3 kilowatt (1-3 kW) in size - enough to cover the needs of pretty much any tiny home - will result in average savings of between $250 and $750 annually. 


Your exact savings figure will depend on a number of factors - we’ve listed the most important ones below:

Factors that increase solar savings: 

  • High energy usage
  • High electricity rates
  • High levels of sunlight
  • Taking advantage of net metering

Factors that reduce solar savings: 

  • Cheap grid electricity
  • Poor access to sunlight
  • Lack of incentives from your state and utility


To see how all of these factors will play out for your particular home, enter your address into our solar calculator here. 


Pros #2: Solar panels offer a great return on investment 


The overall payback period on solar panels is typically between 4-9 years in most states.


The best part is that with a tiny house, this can be achieved with a relatively small investment. A 3kW system, for instance, will cost you just $6,327 (based on a cost/watt of $2.85, and net of the 26% solar tax credit). 


Furthermore, there are many solar financing options available to help with upfront costs, including loans, leases, and power purchase agreements. 


The exact cost you’ll have to pay depends on a few different factors, most important of which is your energy usage. If you consume a lot of electricity, you may need a slightly bigger system, while energy-efficient tiny homes might be fine with a smaller setup. 


Pros #3: Solar power offers clean, renewable energy 


Another priority for tiny homeowners is minimizing their impact on the environment, and solar panels are the easiest way to achieve this. 


Solar panels provide energy that is clean: they are completely emissions-free, meaning that they can substantially reduce your overall carbon footprint. The power they produce is also renewable - the sun shines anew everyday, and no resources are consumed when we harness its rays. 


It’s also worth noting here that solar panels are the only practical option when it comes to using renewable energy with a tiny house. Solar panels are relatively cheap and usable pretty much anywhere, unlike other renewable options like wind power and hydroelectricity, which have high upfront costs and can only be installed in specific locations.  


While some critics point to the use of resources involved in the production of solar panels - the ‘footprint of carbon’ - research has shown this to be miniscule in comparison with emissions that solar panels help avoid. 


Pros #4: Solar panels will increase your energy independence 


Tiny home dwellers tend to be careful about their consumption patterns, and are eager to be as self-reliant as possible. When it comes to energy consumption, the easiest way to achieve a smaller footprint is by going solar.


Depending on the type of system you choose, solar power can be used to lower consumption of dirty grid power, provide backup power in the event of grid outages, and in some cases, cut your connection to the grid entirely. In the wake of incidents like the California wildfires and Texas winter blackout in February 2021, backup power and decreasing reliance on the grid are more attractive than ever. 


Here’s a quick look at the different levels of energy self-reliance you can achieve with solar: 


1. Cover most of your daytime usage and export surplus power 


With a relatively small grid-tied solar panel system, it’s possible to generate enough electricity to both cover your entire daytime energy usage and have enough electricity left over to export to the grid (thanks to net metering, a program where your solar exports are worth the retail price of electricity, and is offered in most states). Grid-tied solar systems are both the most affordable type of system, and the most common. 


2. Cover most of your day and night usage, plus save some backup power 


The next step in energy independence is to add a solar battery to your system. This could be in the form of a lithium battery, lead acid battery, or even a solar generator. Whatever type you choose, your solar battery bank can either be used to cover part of your nighttime usage and/or store several hours of backup power to cover a grid outage. 


3. Complete independence from the grid 


It’s possible to go completely off-grid, i.e. you install a large system that can generate enough power to cover all your energy needs, eliminating the need to ever draw power from the utility. Just be aware that off-grid systems are substantially more expensive.


Pros #5: Solar systems can be customized to your needs 


Solar panel systems are completely modular; they can be designed to be as large - or as small - as you need. 


This is a major advantage as it addresses what’s probably the biggest challenge for tiny homeowners - finding objects (whether furniture or appliances) that match the limited dimensions of their living space. Many tiny homeowners are familiar with the disappointment when their preferred brands don’t offer what they need. 


This is not an issue with solar panels. They are modular by nature, which means that you can build a solar panel system with any popular residential solar panel brand by simply reducing the number of panels used compared to a typical home installation. By the same token, it’s possible to start off with a small solar panel system and add on to it later.  


Disadvantages of solar for tiny houses


Con #1: Upfront cost 


You will need to spend several thousands of dollars if you’re planning on buying a solar panel system outright with cash. 


Before incentives, a small 1 kW system will cost around $3,250, while a larger 3 kW system will cost around $9,750 - these prices are before any incentives and rebates. 


The good news is, so long as you are a taxpayer, you can benefit from the 26% federal solar tax credit, which would bring a 1 kW system down to $2,450, and the 3 kW system to $7,215. Depending on where you live, further incentives and rebates may apply.


The amounts above might be more than you can - or want - to pay. In that case, you can consider solar loans with small or even zero down payments, but you may need to have a decent credit score to qualify. Another option to consider is a DIY solar panel installation; this will be cheaper, but comes with its own pros and cons. 


Con #2: Solar batteries are expensive 


Earlier in the blog, we discussed how solar batteries, when paired with solar power systems, can offer increased energy independence, as well as backup power. 


However, while battery storage tech has improved in recent years - for instance, lithium batteries have replaced bulky lead acid AGM batteries - they remain an expensive addition. 


Newer lithium batteries, such as the 9.8 kWh LG Chem RESU10H battery, are powerful and space efficient, but also costly. The RESU10H costs between $7,000 and $9,000 for the equipment plus installation. However, after the 26% solar tax credit, the RESU10H’s cost comes down to between $5,200 - $6,700. This cost can be further reduced by using some state-specific rebate programs, such as California’s Self-Generation Incentive Program (SGIP). 


However, our analysis finds that even after incentives and rebates, solar batteries don’t offer the same payback as solar panels, and are really only worth considering if you’re willing to pay a premium for solar backup power. 


Con #3: Space requirements 


Tiny houses are, as the name suggests, small. This means that it can often be tricky to place all the solar panels you need on your roof. 


Let’s assume that you have a power consumption of 4,380 kilowatt hours (kWh) a year - this makes for an electric bill of $622 based on average U.S. electricity costs (14.2 cents/kWh) per kilowatt hour, or $1,024 in a high-cost state like California. Covering that much electricity usage with solar panels would require roughly 140 square feet of space, assuming the use of eight 375-watt solar panels, each measuring 17.55 square feet. 


There are three ways that owners of tiny homes overcome space limitations when it comes to solar: the first option is to install the solar panels on the ground near the tiny house, although such setups are difficult to move. 


The second option is to make your home as energy efficient as possible; the less power you consume, the fewer solar panels you’ll need to install. The third option is using high efficiency solar panels, which will generate more electricity in a smaller amount of space.


The easiest way to calculate how much space you will need for solar panels is by talking to a solar installer, or by using our easy-to-use online calculator which will factor your energy usage and location.  


Con #4: Inverter placement can be tricky 


Solar inverters are a critical part of any solar setup; they are the equipment that converts the DC power generated by your solar panels into usable AC power for your home. 


There are four types of inverters you could utilize for your tiny solar home, including:


  • String inverter
  • String inverter plus DC power optimizers
  • Microinverters
  • Hybrid inverter


Assuming you are opting for one of the string inverter options (they are the most cost-effective solution) you’ll have to keep in mind the following factors when deciding on where to place it:


  • Inverters operate best in lower temperatures - your inverter should be placed in a cool place, away from direct sunlight
  • They can generate a very low hum - if this is right next to where you work, it could be bothersome


A common workaround is to place them in an outdoor box, facing north or east if possible, to minimize sun exposure. 


You can also avoid this issue altogether by opting for microinverters - these are small inverters that are attached to each individual panel. However, microinverters setups tend to cost more than those with string inverters, and are thus a less popular option among tiny home owners.  


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