Estimate Residential Solar Panel Cost
The brunt of the expense with solar panels is in installation and the purchase of the actual panels.
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Minimal long-term expenses can make up for the upfront costs. Most systems dont require much maintenance and are designed to last for 20 years or more with little change to the amount of electricity produced, Nilsen says.
When calculating the total price, consider how much energy you regularly consume your usage is listed on your monthly utility bill and what size system will generate the amount needed. Some tools, like the SolarReviews calculator, estimate the system size for you.
With installation, an average residential 5kW size system costs between $3 and $5 per watt, according to the CSE, which results in the $15,000 to $25,000 range. That cost is before any tax credits and incentives.
If you know your current energy usage, you can calculate how much youll need to pay for solar panels.
Then comparison shop for solar panels as you would other big-ticket items, such as a car or TV, says Vikram Aggarwal, CEO of the solar marketplace EnergySage. Some companies lower installation costs through rebates and other programs.
Aggarwal recommends getting quotes from three to five contractors. EnergySage compiles solar companies customer reviews, certifications, Better Business Bureau profiles and other information to help you find reputable providers.
How Much Does One Solar Panel Cost
Solar panels normally retail for around $.70 to $1.50 per watt and range between 150 and 350 watts per panel, making the average cost of a single panel between $100 and $650. If you’re installing one panel, high-quality, high-output options are ideal. Here’s a look at the efficiency of common panel types:
- Monocrystalline panels: 17%-24% efficient
- Polycrystalline panels: 15%-20% efficient
- Thin/film panels: 7%-14% efficient
Many retailers sell panels individually and as part of a larger system. Its important to factor hardware and installation costs into your single-panel project as well. This portion of your installation can make up as much as 30% of your overall cost.
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
|$14,160 $16,800||$23,600 $28,000|
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How Many People Are Having Solar Panels Installed
Residential solar panel installations saw a huge peak in the 2015/16 financial year, with 95,122 0-4kW solar systems installed. Installations have dropped off a bit since then but are beginning to rise again with 32,370 installed in 2018/19 compared to 19,708 the year before.
With prices at a much lower level than they were around 10 years ago, its no surprise that the number of installations is beginning to rise again. If youre interested in generating your own renewable solar energy then you can get free quotes from up to 3 solar installers using Solar Guide. All you have to do is complete our simple online form.
What Is A 5kw Solar System
The 5kw solar system is a power generation plant that is made up of panels to harness sunlight, which will then convert it into electricity. Its important to know what youre looking for when trying to decide between different kW ratings- otherwise, youll end up with a system that doesnt meet your needs.
A higher kw value often correlates to more savings especially in northern latitudes as theres a greater amount of sunlight hours during these months as opposed to summer months when theyre not as plentiful.
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What Is Driving The Declining Cost Of Solar Power
One of the main drivers bringing down the cost of solar power in the last decade is the tremendous growth in solar panel installation. Solar generation has experienced an average annual growth rate of 49%, which activates whats called the economy of scale. Thanks to increasing demand across the private and public sector for clean electricity, there are now more than 89 gigawatts of solar capacity installed nationwide, enough to power 16 million homes.
Add to that the impact of technological improvements and a competitive marketplace among a large base of experienced, internationally active project developers, and you have all the ingredients for a financial adjustment in the cost of solar.
Thus, solar panel installation cost has dropped by more than 70% over the last decade, leading the industry to expand into new markets and deploy thousands of systems nationwide.
Over the next 20 years, solar research firm Wood Mackenzie expects more than 2.6 terawatts of solar power to come on stream globally, taking renewables share of the worlds power capacity, including wind power, from 10% today to an impressive 30%.
And while the solar panel cost decreases, advancements in solar panel materials and methods used for fabricating photovoltaic solar cell has gotten better, too! Keep reading to learn more.
How Much Does It Cost To Install Solar Panels
The average cost to install solar panels in the United States is about $12,000 after federal tax incentives. On the low end, you can install a smaller system for around $5,000, while a high-priced Tier 1 solar panel system can cost $40,000 or more.
There are additional costs that go into an installation project beyond the price of panels. In fact, only about a quarter of the installation costs are actually for the panels. Labor costs, operational costs and additional equipment, such as inverters and control circuitry, make up the rest of the price.
Solar energy companies install the solar panels, provide maintenance and offer warranties on both the panels and the work. These additional services arent free, but they are often worth it. A few additional factors affect the price of solar panel installation.
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Is Solar Energy Expensive
The size of your panel installation and the needs of your home will affect your costs. An average-sized system will cost between $25,000 and $35,000. Larger installations will require more hardware, planning and construction time. This can further increase costs. While solar panels are expensive, they have distinct benefits:
- Savings: An average-sized system can reduce up to 50% of your monthly electricity bill. Over a period of 20 years, these savings can add up to $30,000, based on your location and energy usagae. Federal tax incentives are also making it easier to purchase systems.
- Flexible payments: Solar purchase power agreements allow homeowners to purchase their panels with little to no money down. PPAs give homeowners immediate access to utility savings.
- Increased Home Value: Lower utility bills improve the value of your home. In fact, the National Renewable Energy Laboratory concluded that homes with solar panels sold for 17% more than homes with conventional utilities.
How Much Will The Whole Installation Cost Me
While it can be useful to know the price per solar panel, the real price comes from the entire solar power system and the installation. We are not a DIY-focused site, so for this cost analysis we are going to focus solely on installation costs through a certified solar installer.
Beyond just the cost of solar panels, there are many costs that go into a full-scale solar installation on your home. Here is a quick breakdown of all the costs that go into an installation:
- 25% Solar Panels
- 45% Operational Costs
We will do a future post with a full breakdown of these costs, but what is the actual cost of a solar power installation on your home?
Lets start by looking at the average installation. The average installation on an American home is a 5 kilowatt system. For 2020, the average cost per watt of solar systems in the US is $2.96 cents.
So lets do the math! If we multiply 5,000 watts by $2.96, we get $14,800.
But wait, dont forget about the Federal Solar Investment Tax Credit! With this credit , you save 26% of your total solar installation cost through a tax credit. When we take this 30% credit out of $14,800, we arrive at $10,952.
The average cost of the average solar system in the United States is approximately $10,592 after available tax credits.
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Examining The Recent Growth Of The Solar Energy Industry
The solar energy industry has experienced unprecedented growth in just the past 10 years. Why? Its all thanks to the Solar Investment Tax Credit a federal policy enacted in 2006 that offers discounts to homeowners, business owners and utility-scale solar generators who want to install solar panels either on their roof or on the ground like a solar farm.1 Since then, the industry has experienced an average annual growth rate of 42% and has created tens of thousands of jobs. In fact, according to the Solar Energy Industries Association:
- More than 100 gigawatts of solar capacity installed across the U.S. as of 2021 which is enough power to light 18.6 million homes.
- More than 230,000 Americans at more than 10,000 companies are employed by the solar industry.
- The cost of solar systems has dropped by more than 70% over the last decade.
- Prices as of Q4 2020 are at their lowest levels in history.7
Even better, as prices decrease for consumers, the quality, durability, and efficiency of PV technology increase. Its the ultimate win-win scenario, and its one that deserves a critical examination so homeowners can be educated on exactly how they can benefit from getting a solar power system installed on their homes.
Cost Of Diy Solar Panels
The cost of DIY solar panels runs $2,000 to $20,000 for a kit ranging from 2kW to 10kW. These kits include everything you need to install your own solar array. However, you may even look to building your own panels.
The costs to make your own system and build it from scratch is going to vary quite a lot depending on you level of skill. Its a highly technical and specialized field. If you have a high level of electrical skills, you may be toying with the idea of building your own solar panels. The cost of solar cells and the silicon wafers used to create them are available to purchase individually. To build your own, you would typically put 60 of these wafers onto a backing and wire each of them. You would then need to connect this to an inverter.
Consider, however, that there are several risks associated with building your own, including:
- You can’t be sure of the quality of solar cells purchased.
- Homemade panels are often a fire hazard.
- Many tax credits and incentives will not apply when systems are constructed outside of approved facilities.
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Remember Economics Supply And Demand
As a mini refresher, the following are the four basic laws of supply and demand:1. If demand increases and supply remains unchanged, then it leads to higher equilibrium price and quantity.2. If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and quantity.3. If supply increases and demand remains unchanged, then it leads to lower equilibrium price and higher quantity.4. If supply decreases and demand remains unchanged, then it leads to higher price and lower quantity.
Since the very beginning of solar panel production and installation, the demand and supply for solar panels have shifted throughout time. Slow or stagnant demand alongside limited supply was the economic beginning of solar panels an economic status that has continually changed even till today.
Previously, silicon supply was more limited thus, contributing to the high cost of production and pricing. In the last 10 years or so however, with operations to produce more silicon supply, prices have been dropping for solar panels making it more affordable for customers as well as more beneficial toward their investment goals.
If enough solar energy can be used to power the residential property or commercial property and outweigh the cost of conventional electricity, then the solution and decision making for customers becomes simple.
Today, many local government jurisdictions have also provided subsidies and incentives in order to drive a greener environment.
Solar Costs Over Time Continue To Fall
A solar panel system hasnt always been $2.76/W. As recently as five years ago, the cost of solar panels was almost 20 percent higher than it is now:
Prices will likely continue to fall even more in the future. The solar industry is still young, and theres plenty of innovation still to come. As manufacturing and installation processes mature and become even more efficient, solar shoppers will hopefully start to see some of those cost savings impacting their sticker price for solar.
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Solar Panel Monthly Cost
If you purchase your solar panel system, they have no ongoing monthly costs. However, if you do not want to purchase the system upfront, you have the option of leasing your panels monthly. This costs between $50 and $250 a month, depending on the system size. It is only advisable if your electric bill is considerably higher than these figures to offset your monthly energy costs. Otherwise, you may find that purchasing gives you a better overall return on your investment.
Solar power might appear expensive, but you are paying for power anyway. The difference is after several year with solar your system is paid for. After several years of paying your electric bill, month after month, with power costs going up year after year, the only thing you have earned is the right to continuing doing it for the rest of your life.
Leasing Vs Buying Solar Panels
Solar leasing has become relatively popular as more people hope to save on their energy bills without having to pay a huge amount of money to purchase a solar panel system. However, leasing and buying both have pros and cons. You often pay more over time for solar leasing, with costs of between $50 and $250 a month. This makes the most sense if you have higher-than-average energy bills. This could be due to higher electricity costs in your area or because you use a lot of electric-based appliances, such as an HVAC system.
With leasing, monitoring and maintenance are included. This may give you peace of mind. With owning, you get a full return on your investment within 10 years. This can actually save you more money long-term than it would have with leasing.
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Additional Solar Panel System Costs
There are a few things youll want to add to your solar energy systems total cost to get the most accurate price estimate. Here are a few additional factors that will impact how much your solar panels will cost:
- Labor costs Local labor costs for solar installation will change depending on your area and the average costs solar installers charge in your area.
- Installing solar mounts The costs to install the racks that hold your residential solar panels will effect cost as well. There are a few options for solar mounting.
- Installing solar inverters A solar inverter will need to be installed to transform direct current power from the panels into the alternating current you can use in your home
- Other costs: There may also be costs for any local permit fees, inspection fees, and taxes on the solar panels.
With the fall in solar panel prices, these soft solar panel costs now constitute the bulk of what you pay when you install solar for your home.
Fortunately, as more people adopt solar power, soft costs have fallen as a resulta trend thats very likely to continue in the future. An analysis by the federal governments National Renewable Energy Laboratory discovered that installed prices have fallen at an average annual rate of 13% to 18%.
Always make sure to speak with a local solar professional to get a more accurate estimate of what your installation will cost.
What Are You Really Buying When You Get Solar Panels
In short, cost savings and environmental benefits. If you install a residential solar system in your home, youll drastically reduce your carbon footprint, save thousands of dollars on your electric bill over the lifetime of the system , increase your property value, and achieving a significant return on investment . National energy statistics indicate, at the time of this writing, that the average payback period for installation of a residential solar system is about five years. In some states, with extraordinarily high energy costs , the Department of Energy estimates a cost savings of over $60,000 in 20 years. How about the value of your home? Its been found that installing solar panels will increase your property value. But, how and why? According to the U.S. Department of Energy, property values increase $20 for every $1 of utility savings per year. With a 5 kW unit installed in your home, you could easily increase the value of your home by at least $20,000.
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