New Lows For Solar Installation Costs In 2021
Every year, the solar industry makes the headlines with lower installation prices. The latest jaw-dropper was from the once-great SolarCity , which announced early this year that it would charge just $2.50 per watt for solar installations a record low. With the 30% federal tax credit, that put solar installation costs at just $1.75 per watt.
In 2010, the average home solar installation cost was $7.34 per watt. So while Tesla charges just $20,000 for an 8 kilowatt installation, that same installation in 2010 wouldve cost $58,720!
Of course, since 2010 installation costs have steadily fallen each year. Colorados National Renewable Energy Lab actually publishes data every year on solar installation costs, the latest being the Q1 2018 Solar PV System Cost Benchmark. As can be seen in the chart below, NREL estimates that the average installation price in 2018 was just $2.70 per watt. Thats a 65% drop in price in just 8 years.
Teslas installation cost of $2.50 per watt is certainly headline-grabbing, but most installers arent quite there yet and, in reality, solar installation costs can go all the way up to $3 per watt. A $0.50 difference probably doesnt sound like a lot, but for an 8kW installation thats an extra $4,000 youll have to shell out.
Annual Solar Inspections: $200$400+ Per Year
How much your solar inspection is going to cost depends entirely on how large your system is and who performs your inspection.
An annual inspection is the best way to determine that your solar system is still operating at maximum efficiency based on its age and whether any work needs to be carried out to bring it back up to an optimal standard.
This can seem like an unnecessary expense, but it is well worth paying for if it guarantees the future longevity of your system and the savings that come with it.
How Solar Panel Installation Works
Solar installation is a straightforward process. Your solar company handles almost every part of the process for you. First, the solar provider holds a consultation with you about your energy needs and homes design.
Then, it designs a solar power system based on your homes specifications and handles all required permits from your local municipality. Finally, the company schedules an installation day with you and conducts final inspections. Overall, this process may take 60 days to complete.
Watch our video below to get a better understanding of what the solar installation process entails:
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Supply Chain Issues Have Caused Prices To Rise In 2022
The pandemic caused chaos in the price of everything, from toilet paper to pork chops. The prices of raw materials for solar panels were affected too, especially polysilicon, which is used to make silicon cells.
But Why Was The Transition To Us Solar So Slow
New technology can require decades to pay off, which is an inhibiting factor for companies. As a result, governments often take on the task of early R& D.
Solar got the initial spotlight when Jimmy Carter was elected US President. In 1977, he established the Department of Energy, with a particular focus on energy independence. Yet there was no funding for major federal purchases of solar panels, instead allocating millions of dollars for solar technology R& D. At the time, Carter stated that it was still too early to concentrate on commercialization of photovoltaics. Solar panels were mounted on the roof of the White House a year later.
Ronald Reagan, the next US President, hacked renewable energy research budgets by 85%.
Countries like Germany and Japan then left the US way behind in solar power R& D and government subsidies. There was no turning back for Europe and Asia.
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Review Your Electric Bill
Solar panels generate their own power and can therefore greatly offset your monthly electricity bill, if not eliminate it. The higher your bill, the more likely you’ll benefit from switching. But you should note that electricity rates and usage the main charges on your statement are volatile.
“If a utilitys electricity prices fluctuate, so could the amount of savings,” says Garrett Nilsen, acting director for the U.S. Department of Energy’s solar energy technologies office. “Similarly, if energy consumption changes, the amount of savings can also vary.”
Visit the EIA website to view the most recent prices per state.
The Bottom Line: Are Solar Panels Worth It
Solar panels can be a beneficial investment for your home by saving you money long-term on the cost of electricity and increasing the value of your property. However, there are factors that you should consider before making the switch, including how much sunlight directly hits your house daily and the layout and direction of your roof. Residential solar systems in states that are, on average, sunnier will typically perform better, and south-, west- or southwest-facing roofs get more sun exposure.
You should also take a close look at your monthly electricity bill and compare it against your states average energy cost. Solar panels may be a good solution if you have consistently high payments or your cost is more expensive than in other areas of your state. On the other hand, you may not see enough cost savings to justify the expense of installing a home solar system if you have relatively low bills or can find ways to cut down electricity usage significantly.
Its also crucial to determine what incentives, if any, your state offers for solar energy, including a net metering program and tax credits. Remember that you can only take advantage of these incentives if you own your panels, either by paying for them outright or through a loan, so you need to consider whether your budget allows for a purchase rather than a lease. Fill out this online form to get quotes from top solar installers in your area.
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Calculating Your Energy Production
The second factor you’ll need to consider in your calculations is the amount of energy your system will produce and when it will do that. This can be a very complicated calculation to make, even for experienced solar engineers. However, let’s run through the basics.
One of the most important considerations is the solar irradiation levels available in the home’s geographical location in other words, how sunny it is where you live. When it comes to using solar panels, being closer to the equator is generally better, but other factors must be considered. The National Renewable Energy Laboratory produces maps for the U.S. showing solar irradiation levels and the tools on its website provide detailed solar information for specific locations within the U.S.
Equally important is your home’s orientation: For rooftop arrays, a south-facing roof without trees or other objects obstructing sunlight maximizes the available solar energy. If this is not available, panels can be mounted on external supports and installed away from the house, incurring additional costs for the extra hardware and cables.
Are Solar Panels Cheaper After The Vat Cut
Solar panels are between 5% and 20% cheaper now.
The government has cut the VAT rate on energy-saving materials like solar panels to 0% from April 2022 to 2027.
Most installations will cost 5% less as a result, meaning the average cost will drop from £5,420 to £5,149.
This is a positive step, though unfortunately rising fuel prices and a general increase in the cost of living has understandably led many installers to raise their prices anyway, which has negated some of the gain from this VAT cut.
The good news is solar panel prices have decreased sharply over the past decade, so they’re already cheaper than they’ve ever been.
That’s good news for the 60% of UK residents who, according to our National Home Energy Survey, want to switch to renewable energy at home.
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Advances In Solar Technology And Efficiency
Early solar cells had an efficiency of just 1%. Todays solar panels are now hitting the 25% mark and above in the highest efficiency solar panels available today. At Boston Solar, we only install the highest quality and most efficient panels on the market from LG and Trina for residential installations and JA Solar, Talesun and LG for commercial solar projects. The solar panels Boston Solar installs can generate 70% more energy in the same space over 25 years.
Solar panels are converting more and more of the energy from the sun into electricity for a home. Think about it this way: the more energy that is converted by a single panel, the fewer panels a home will need. When we combine these two factors, what we get are smaller solar PV systems that cost less per watt to install!
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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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, and prices since the pandemic have started to climb for the reasons describe above.
What Factors Affect Solar System Cost
A single solar panel costs between $2.67 and $3.43 to buy and install.4 The price of the whole system is based on its capacity, measured in watts. How big a system you need will be based on how much energy you use, your roofs sunlight exposure and panel efficiency.
The amount you save will rely on several factors, including:18
- Regions sunlight exposure
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How Many Solar Panels Will You Need
To know how many solar panels you will need, you will want to determine how much electricity you use in your home daily.
Modernize recommends discussing these factors with a trusted solar contractor. For ease, bring your electric bills with you to a consultation or calculate how much energy you use per day ahead of time by taking your monthly kilowatt usage and dividing it by 30. For context, the average house in the United States uses about 900-kilowatt hours a monthroughly 11,000 kWh a year.
Ultimately, the number of panels you purchase matters because it contributes toward the amount of kW of electricity produced each day. In turn, the more of your electricity costs you want absorbed by solar energy, the more panels you will need. If you only want a portion of your power to be produced by solar panels, you wont need as many panels.
Tracking Solar Panel Efficiency
The rate to solar panel efficiency has been a long one, but is heating up right now. Take a look at how much the past years have mattered in the grand scheme of solar innolvation:
- 1960: Hoffman Electric achieves 14% efficiency in PV cells
- 1992: University of South Florida fabricates a 15.89% efficient thin-film cell
- 2012: Solar Frontier reaches 17.8% efficiency
- First Solar breaks 18.2% efficiency
- SolarCity announces 22.04% efficiency and Panasonic announces 22.5% efficiency
- SunPower achieves 22.8% efficiency, validated by the National Renewable Energy Laboratory
- NREL and Swiss Center for Electronics and Microtechnology achieved 29.8% efficiency
- A group of U.S. scientists develop a prototype for a solar cell capable of 44.5% efficiency
- NREL researchers develop a six-junction III-V solar cell with 47.1% efficiency
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What Is The Federal Solar Tax Credit
An important aspect of paying off your solar panels is the federal tax credit and other state incentives to use renewable energy. The federal tax credit for solar started in 2006, and unless Congress extends it, itll expire in 2024.
In December 2020, Congress extended the credit through 2023, giving those in the U.S. up to a 26% tax credit for systems installed in 2020-2022. But that rate drops to 22% in 2023. So if youre on the fence, youll want to decide sooner than later.
Those who take advantage of the federal solar tax credit can write off the cost of solar on taxes. This includes the cost of panels, labor costs, mounting equipment, assembly, and energy storage devices like a battery. Youll get a $1 to $1 tax reduction of up to 26%. However, this only applies if you bought or financed the purchase. Those leasing a solar setup are not eligible for the credit.
A Separate Battery Bank: $8000$15000+
The reason why you might want to consider getting either a separate solar battery or a hybrid battery and inverter is that it will allow you to store excess solar energy, meaning that you will never have to dip into the grid for power.
Sometimes, there may rarely be periods when you cannot store up enough power throughout the day. You will still have to use the grid in at least a small capacity. With a separate battery bank, you will always have reserve power to rely on independently of the grid.
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Tips To Ensure A Great Deal
Even with all the great incentives available, installing solar still costs a pretty penny. Here are a few tips to make sure you get the best deal around.
Install energy efficiency measures
Installing energy efficiency measures is the easiest way to save money on your utility bills and its even cheaper than installing solar! Its certainly not as fun or cool as solar panels on your roof, but consider beefing up your insulation, weatherstripping around doors and windows, installing a few energy efficient appliances, and replacing all your old incandescent light bulbs with LEDs.
Dont know where to start? Many utilities will give you rebates for performing an energy audit, where a technician walks through your house and tests your doors, windows, and appliances to see how they affect your energy use. Theyll then provide you an itemized list of recommendations to cut your energy use.
All this is such an easy way to drop your energy needs, consider it a prerequisite to installing solar. And once youve dropped your energy use as low as possible, you can install a smaller solar installation, allowing you to spend even less money!
Just like any home improvement project, talk to a few different installers to see what equipment they offer and their costs.
Read everything carefully
Be sure to know how much electricity your installation will produce. Know how to estimate your total financial savings. Read through all the contract details. How about warranties?
Solar Panel Cleaning: $300$600 Per Year
It costs an average of $150 per clean to have your solar panels thoroughly cleaned. Considering that your system will lose roughly 1% efficiency every month when they are cleaned by rainwater alone, this means that solar panel cleaning costs are a worthwhile investment.
You should aim to get them cleaned quarterly or at the very least once per year. You could always clean them yourself, however.
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Commercial Solar Panel Costs
Since May 2014, Solar Choice has been publishing commercial-scale solar PV system prices for each of Australias capital cities across a range of popular system sizes. The data we use comes from our installer network database, which consists of about 150 reputable solar installation companies around the country. Companies in our network upload their pricing & product information for us to present to our commercial clients in our free & impartial quote comparisons so that the client can make an informed decision about who to pursue further discussion with.
Our Commercial Solar PV Price Index is published monthly, providing reliable ballpark figures on the going cost of solar panels in Adelaide, Brisbane, Canberra, Hobart, Melbourne, Perth, and Sydney.
Solar Choice manages tenders for a wide range of commercial solar projects around Australia. The figures in the tables below are based on data from our extensive network of solar installers, many of which specialize solely in commercial-scale solar projects.
All prices in the tables below include incentives available through the federal Renewable Energy Target as well as GST.