Thecostofsolarpanelshasdeclineddramaticallyoverthelastseveraldecadesand,withasharpriseinutilityelectricityratesin2022,homesolarnowoffersmorecostsavingspotentialthaneverbefore.
Infact,the2023HeatmapClimatePollfoundthat46%ofUSadultswanttopowertheirhomeswithsolarpanelsinthefuturewhile13%alreadydo.
So,what’sstandinginthewayofAmericanhomeownersandsolarpanelsThebiggesthurdleisoftenthecostofsolarpanels.Andlikeamonsterinahorrormovie,thecostofsolarpanelsisfarlessintimidatingonceyoushinesomelightonitandunderstandhowitworks.
Inthisarticle,we’llexplore:
Asalways,ourgoalistoempoweryouwiththeresourcesandknowledgetomakeeducateddecisionsduringthesolarprocess.
Thepriceofsolarpanelshasdeclinedsubstantiallyoverthelastdecadeastheindustryhasmaturedandreachedproductionatthelargestglobalscale.
Justlikecomputers,big-screenTVs,andcellphones,theeconomiesofscalethatsolarpanelsnowenjoyhaveproducedadramaticcostcurvethathasfundamentallychangedtheenergyindustry.
Utility-scalesolarinstallationsarenowcheaperthanallotherformsofpowergenerationinmanypartsoftheworldandwillcontinuetoreplaceolder,dirtierpowerplantsthatrunoncoalandnaturalgas.
Additionally,homeownersarenowabletoowntheirpowerproductionmorecost-effectivelythaneverbefore.
Lessefficientpolycrystallinepanelsaretypicallycheaperat$0.75perwatt,puttingthepriceofa400-wattpanelat$300.
Thecostofasolarpanelalsodependsonhowyoubuyit.Ifyoupurchasethroughafull-serviceinstaller,youwilllikelygetalowerpriceforeachpanelthanbuyingthemindividuallyfromaretailstore.
Therearetwomainwaystocalculatethecostofasolarsystem:
Afullyinstalledsolarsystemtypicallycosts$3to$5perwattbeforeincentiveslikethe30%taxcreditareapplied.Usingthismeasurement,5,000Wattsolarsystem(5kW)wouldhaveagrosscostbetween$15,00and$25,000.
Thepriceperwattforlargerandrelativelystraightforwardprojectsareoftenwithinthe$3-$4range.ClaimingincentivesliketaxcreditsandrebatescanbringthePPWevenlower.
However,thefollowingfactorsmaypushyoursolarpriceperwattintothe$4to$5range.
Priceperwatt($/W)allowsforanapples-to-applescomparisonofdifferentsolarquotesthatmayvaryintotalwattage,solarpanelbrands,etc.
Protip:Itcanbehelpfultoknowyoursolarpriceperwattbeforeandafterclaimingthe30%taxcredit.
Ultimatelymanyfactorsfigureintothepriceperwattofasolarsystem,buttheaveragecostistypicallyaslowas$2.75perwatt.Thispricewillvaryifaprojectrequiresspecialadderslikegroundmounting,amainpanelupgrade,anEVcharger,etc.
Anothermeasureoftherelativecostofsolarenergyisitspriceperkilowatt-hour(kWh).Whereasthepriceperwattconsidersthesolarsystem’ssize,thepriceperkWhshowsthepriceofthesolarsystemperunitofenergyitproducesoveragivenperiodoftime.
Netcostofthesystem/lifetimeoutput=costperkilowatthour
Youmayalsoseethisreferredtoaslevelizedcostofenergy(LCOE).
Whilepriceperwattismosthelpfulincomparingtherelativecostsofsolarbids,solarenergycostperkWhisbestusedtoillustratethevalueofsolarrelativetobuyingyourpowerfromtheelectricutility.
Forexample,theaveragecostofasolarsystempurchasedthroughsolar.comis6-8centsperkWh,dependingonthesizeofthesystem,typeofequipment,andlocalincentives.
Basedontheseprices,itcostsaround46centstodryaloadoflaundryusinggridelectricityinNewYorkandonly14centstodryaloadusingsolarpower.
Thereareafewwaystogetaroughestimateofhowmuchsolarpanelswillcostwithoutsittingthroughasalespitch.Theseinclude:
Let’sstartwiththequickestmethod:onlinecalculators.
Forexample,yoursolarsavingsdependslargelyonhowmuchutilityratesincreaseover25years.Mostcalculatorsassume3-5%annualinflationbasedonhistoricalaverages–butnobodycanknowforsurewherepriceswillgooverthenext25years.
Solarsavingsarealsogeographicallysensitivesinceeverystatehasdifferentincentives,electricityrates,sunexposure,andnetmeteringpolicies.
Forexample,asolarpanelcostcalculatorforCaliforniawouldhavedrasticallydifferentassumptionsthanacostcalculatorforNewYork.
Ifyou’drathermakeyourcalculationsoffline,thereareafewsimplestepstoestimatethecostofyoursolarsystembasedonyourelectricityusage.
Togetstarted:
Onceyouhaveyouraveragedailyelectricityuse,followthestepsinthegraphicbelow.Hereareafewtips:
Thethird–andleastaccurate–waytogetanideaofhowmuchsolarpanelswillcostforyourhomeistoseehowmuchsolarpanelscostforhomessimilartoyours.
Now,weabsolutelyencourageyoutotalktofriends,family,andneighborswhohaveinstalledsolarsystemstogetasenseofthepros,cons,andcosts.However,we’vedonealotofthatlegworkforyou.
Weanalyzedthousandsofsystemssoldonsolar.comin2022tofindtheaveragecostofsolarpanelsforhomesbasedontheirsquarefootageoflivingspaceandnumberofbedrooms.
Onaverage,solarpanelscost$8.77persquarefootoflivingspace,afterfactoringinthe30%taxcredit.However,thecostpersquarefootvariesbasedonthesizeofthehome.
Forexample,thepost-taxcreditcostofsolarpanelsfora2,500-square-foothomeisaround$20,000forarateof$7.96persquarefoot.
Buthowmuchdosolarpanelscostfora1,500-square-foothomeTheaveragesystemcostonlydropsby$1,000andthecostpersquarefootincreasesto$12.83.
Basedonsystemspurchasedonsolar.comin2022.SquarefootageperZillow.
Ifyoudon’tknowyourhome’ssquarefootage,youcaneitherlookituponZilloworgetaroughestimateusingthenumberofbedrooms.
Theaveragepre-incentivecostofhomesolaris$29,161forathree-bedroomhouse,or$20,412afterclaimingthe30%taxcredit.
However,asshowninthechartbelow,thenumberofbedroomsisn’tagreatindicatorofthesizeandcostofasolarsystem–andneitherislivingspace,forthatmatter.
So,youcanusethismethodtogetintherightballpark,butkeepinmindthattheprevioustwomethodsaremoreaccurate.
Onceyouhavearoughcostestimateforyoursolarsystem,it’stimetocompareittothecostofbuyingelectricityfromautilityprovidertogetasenseofhowmuchyoucansavebygoingsolar.
Yes,homeownersacrosstheUScansavemoneyonenergycostsbypoweringtheirhomeswithsolarpanelsinsteadofpurchasingelectricityfromautility.Thisisespeciallytruefollowingtherapidriseingridelectricityratesin2022and2023.
Homesolarisessentiallyawaytobuyelectricityinbulk–similartobuyingagiantcanofcoffeegroundsfromCostcoinsteadof50individualcupsatStarbucks.The$25canofgroundscostsmoreupfrontbutpaysforitselfafterjust9GrandeLattesat$3eachandnets$125insavingsoveritslifespan.
It’sthesameconceptwithhomesolar,justonamuchlargerscale.
Exactlyhowmuchmoneyyousaveamonthwithsolarpanelsdependsonafewmainingredients:
Thesefactorsvaryfromhouseholdtohousehold,solet’stakealookattheaveragemonthlyelectricbillwithsolarpanelsandwithoutsolarpanels.
Adjustingthesizeofyoursolarsystemandhowyoufinanceitgivesyoucontroloveryouressentialelectricitycosts–somethingyou’llneverhavebypurchasingelectricitysolelythroughautilitycompany.
Bypayingcashforsolar,homeownersmaximizetheirlifetimesavingspotentialbuttypicallyneedtowait6-11yearstorecouptheupfrontinvestment.
Whyisitfinanciallybeneficialtopayforsolarratherthanutilityelectricity
Homesolaralsoactsasatimemachine,ofsorts.Insteadofpayingthecurrentutilityrateforelectricity,thecostperkilowatt-hourofhomesolaristypicallyaround6-8cents–roughlywhatutilitieswerecharging40yearsago.
Solarpanelsareworthyourmoneyifyouwanttowantto:
However,ifyouhaveahunchthatgridelectricitypricesaresuddenlygoingtoplummetbelow8centsperkWhandstaytherefor25+years,thendon’tbuysolarpanels.
Thatamountsto$1,375fora$25,000solarproject.
Thisfigureoftenseemssurprisinglylowtohomeownerswhoareusedtolaborbeingabiggerchunkofthecostforcarrepairs,landscapingwork,andotherhomeupgrades.
It’sworthnotingthatinstallationcostsvaryfromprojecttoprojectbasedonthelocalwageandscopeoftheproject.Forexample,laborforspecializedelectricalworktypicallycostsmorethangenerallaborforpanelinstallation.Thisvariabilityiswhyit’stoughtofindasolarinstallationcostestimatoronline.
Overall,laborcostshavefalleninthelastdecadeastechnologyhasimprovedandthelaborforcehasmatured.Thechartbelowshowsthesolarpanelinstallationcostbreakdownsince2010.
It’snotablethat:
Attheendoftheday,theinstallationlabormakesupaverysmallchunkofthetotalcostofasolarsystem–andit’swellworthhavingprofessionalsinstallasystemthatyouwanttolastfor25yearsormore.
Somehomeownerswithadvancedknowledgeandexperienceinconstruction,circuitry,andlocalpermittingguidelines(nottomentionagoodamountoftimeontheirhands)cansuccessfullyinstallsolarpanelsuptoinspectionandinterconnectionstandards.
So,ifthereareproblemswiththeequipmentortheinstallation,likeapanelbrokenduringinstallationoraleakyholeintheroof,youareonyourowntosolveandpayforthem.
Giventherelationshipswithpanelmanufacturers,full-servicesolarcompaniescanofferamuchlowercostpersolarpanelthanretailestablishments.
Althoughhomesolarisalreadymoreaffordablethanpayingforutilityelectricity,thereareafewwaystoreducethecostofyoursystemandmaximizeyourenergycostsavings.
First,therearesolarincentivesofferedbyfederal,state,andlocalgovernments,inadditiontoutilityproviders.
Someexamplesinclude:
It’swellworthspending5-10minutessearchingforsolarincentivesthroughyourstate,county,city,andutilityprovider.
Thenextwaytoreducethecostofsolarpanelsistoshopforthelowestpricelikeyouwouldforcarsoranewpairofhikingboots.
InmostareasoftheUS,thereareatleastahandfulofsolarinstallerswillingtocompeteforyourbusiness.Gettingquotesfromatleastthreereputableinstallersgivesyouasenseofafairprice,weedsoutscammers,andgivesyouleveragetonegotiateforalowerprice.
Admittedly,ittakestimeandefforttoresearchinstallers,setappointments,andsitthroughsalespitchestogatherquotes.Solar.comsimplifiesthisprocessbyinstantlygeneratingdozensofquotesfromournetworkoftrustedinstallerssoyoucaneasilycomparequotesinapressure-freeenvironment.
Howeveryouchoosetodoit,comparingmultiplequotesiscrucialtoloweringyoursolarcostandsettingyourselfupforalong-lastingandproductivesolarinstallation.
Forexample,inFebruary2023,aFacebookpagecalled“SolarPanelRate”ranmultipleadsclaimingElonMuskwaspayinghomeowners$2,500totestoutnewsolartechnology.FurtherinspectionrevealedthattheaccountwasrunbythreeindividualsinIndonesiaandtheadsweredesignedtocollectpersonalinformation.
Thefallingcostofsolarpanelscoupledwiththerecentspikeingridelectricitypriceshavemadehomesolarareliablemeansofreducingyouressentialenergycosts.
Plus,therearezero-downsolarloansthatcanspreadoutthecostofsolarpanelsand,inmanycases,provideinstantenergycostsavings.
Installationaccountsforroughly5.5%ofthetotalcostofsolarprojects.However,non-laborsoftcostslikepermitting,inspection,interconnection,andgeneraloverheadmakeuparoundhalfofthecostofhomesolar.
Finally,neitherElonMusknortheUSgovernmentaregivingawayfreesolarpanels.Andiftheywere,theywouldn’tbeadvertisingitonFacebookandYouTube.
Steerclearoffreesolaradstoavoidgivingawaypersonalinformationorendingupinalong-termsolarlease.
Onesolarpanelisnotenoughtopowerahouse.Homesolarsystemstypicallyfeature10-20panelstoproduceenoughpowertooffset100%oftheaveragehouseholdelectricityconsumption.
It’salsoworthmentioningthatinstallingonesolarpanelatatimeisn’tveryefficient,astherearesoftcostsassociatedwithdesigning,permitting,inspecting,andinterconnectingsolarsystems.Homeownerstypicallygetthemostbangfortheirbuckbyinstallingatonceasmanysolarpanelsasthey’llneedtooffsetcurrentandnear-futureelectricityneeds.
Essentialelectricalsystemsdonotincludeelectricheatingorairconditioning,whichrequiremassiveamountsofelectricity.
However,it’sworthnotingthatsolarsystemsneedtobepairedwithbatterystoragetoprovidebackuppowerduringoutages.Solar-onlysystemsareautomaticallyshutoffduringoutagesasasafetyprecautiontoprotectthetechniciansrepairingthegrid.
Themaindownsideofsolarenergyisthatit’sintermittent.Inotherwords,solarpanelsneedsunlighttoproduceelectricity,andwhenthesungoesdownproductionstops.
Thisintermittenceposeschallengestogridoperatorsbecauseitcreatesaninfluxofenergyduringthemiddleoftheday,whenconsumptionisdown,andalackofenergyintheeveningwhenconsumptionispeaking.
Themostobvioussolutiontothischallengeisvariousformsofenergystorageincludingbatteries,pumpedhydro,compressedair,andthermaltechnologies.
Givenitsabundantsunshineandhighutilityelectricityrates,Californiaisoneofthebeststatestosavemoneywithhomesolar.
Infact,evenafterreducingthevalueofsolarexportsthroughNEM3.0solarbilling,Californianscanstillsavemoremoneywithsolarthanhomeownersinmostotherstates.UnderNEM3.0,it’smuchmorebeneficialtopairsolarsystemswithbatterystoragetouseasmuchofyourownsolarproductionaspossibleinsteadofexportingitontothegrid.
Manyinstallersareofferinglessexpensive“arbitrage”batterysystemsthatallowsolarownerstostoreandusetheirownelectricity,butdon’tprovidebackuppowerduringoutages(hencethepricedecrease).
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