Calculating Solar Power Costs
Once the above costs and benefits are determined, a solar system can theoretically be evaluated using the discounted cash flow method. Outflows at the beginning of the project would consist of installation costs , and inflows would arrive later in the form of offset electricity costs .
Rather than using DCF, the viability of solar power is usually evaluated by calculating the levelized cost of electricity , then comparing it to the cost of electricity charged by the local utility. The LCOE for household solar will typically be calculated as cost/kilowatt-hour – the same format commonly used on electricity bills. To approximate the LCOE, one can use the following equation:
LCOE = Net Present Value of the Lifetime Cost of Ownership / Lifetime Energy Output
The useful life of a PV solar module is generally assumed to be 25-40 years. The cost of ownership includes the maintenance costs, which must be discounted to find the NPV. The LCOE can then be compared to the cost of electricity from a utility remember, the relevant price is that which occurs during times at or near peak PV solar production.
Why Solar Installations Cost More In The Us Than In Germany
In 2011, residential solar system installers paid a little over $1.80 per watt for solar panels in both Germany and the United States. In Germany, installers added $1.20 to the cost of the solar panel to complete an installation. But in the U.S., they tacked on $4.36 per watt, more than three times as much.
A report released this month by Lawrence Berkeley National Laboratory explains why.
The most obvious difference between the United States and Germany is the total amount of solar power installed in each countrytheres five times as much installed in Germany.
The study concludes, however, that the learning curve isnt enough to explain the price disparityit might account for only half of it. Instead, based on a survey of U.S. and German installers, it seems that there are some fundamental differences in the U.S. and German markets that could keep prices higher in the U.S.unless something is done to address them.
U.S. installers also spend more on labor during actual installation . They pay more in sales tax . And they pay more for overhead .
The report lists some more line items. Part of the difference, for example, is due to higher costs for inverters in the U.S. But the report comes short of explaining the entire price differenceabout $1.30 of the price difference remains unaccounted for. The researchers speculate that some part of that difference is coming from U.S. installers taking higher profits.
How Recs Solar Panels Compare To Other Panel Manufacturers
There are four key metrics that you should review as you evaluate solar panel quality: efficiency, performance, warranties, and price. EnergySage has developed RECs solar panel reviews for each metric to help make your solar decision easier. Weve also created a comparison of RECs solar panels against other leading panel manufacturers that are frequently featured in offers to homeowners and businesses shopping for solar on the EnergySage Solar Marketplace.
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If Solar And Wind Are So Cheap Why Are They Making Electricity So Expensive
Clipper yacht Liverpool 2018 passes the Burbo Bank Wind Farm on August 14, 2017, off Liverpool,… England.
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Over the last year, the media have published story after story after story about the declining price of solar panels and wind turbines.
People who read these stories are understandably left with the impression that the more solar and wind energy we produce, the lower electricity prices will become.
And yet thats not whats happening. In fact, its the opposite.
Between 2009 and 2017, the price of solar panels per watt while the price of wind turbines per watt .
And yet during the same period the price of electricity in places that deployed significant quantities of renewables increased dramatically.
Electricity prices increased by:
What gives? If solar panels and wind turbines became so much cheaper, why did the price of electricity rise instead of
Electricity prices increased by 51 percent in Germany during its expansion of solar and wind energy.
One hypothesis might be that while electricity from solar and wind became cheaper, other energy sources like coal, nuclear, and natural gas became more expensive, eliminating any savings, and raising the overall price of electricity.
But, again, thats not what happened.
The price of nuclear and coal in those place during the same period was mostly flat.
What Makes Up The Cost Of A Solar System
There are several components in residential solar installations that affect the final price.
The cost can be grouped into two categories, hardware costs and soft costs. According to our data:
- Hardware accounts for 46% of average solar panel costs. This covers solar panels, solar inverter, and balance of system
- Soft costs account for 54% of average solar panel costs. This includes installation and labor, sales and marketing expenses, permitting and inspection fees, and installer margins.
The share of soft costs in the total cost of solar panels is another fact that often surprises consumers. However, the number makes sense when one considers the nature of solar panel companies and the installation jobs they perform.
Each home is different and requires a customized design and installation. Solar companies require staff with the proper skills and qualifications. And like other companies, they have to factor in profits, overhead expenses, and marketing costs.
Here is a more detailed breakdown of solar panel installation costs, based on the nationwide average solar panel installation cost of $2.49 per watt.Solar system cost breakdown for a 6kW system
*Cost before incentives
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How To Find The Best Price On Rec Solar Panels
The best way to determine whether REC offers the best solar panels for your home is to review multiple quotes with different solar equipment options before making a decision. When you compare all of your options on the EnergySage Solar Marketplace, youll find the right combination of price and quality that meets your needs.
Many of our qualified, pre-vetted solar installers offer REC solar panels in their quotes to EnergySage users. When registering, simply note in your profile that youre interested in receiving quotes that include REC solar panels for your home.
So Why Are Solar Panels So Expensive Actually Theyre Not
So I found some significant material costs in solar systems. But there is also a large installation cost element that a careful buyer can significantly reduce by shopping around, doing research, or installing the system themselves.
Then the initial solar investment can be further reduced by federal and local tax rebates and incentives.
After that, whatever system setup costs remain need to be spread across the life of the solar system by working out the payback period. The findings are that most solar systems pay themselves off only 1/3 of the way through their working life.
So in the long term, solar systems are most definitely not expensive. They are, in fact, incredibly cheap, and its a great idea to have one installed, especially while the government is offering you such good incentives to do so.
If you have any comments or questions about the price of solar systems, then please share them with others.
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Solar Panel Use Heats Up As Installation Costs Fall
When Mike Rain and his wife purchased their new house from Tri Pointe Homes at Bloom at Green Valley in Fairfield, Calif., in April 2020, they went from paying $50 to $80 per month for electricity at their previous home to paying nothing for a year. Thats because their new house came with a mandatory array of solar panels on the roof.
Our only choice was whether we wanted a system that generated three, four or five kilowatts of electricity, Rain says. Were empty-nesters with a 2,400-square-foot house, so we went with the smallest and less-expensive option. Our bills were always low in our old house because we lived in an area with mild weather and didnt use air conditioning.
Solar power seems like a natural fit in California, known for its sunny skies and liberal policies on environmental issues. In 2020, California became the first state to mandate that all newly built homes, with a few exceptions, must include a rooftop solar system.
Several factors came together in California that made a mandate unsurprising, says Kevin Wilson, national vice president of strategic sourcing and sustainability for Tri Pointe Homes in Los Angeles.
Wilson says architects in California are now designing homes to be aesthetically pleasing while easily accommodating solar panels.
Whether the rest of the country will follow Californias lead remains to be seen.
Pros And Cons Of Solar Panels For Your Home
Like most things, solar power has its benefits and drawbacks. At the same time, some economic costs may be defrayed by the social benefits to the environment and lowering your carbon footprint, which exceeds pure monetary evaluation.
Green energy that lowers your carbon footprint
Net metering allows you to sell back excess energy produced
You may be eligible for certain tax breaks
Installation and maintenance costs still high
Solar only works when the sun is out
Parts of the system need to be replaced every few years
Some tax breaks may have expired or will be expiring
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Why Is Solar Power So Expensive In America
Solar power is now as cheap as traditional energy sources in Italy and Germany, according to a new report. In terms of LCOE or “leveled cost of energy,” which weighs everything that effects a given energy source’s price from installation to maintenance solar has achieved “grid parity” in those places thanks in part to a combination of cheap installation costs, high electricity prices, and government subsidies.
Meanwhile, the cost of solar power in the U.S., though it has fallen off a cliff since the late 1970s, remains relatively high. So what gives? Why can’t we have cheap, clean solar power, too?
A big part of it has to do with demand. In 2011, Germany boasted more than 21 times the solar power, per capita, of the U.S, which helped to drive down the price. And given that imbalance, American companies had a comparatively tougher task recruiting customers, so they spent 10 times as much as their foreign counterparts did on marketing costs.
But the biggest factors keeping American solar from catching up are so-called “soft costs,” which include everything from fees and taxes to company overhead. For instance, while German installers added $1.20 per watt to the cost of each panel in 2011, American companies added $4.36 per watt. And according to the Department of Energy, soft costs make up 64 percent of the price tag on installing residential solar systems in the U.S.
The Future Of Green Energy: Wealth Redistribution
Due to the heavy push by moneyed interests, we will probably continue to increase our reliance on wind and solar energy.
Wed be better off investing in common sense ways to improve our energy efficiency . Doing so would actually save us money on power consumption, and reduce our carbon emissions .
Instead, weve invested heavily in green energy, which is about the least efficient way of solving the problem at hand.
Thats why I dont think its about the environmentat least for the guys at the topits about making money.
This is wealth redistribution, pure and simple.
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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.
The Cost Of Solar In The Us
On EnergySage, weve seen the cost of solar drop from $3.86 per Watt to $2.76 per Wattas of July 2021since the end of 2014 alone. That means in about five years, a small to medium-sized 6-kilowatt system has dropped in price by about $6,600 . The decrease in costs is even more pronounced from earlier in the 2000s, when solar prices were up over $7 per Watt for residential systems.
Whats more, this pricing information is for the gross installed cost of solar. In fact, federal, state, and utility incentives mean that the net installed cost of solar is much lower, even before accounting for the savings from reducing or eliminating your electric bill.
For instance, a 6 kW system with a $3 per Watt gross cost would only cost $13,320 after applying the federal investment tax credit, for an effective net cost of only $2.22 per Watt.
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Solar Twice As Expensive In Us As In Germany
What difference does policy make? Craig Morris says that a comparison of the low prices for installed solar arrays in Germany with more expensive arrays in the US is a good way to start answering that question.
More sun and higher prices? Some US states set the wrong incentives for solar development.
Typically, whenever the Anglo press speaks of German policy support for photovoltaics , we read of things like lavish subsidies and generous feed-in tariffs . So how does that sound when compared with the chart below?
The prices for US arrays were taken from RMIs Electricity Grid Defection study, while the German data come from Fraunhofer ISE . The German prices in euros were converted into USD at the historic average exchange rate by quarter year.
Here, we see that the price of a completely installed solar array has been and continues to be considerably cheaper in Germany than in the US. The gap seems to have been around two dollars all along. Now that the price in Germany has fallen to two dollars, solar is now twice as expensive in the US as it is in Germany.
The reasons behind unnecessarily expensive PV in the US are interesting, and I have written about them before. In a nutshell, the installation process in the US is laden with red tape, making a residential PV array as complicated as an infrastructure project whereas solar rooftops in Germany are as uncomplicated for homeowners as any other roof work on your own home.
Its Fine To Start Small
You can always start small and cover part of your energy needs, then expand as your budget allows.
Its hard to give a conclusive answer, since this is such an open-ended question. But we hear it most often from people who have quotes out with a turnkey installer.
A system that costs about $10,000 in materials, like this 7.56kW grid-tied system, might be marked up to $30,000 after installation costs from a turnkey provider.
Which explains why sticker shock is a common phenomenon in this industry.
So heres our advice: the best way to save money on solar is to install it yourself, or hire an independent contractor to complete the installation at a fraction of what a turnkey provider would charge you.
If the up-front cost is still a concern, the next solution would be to scale back to a more modest system design and then expand on it as your budget allows.
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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.
What Do Solar Panels Cost And Are They Worth It
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list ofour partnersandhere’s how we make money.
The rising cost of electricity from traditional sources makes solar installation seem like a no-brainer for many homeowners.
But the true cost of solar panels, and whether they’ll help you save money, depends on a few key factors. On average, installation and the system together can run between $15,000 and $25,000, according to the Center for Sustainable Energy.
Location largely affects electricity rates. The national average is about 13 cents per kilowatt-hour, according to year-to-date 2021 data from the U.S. Energy Information Administration.
Before you make the leap, learn how your electric bill, location and incentives can impact your wallet over time. Here are six steps to take to determine whether youll save more than you spend on solar panels.
» MORE: Find ways to save with NerdWallet
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