Solar Panel Cost Calculations
To calculate average purchase and installation costs by system size and electricity needs, the Royal Institution of Chartered Surveyors analyses costs from a variety of sources, including surveys, online quotes and retailer pricing information. It combines these with quotes from specialist subcontractors to give the most accurate average prices.
The prices include everything necessary to carry out the installation. This includes materials, labour, preliminary work, contractor costs, VAT and profit.
Materials costs are based on the best trade prices from a range of suppliers across the UK, which are then benchmarked to reveal the best national average. Labour rates are based on the current Building and Allied Trades Joint Industrial Council wage agreement. RICS then uses this data in a standardised model. Data copyright RICS 2020 and reproduced with permission. Prices are correct as of October 2020.
*Which? conducted an online survey in June 2021 with 1,116 Which? Connect members who have solar panels.
What Are The Different Types Of Solar Panel Systems
As with anything the type of system you decide on will determine the overall cost of your solar panels. Grid tie systems vary in price from off gird systems, and if you bring energy storage into the mix, the price will be even further altered. There is no need to go over the top with your installation see what meets your needs and make your decisions accordingly.
If you are only powering a smaller building, there is no need for a full industrial solar panel installation. Conversely, if your building is larger and has a greater power demand, it makes sense to upgrade your panels to heavy usage commercial ones.
How Many Solar Panels Do I Need
Your energy needs determine how many panels you need, which affects the overall price of your solar system installation. To eliminate your electric bill entirely, you must generate 100% of the electricity your home needs. Most homeowners need between 25 and 35 panels to achieve complete energy independence.
Average households need867 kWh/monthin electrical power
A solar panel typically produces about one kilowatt-hour per day, so if your daily kWh usage is 30, you would need 30 solar panels to generate all of your energy needs. If you need to generate extra energy to heat a pool or run the air conditioning for most of the year, this adds to your energy costs.
To estimate the amount of energy youll need, you need to know your average kilowatt-hours . This number should be on your utility bill as kWh used. To get your monthly average, look at bills for the past year, add up the stated kWh used and divide by 12.
Next, divide your monthly kWh average by 30 to calculate your daily average. For instance, if your average monthly kWh is 900, then your average daily kWh is 30.
For a more accurate calculation, try to factor in times when there is not as much solar power available, like when its cloudy or in the evening. There are two main ways to account for this:
These additional calculations can be difficult, but they are necessary if you want the optimum solar power system for your home.
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How Much Do Solar Panels Cost To Lease Should I Buy Or Lease Solar Panels
Buying solar panels will always be far more advantageous than leasing them for a wide number of reasons.
- Solar leases and loans have built-in escalation clauses that mean you will be paying significantly more over time to use your panels than you would if you purchased them outright.
- You will never own the panels if you lease them unless you pay a hefty balloon payment at the end of your solar agreement.
- Solar leasing can prove to be problematic for those who wish to move and can lead to additional costs being incurred. Your home value may also be negatively affected.
The only benefit of leasing is that you do not have to pay for the installation of your solar panels yourself. Compared to buying though, you are simply not going to see the same level of savings through leasing. We have covered this topic in comprehensive detail in one of our other posts if you would like to take an in-depth look at this subject.
Solar Panel Costs Are Declining Over Time
As solar panel costs are declining by roughly 2% per year, this means that they are slowly becoming more and more affordable.
At one time, going solar was financially unfeasible for the vast majority of people. The market has changed so much that we are nearly at a point where virtually everybody will be able to afford solar technology.
The following chart shows how rapidly the cost of solar has fallen over the past decade.
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Monocrystalline Panel Price By Type
Monocrystalline panels are made of cells formed from a single silicon crystal. This makes them different from other types that may use other materials or fragments of silicon crystals. Three basic monocrystalline panel types are used regularly – traditional, PERC, and bifacial. Traditional cells are also known as Mono-Si or mono-silicon crystal. PERC, passivated emitter and rear contact cells, are more efficient because they can produce more energy. Bifacial can produce energy from both sides, making them attractive for ground-mounted installations.
Most people use Mono-Si or PERC panels on their homes with a roof installation. All types can give you some of the best efficiencies on the market for energy production. Below are the costs of these types per panel uninstalled.
| Type |
|---|
| $300 – $500 |
Solar Panel Cost By State
As interesting as it is to look at the average solar panel cost in the United States, its also very helpful to understand what solar will cost in each state, as prices can vary significantly depending on where you live. Why? There are a number of reasons, but one important factor to keep in mind is system size.
In general, states where homeowners need to use air conditioning more often have more average electricity used per household. As such, some of the largest solar panel systems are installed in sunny, warm states like Arizona and Florida. Why does this matter? For solar installers, the larger your system, the less they will usually charge per kilowatt-hour . Its like buying in bulk at Costco you might pay a higher sticker price, but your per-unit costs are lower when you buy more at one time. Well dive into this phenomenon more below.
Back to solar panels. In the end, this very roughly translates to lower $/W pricing in warm states and higher $/W pricing in cold states. But in the end, total pricing is usually close to a wash warm states have a lower price per watt, but larger system sizes, and cold states have a higher price per watt, but smaller system sizes.
Cost of solar panels by state
| State | |
|---|---|
| $14,160 $16,800 | $23,600 $28,000 |
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Payback Of Your Solar System
So looking at System A in the table above, the system costs £4,800 and the annual return is £320 per year, so it will take approximately 15 years to pay back. In addition, electricity prices are expected to go up over time, so the £0.15 you save for every kWh of electricity you use in your home will actually increase and could be nearer 20 pence in just 5 years therefore the absolute return could actually become bigger.
Once you have made your money back, then any money you make is paid directly to you as profit so you will be in line to receive the SEG indefinitely while you are exporting electricity.
Can You Still Earn Money With Solar Panels
Smart Export Guarantee here
The Feed-in Tariff ran from April 2010 to April 2019, and it was hugely successful. The scheme paid households for each kWh of electricity that they generated from solar panels, while also allowing homeowners to sell any of their unused electricity to the National Grid .
During the Feed-in Tariffs nine-year existence, renewable energy capacity in the UK skyrocketed from 9.3 gigawatts to a mighty 38.9 gigawatts. Fortunately, anybody who signed up to the Feed-in Tariff before its conclusion will still receive payments for the full 20 years of their contract.
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Theres More To The Solar Cost Story
Its great that weve arrived at the average cost of a solar system installation but as you may have guessed, there are many different factors that influence what the cost of solar would be for you.
Size of Your Solar System
5kW is the average size of a solar system, but many people choose to install bigger systems. A bigger system means more energy production and more energy savings over time. Some popular sizes are 6kW, 10kW and 15kW. Of course, it really depends on what your energy needs are. If you have 1500 square foot house and few appliances, your energy needs will be much different than someone who has a 3,000 square foot house with a hot tub!
The best thing you can do is run a simple analysis on your energy bill. How much energy do you use? Take that and you can easily decide what the size of your residential solar system should be.
Where You Live
The cost of solar installations varies from state to state, however the price of solar is actually fairly steady across the board. Almost all states tend to fall within 50 cents of the $2.96/watt average we discussed earlier.
Where you live certainly affects your solar savings but that is a topic for our aforementioned solar savings page.
Energy Sage also has a great breakdown of state by state solar installation costs!
Your Roof
The Installers
How Much Does A Solar Panel Cost
Prices have been coming down steadily over the years. The total cost will depend on how many kilowatts of power your array will generate. According to consumer reports, after solar tax credits are accounted for, the cost for a solar panel system on an average-sized house in the U.S. in 2021 ranges from $11,000 to $15,000.
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Seg Tariff Vs Using The Electricity At Home
To maximise the return from the solar PV installation, you will want to use as much of the electricity you produce in your home as possible. In the most basic terms, if you use the electricity you produce in the home, then you dont need to buy it from your energy provider . If you export it, you only get paid a fraction of this so if you can use it in the home, then it is strongly recommended to use it!
By incorporating battery storage technology into your solar system setup it allows you to store the electricity you produce to use as and when you need it. You can learn more about battery technology by clicking here.
Keep An Eye On Trade Policy
Changes in government trade policy also impact prices. In January 2018, President Trump imposed a four-year tariff on imported solar cells and panels that started at 30% and was set to drop 5% each year until February 2022. In 2020, the tariff rate for the fourth year was raised from 15% to 18%. The tariff resulted in a 16 cent per watt increase for the average consumer in 2018, which translated to an overall increase of $960 for a six-kW system, according to EnergySage.
The cost of foreign-manufactured panels may still drop, lessening the tariffs effect over time.
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What Is Meant By Feeding Back Into The Grid Is That You Can Set Up A System To Push Any Excess Power Generated Back Into The Grid And Reverse Your Meter Or Be Credited For Your Power Generation
Not so simple though …Your current meter may still count up and charge you for power you are putting back into the grid.New regulation may require you to register with NERSA to be able to feed back into the grid with an annual fee
Municipalities allowing you to feed back into the grid may charge you more per kilo watt of power used from the grid than your neighbours who dont feed into the grid.
Incentive and feeding back into the grid.
read more Solar Power In South Africa wikipedia
The Dream – Off grid Solar Energy systemsGoing totally off the grid would be ideal but is usually too expensive for the average home owner because the solar system would need enough battery storage to meet both the average and peak power consumption demand.Solar batteries that are available are lead acid and lithium-ion. With lead Acid batteries you need to double up on the battery capacity to meet your needs, discharging the batteries by more than 50% will damage and drastically shorten their lifespan normal lifespan is about 5 years.Lithium-ion batteries have a longer lifespan and can discharge to 90% or more, but are more expensive.
Are Sunpower Panels Worth It
Industry analysts agree Sunpower panels are the best money can buy. Of course, youll need to dish out a few thousand extra to buy these panels, so the question remains: Are they worth it?
You might be shocked, but for most of us, the answer is likely no. The amount of additional electricity Sunpower panels create simply isnt enough to justify their higher cost. They just arent as effective as standard quality solar panels.
However, there are instances where Sunpowers higher prices are justified. if your situation fits one of the following criteria, they might make sense for you:
- You have limited roof space and youre not able to physically fit enough standard solar panels on your roof to meet your energy needs. While it still might be better financially to just have a smaller installation, the increased production Sunpower panels can dish out might be worth it.
- You want the absolute best, USA-made panels money can buy. Sunpower knows theyre that good, and backs them up with a 25-year product warranty and a 25 year, 87% output guarantee unheard of from any other manufacturer.
Image Credits under CC License via Flickr 1, 2, 3
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Evaluate Your Sunlight Exposure
More sun means more energy produced and a greater potential to save with solar. Certain states, like Arizona and California, average more sunlight hours per day.
Your home’s orientation toward the sun, the amount of shade and its roof type also affect a solar system’s output. You can estimate the efficiency of panels in your area by using the SolarReviews calculator. Enter your address and the average cost of your monthly energy bill.
Are Solar Panels Worth It For A Business
Even just the financial savings from solar panels make solar panels a worthwhile investment for businesses. Before using solar energy, commercial business owners paid an average monthly power bill of $1,950, according to EnergySage. That is a 75% discount and a good reason for installing solar panels at your business.
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Other Benefits Of Solar Power
Solar panels can be very liberating. The more youre able to power your home entirely with solar energy, the less you have to rely on energy suppliers. If you can capture all the power you need from the sun, youll be living a life of electricity independence.
Most importantly, youll avoid the price hikes that suppliers often impose on their customers.
In late 2021, around 15 million UK households were told their annual energy bills would increase by £139 to £1,277 per year, as a result of Ofgem lifting its price cap.
These caps are revised every six months, which means that another increase might not be far away. Remember: the sun never increases its rates.
Additionally, a self-sufficient, solar-powered household will avoid any power cuts that hit the National Grid. Since Brexit took effect in 2020, the UK has narrowly avoided blackouts on multiple occasions, as Bloomberg has reported.
60% of the UK’s imported gas comes from the EU and Norway, and 91% of our imported electricity comes from the EU. Brexit has made the nation more vulnerable to supply shortages.
Are Solar Panels Worth The Investment
Thanks to the lower-than-ever cost of solar panels and various solar incentives, solar panels are a cost-effective investment for the majority of homeowners that will provide an excellent return on investment.
Not only do they lower your energy bills, but you also get to power your home with clean renewable energy and reduce your dependence on your local utility company.
Even though spending up to $20,000 is daunting, federal incentives eliminate 26% of solar system costs after 1 year. There are also various ways to finance a solar system – from solar loans and leases to PPAs – so you can pick whichever option that works best for you.
Plus, solar panels provide significant utility bill savings in most areas. An average home solar panel system can save between $1,000 and $1,600 per year on electricity bills depending on the states net metering policy and the homes energy consumption.
Actual solar savings will depend on the system size, the cost of electricity, home energy usage, and what net metering policies are in place, but the average solar homeowner can expect their solar payback period to be between 8 and 11 years. After that, theyll be enjoying completely free solar electricity for at least 15 more years!
If youre still not convinced, you can use our solar panel calculator to find out how much solar costs and can save you for your specific home based on your average electric usage and prices in your area.
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