How Much Does It Cost To Install Solar Panels On A Home
There are a lot of factors that go into the cost of a home solar panel system, and a lot of choices you can make that affect the final price you pay. Still, its useful to know what the industry trends are.
The table below lists the median price of home solar in different states in the US. The data is from the Tracking the Sun report. Note that these prices are the total installed cost of the system, including all equipment and labor.
The price compared to 20 or 10 years ago is impressive, but the recent decline in price isnt nearly as dramatic. This means that you can probably expect the cost of solar to continue to drop, but dont expect a big cost savings.
Will The Cost Of Solar Continue To Decrease
Its unlikely that well see the continuation of the dramatic decrease in price from the last two decades in the 2020s, but we do expect to see some decreases in price.
As the solar manufacturing and installation process becomes more and more efficient, there is less and less room for the hard costs to decrease, meaning soft costs make up a larger portion of the price. Hard costs are things like the panels and solar inverters themselves. The soft costs are things like permitting and financing.
Soft costs make up 64% of the cost of a residential solar system, according to the US Department of Energy. These costs are more likely to increase with inflation, contributing more and more to the cost of your solar system. While hard costs may continue to decrease, they will have less of an impact on the overall price of installing a system.
However, the overall cost still hasnt reached its lowest point, at least not according to the BNEF New Energy Outlook 2019. Bloomberg and their 65 market specialists predict that overall, the cost of solar will decrease by about 34% by 2030.
While it doesnt quite match the 80% decline we saw from 2000 to 2020, it shows that the cost of going solar is still moving in a downward direction.
State Level Solar Incentives
The main reason why countries offer incentives on residential transition to solar power is to support local solar industry. As more customer decide to join the renewable energy transition, these programs begin to phase out. Many state-level solar rebate programs are currently declining or ending soon.
In the past years we have seen this trend in top solar markets like California with the extremely successful Solar Initiative Program that distributed $191 million in rebates , but also in Massachusetts and New York.
If you are considering the option of getting solar panels for your home, you should verify what state-level programs are available in your area, as they may in combination with ITC make a real difference in the final price.
Rebate programs for solar energy are currently available in 17 states. You can find a list with detailed information in the official Database of State Incentives for Renewables & Efficiency.
One promising area to still earn money from solar energy generation is in the market for Solar Renewable Energy Certificates .
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Solar Power Prices Drop 12 Percent In One Year
The cost of solar energy dropped over the past year as utility-scale solar installations reached a record high. Utility-scale solar are facilities that produce more than one megawatt of power. Analysts describe solar sites producing less than one megawatt as small-scale.
- The cost for utility-scale solar dropped by 12.3 percent from 2020 to 2021.
- There was a 3.3 percent price decline for residential solar power.
- The price for commercial solar panels dropped by 10.7 percent.
The reduction in the cost of solar power is even more impressive over a longer timeframe. The NRELs figures note that residential solar power cost $2.65 per watt during the first quarter of 2021 compared to $7.53 per watt in 2010. The drop in price for utility-scale solar is even more substantial. It fell from $5.66 per watt 10 years ago to just $0.89 per watt in 2021.
Project Capacities Climb And Larger
Project capacities are increasing, particularly for large-scale ground-mount facilities in the utility-scale space. With larger projects come economies of scale benefits. The average cost of a 100 MW single-axis tracker system in the U.S. was as much as 8% less than that of a 10 MW system in 2020.
However, procurement strategies and soft-cost optimization will determine just how much costs can be reduced on a dollar-per-installed-watt basis with more megawatts installed. Hardware costs can only go so low. Reductions in costs such as project management, due diligence and labor can yield more cost-per-watt benefits.
Solar module power classes will continue to increase, especially as larger-format wafers come onto the scene. These modules will be physically larger and heavier but with higher power ratings. As a result, developers and engineering, procurement and construction providers are analyzing their cost stacks to understand the full savings potential and determine how labor costs might be impacted.
***Learn more about the Wood Mackenzie U.S. PV pricing report.Molly Cox is a solar analyst with Wood Mackenzie.
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Solar Power For The Home: Costs
Solar power is capital intensive, and the main cost of owning a system comes upfront when buying the equipment. The solar module will almost certainly represent the largest single component of the overall expense.
Other equipment necessary for installation includes an inverter , metering equipment , and various housing components along with cables and wiring gear.
Some homeowners also consider battery storage. Historically, batteries have been prohibitively expensive and unnecessary if the utility pays for excess electricity that is fed into the grid . The installation labor cost must also be factored in.
In addition to installation costs, there are some further costs associated with operating and maintaining a PV solar array. Aside from cleaning the panels regularly, inverters and batteries generally need replacement after several years of use.
While the above costs are relatively straightforwardoften a solar installation company can quote a price for these for a homeownerdetermining subsidies available from the government and/or your local utility can prove more of a challenge. Government incentives change often, but historically, the U.S. government has allowed a tax credit of up to 30% of the system’s cost.
Will Solar Panel Prices Continue To Drop
Solar panel prices have been falling ever since the technology was invented. 40 years ago the solar cells alone cost $2,000 per watt. Today, an entire system, including permitting and engineering, can be built for about $2 per watt. The previous two years alone saw a nearly 50% reduction in solar panel prices.
However, as solar panel prices fall, the dollar amount of each percentage point becomes smaller and smaller. Todays panel prices are so low that many solar panel makers are struggling to remain profitable. The solar panel manufacturing sector has entered a tough period of mergers, acquisitions, down-sizing and right-sizing. Currently, we are in a period of overcapacity on solar panels. How this will affect prices in the future is not clear, but solar panel prices have stabilized in recent months and could soon begin to increase.
Historically, the solar panels were the largest piece of the cost equation in a solar energy system. As a result, the total system price trends followed the panel price trends.
Today, the substantial drops in solar panel prices means that the solar panels now have a much smaller affect on the overall cost of a complete system. Costs of the other equipment are tied to the cost of commodity metals like copper, and these prices are not expected to decline anytime soon. Labor prices, project management costs, and engineering costs are currently at their most competitive and will likely not decline further.
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System Panels And Equipment
The cost of your system is also dependent on the number of panels you need and the type of panels you select.
The average home solar system is 5kW, although larger homes may require a 6kW system. Assuming your system uses 250-watt photovoltaic panels, that equates to approximately 20 panels per home, at the cost of roughly $11,000. Of course, prices increase from that starting point for larger systems requiring more panels.
Home solar systems also typically require an inverter. Most solar companies will design your solar system with these components included, but selecting specific inverters or batteries, such as a Tesla Powerwall, may increase your overall cost.
Should I Get Solar Panels Now In 2022 Or Wait
As a homeowner, installing solar panels on your property is a great way to save money on your energy costs over multiple decades. Due to the precipitous 70% drop in the cost of solar power equipment since 2010, more than 10 million homes across America are now powered by solar photovoltaic panels on homes, businesses and from large-scale solar projects .
If you are considering solar energy, you may have wondered: is it best to get solar panels now or wait until prices drop further?
It is a fair question, given how much prices have dropped historically from over $12 per watt in 2000 to on average $3.82 per watt in 2019. Simply looking at the rate of cost declines in recent years, one could expect solar photovoltaic modules to get cheaper in a few short years. Indeed, the price trend over the past two decades has been decreasing even despite some bumps on the road like 2018 tariffs on imported solar equipment.
For example, lets assume that you wait three years to purchase a PV system and that solar power costs decline by two percent per year , bringing the cost of a standard $15,000 system down to $14,100 on the third year. For each year that you waited, you would save $300 on solar power installation costs. But have you considered the option of how much solar energy will save you over the lifetime of the installation, starting with the first year?
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Supply Chain Disruptions A Challenge
Global supply disruptions are posing a challenge to bothbusiness and world leaders as they attempt to revitalizepandemic-battered economies. The solar industry is no exception,especially as it seeks to maintain its growth track record.According to an International Monetary Fund blog, pandemicand climate-related disruptions resulted in shortages of key inputsand cut manufacturing activity across the globe.
“These supply shortages, alongside the release of pent-up demandand the rebound in commodity prices, have caused consumer priceinflation to increase rapidly” in, for example, the US, Germany,and many emerging and developing economies, the IMF said.
Manghani said tightness in the global supply chain for solarmodules existed prior to the COVID-19 pandemic due to the increaseddemand to decarbonize energy sources. The disruption kicked into ahigher gear during the pandemic-induced lockdowns when solarinstallations were brought to a halt, he added.
When the lockdowns were lifted and global economies beganresuming normal activity, Manghani said there was initially someconcern about an excess of supply. Instead, he said, manufacturersfell behind demand, which resulted in the scramble that has nowworsened with the uptick in commodity prices and across-the-boardglobal freight and shipping delays.
Type Of Solar Panels And Other Equipment Costs
There are three basic types of solar panels, two of which are commonly used residentially: monocrystalline and polycrystalline panels. Monocrystalline panels tend to be more energy-efficient, which can lead to greater savings in the long run, but they’re also a bit pricier on the front end.
That being said, solar panel efficiency is the name of the game for most homeowners who aim to install a system on their roof, as they’ll likely have less space to work with than commercial solar projects or ground-mounted solar panel systems will.
Other components you may need to purchase include inverters, wiring, charge controllers, mounts, solar batteries and more. Consider how much backup power is a priority for your home â backup batteries will add some costs on the front end, but additional safety and savings on the back.
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The State Of Residential Solar Panels
Despite delays associated with the pandemic, residential solar projects increased 11% in 2020. In the third quarter of 2021, one out of every 600 households in the US installed a solar system, totaling more than 1 Gigawatt and 130,000 solar systems, according to Wood Mackenzie.
Growing interest in solar panels is due to a variety of factors, including incentives such as the Federal solar Investment Tax Credit and prices for residential solar panels decreasing by an average of 64% over the past decade. Much of that change is due to falling hardware costs, especially solar panel components, which dropped 85% between 2010 and 2020.
Although there have been notable reductions in solar costs since 2010, the most significant declines took place earlier in the decade.
“The cost of solar projects has declined considerably in recent years, but the cost reductions have now started to taper off and move closer to a floor, currently defined by the price of input factors such as labor, polysilicon, silver, copper, aluminum and steel,” according to a report by Rystad Energy in September 2021. “These input factors have seen a clear rise in prices in 2020 and 2021.”
While solar component prices are going up, the solar Investment Tax Credit is only available at 26% through 2022.
Let’s look at these competing factors a bit more closely.
Waiting Means Missing Out On Thousands Of Dollars In Potential Savings
Waiting to install solar panels means waiting to save on your energy bill, and continuing to pay more for that energy as prices rise.
- In 2022, residential electricity price is projected to increase on average at least by 3.8% when compared to 2021 in the U.S. .
- In 2020, the average American households energy bill was $117.46 per month, or about $1,410 annually .
- If you were to install a solar photovoltaic system that generated enough power to offset this bill entirely, you would be saving $1,410 in year one. With a 3.8% increase each year, your savings in year two grow to $1,464 and would reach $1,518 in annual savings in 3 years.
Remember, the total cost savings on energy price from waiting three years to go solar came out to $900. This figure would be eclipsed in year one by getting solar panels for your house now. Savings would nearly double by year three and would only continue to grow with time, as you are avoiding paying for the rising cost of energy. And that is a good reason to get solar panels for your home right now.
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Falling Solar Panel Prices Spell Sunny Future For Clean Energy
Solar electricity has fallen in cost faster than predicted. Within a decade, it will be cheaper to shut down existing coal-fired plants and build new solar plants in their place, experts say.
The plummeting cost of turning sunlight into electricity is beating forecasts by decades, speeding the transition toward a clean energy system.
Solar prices have sunk low enough to make photovoltaics the cheapest source of electricity in most of the world undercutting fossil fuels in price even before counting costs like air pollution and climate change. Averaging about $0.05/kWh, the cost of generating solar electricity has reached lows that six years ago the International Energy Agency did not expect to come until the middle of the century.
When Jenny Chase started working on solar energy in 2006, her job title was head of “improbable technologies” and she thought solar could only ever provide 1% of the world’s electricity mix. “Now, it’s already gone north of 2%,” said Chase, a solar analyst at energy consultancy BloombergNEF.
The price of renewables like solar matters for climate change. The energy sector is responsible for about three-quarters of global greenhouse gas emissions mainly from burning coal, oil and gas and governments must rapidly decarbonize their electricity grids to meet targets that keep global warming well below 2 degrees Celsius .
Forecasters have underestimated the rate at which solar capacity would grow
Where is solar energy cheapest?
Solar Panel Prices Have Dropped Off Cliff & Sunk Into Ocean Solar Panels 9 Cheaper Than In 2006
Solar panel prices have come down a tremendously in recent years, including rooftop solar panel prices.
I used to write articles about solar power every day for years. When youre in the thick of it, you get more and more focused on details and get increasingly busy with industry conversations that are foreign, if not confusing, to outsiders. I tried to keep that in mind and tried to regularly consider what would be useful for normal people to read about solar power. One topic I repeatedly came back to was: solar panel prices keep dropping, and solars probably cheaper than you think.
For the past few years or so, Ive been much more focused on electric vehicles, and I increasingly feel like an outsider in the solar industry. Im not always up to date with the hottest topic of debate or discussion among solar policy wonks or solar industry analysts. One result in recent months is that this news has seemingly come out of nowhere: solar power prices have dropped more than I realized.
First of all, when Tesla rolled out $1.49/watt rooftop solar panels , I was quite surprised to see it so low. Thats a terrifically low price for rooftop solar panels. The savings from going solar should save many homeowners thousands or even tens of thousands of dollars over the lifetime of their solar power systems*.
Jenny Chase, Solar analyst with BloombergNEF.
Is it time for you to go solar? That depends on your individual circumstances, but if you have a roof, Id look into it.
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