Solar panels have become a common sight on American rooftops in recent years. Residential solar panel costs have been at their lowest levels in over 30 years, as their cost of installation has fallen by over 40%!
In the last decade alone, solar has experienced an average annual growth rate of 42%. As solar costs continue to fall, it’s no surprise that nearly 1000 residential solar systems are installed in the United States every day. Modern residential solar panels boast technology advances that make their use more efficient. Currently, solar panels on homes are more affordable than ever before.
Solar Panel System Costs
Suppose you are installing solar panels on your home or business. In that case, the average price of a system is between $16,000 and $20,000 before you subtract the federal solar investment tax credit of 26% to which you are entitled when you install solar panels. According to this figure, the cost of solar panels will be between $2.60 and $3.35 per watt.
Once you consider the federal solar credit, the overall cost falls to around $11,500 to $14,800 – that’s almost 80% lower than where solar was ten years ago! Even though PV solar panels remain expensive, this fall in price means that many homeowners with suitable roofs can now reap the benefits of this energy-efficient investment.
Factors That Affect Solar Panel Installation Costs
The main factors that determine the price of a solar panel system are the system size needed, the location of your home, the amount of sun you can expect, local incentives, and the equipment that is used.
Solar Panel System Size
Obviously, the size of the solar panel system will significantly impact how much the installation will cost.
Generally speaking, solar systems are measured in kilowatts, which tells you how much power each panel will produce.
You need to determine how much solar energy system you must have based on how many kilowatt-hours (kWh) of electricity your home consumes, as well as by how much you want to reduce your electric bill.
A more extensive system will bring a higher total cost for installation, and the total cost will increase as the size of the system increases. Despite this, the cost per watt of larger systems is often lower because you can purchase the equipment in bulk, and other overhead costs are spread across a more substantial setup.
Your location plays into the costs of your system in a few ways. The most obvious one is probably just how sunny your area is. If your home does not get enough sunlight, you will require more panels to fulfill your energy needs, which will increase the cost of your energy needs.
There are also various state and local solar rebates and tax incentives that can help lower installation costs. The 26% federal solar tax credit, also called the Investment Tax Credit, significantly reduces solar installation prices, but there may be local programs that could lower the price even lower.
Lastly, local and state market conditions highly affect solar panel costs, such as the amount of competition between installers, job volume, overhead costs, and labor costs.
Equipment Type and Manufacturer
Brand dictates price with solar, as it does with most things. It’s not always the case that panels from certain manufacturers perform better than others, even when they’re more expensive. Jinko Solar, for example, offers panels at a much lower cost than premium brands like SunPower while offering almost the same specifications.
The solar panel brand doesn’t solely determine the price. Installation costs also vary depending on the other equipment used in a residential solar system, such as the type of inverter you choose. String inverters, for example, are less expensive than microinverters, but they produce more electricity.
You can also expect a slight increase in price based on the type of solar panels you install. Typically, homeowners choose monocrystalline solar panels when installing a solar panel system. Still, some may opt for polycrystalline panels if they would like to save a bit on the upfront costs of the system.
In addition, the type of rack installed affects how much the installation will cost. A more durable rack may be necessary if you live somewhere that experiences hurricanes or heavy snowfall.
It’s best to get in touch with some local installers for a quote based on your home’s unique circumstances and power requirements.
Solar Battery Costs
Many people don’t consider the added costs of adding battery backups to their solar panel system. The power storage is practical and sometimes necessary, depending on where you live.
But the fact is, depending upon the size of your solar and storage install, batteries can increase the overall installation cost significantly, sometimes even doubling the cost of a solar panel installation.
You should think carefully about the costs of batteries before going ahead with energy storage. Here are some of the main things to consider when buying batteries.
The Quality of the Batteries
Quality is an essential aspect to consider when we talk about solar panels when installing batteries. All energy storage systems currently on the market meet rigorous safety regulations. However, their quality can still vary, so you may have to pay more if you want a higher quality product.
The Number of Batteries
There is no such thing as a typical storage installation, and everyone has different storage needs. As a general rule, storage systems are less flexible than solar panel systems for sizing. When designing a solar installation, adding or removing a single solar panel is easy to fine-tune how much power the new system will produce.
However, with most solutions available, it’s difficult for you to fine-tune the size of the battery you install. This means that storage costs will vary significantly as a function of the total Kilowatt-Hour energy you will need to store and, thus, the total number of batteries you intend to use.
The On-Going Costs of Solar Panels
Aside from the initial costs for solar panel installation, there will also be some ongoing costs associated with maintaining the solar panels.
Solar Panel Maintenance Costs
Cleaning routinely and performing major repair work on solar panels are all part of solar panel maintenance. The average household will be required to pay $150 to have their solar panels cleaned.
Companies charge anywhere from $3 to $10 per panel, depending on the roof slant, the home height, and the number of panels installed. In some cases, firms charge flat rates for the cleaning of the solar panel system. According to recommended guidelines, you can expect to spend about $300 on your annual maintenance bill if you clean your system twice a year.
Your system may require additional repairs if it has been damaged. The cost of the repairs to your system will include both the equipment and the labor. The average price of labor per hour in the United States is $100.
Materials for solar repairs could be as low as $180 in some cases but could cost as much as $1,000 in other cases. In total, you can expect to spend anything from $200 to three thousand dollars depending on whether there is damage and how extensive it is.
There are four common types of damage to a home solar system. The repair costs will range depending on all the same factors that go into the initial installation or purchase of parts.
Replacing a Broken glass panel can cost between $20 and $350. Repairing a cracked panel can cost $100 to $400 or more. Just repairing a loose connection can cost $100+, and Inverter repairs or replacements can cost as little as $100 or as much as $2500.
Solar Panels Pay For Themselves Over Time
When considering the costs of solar panels, it’s important to look at things from a long-term perspective. First, when you finance solar panels, typically, you’ll be swapping your energy bill for your solar financing payment – so the monthly costs are generally a wash. Between the money you’re saving on energy bills, the increase in value to your home, and several other factors, your solar panels will more than pay themselves off over time.
Federal Investment Tax Credit (ITC)
There is no question that the federal investment tax credit (ITC) is the top solar incentive. With the ITC, you get back 26 percent of what you paid for solar on your taxes. The difference between a deduction and a tax credit is that rather than reducing your taxable income (as would occur with any charitable donations you make during the year), the tax credit directly reduces your taxable income. The federal ITC, instead of just taxing you on your lower income, offsets your taxes owed and even reverts to you as a refund.
State Tax Credits
Solar panel systems are tax-deductible in some states, working the same way as an ITC but with state taxes. State ITC amounts can differ significantly by state, but combined with federal ITC; they can amount to a sizable amount!
The state, municipality, or electric company may give you a rebate for installing solar panels. The rebates available generally last only a short period and are withdrawn once the designated amount of solar is installed in your area. By using these rebates, you can further reduce your system costs by up to 20 percent.
Solar renewable energy certificates (SRECs)
It should be noted that there are now many states that have renewable portfolio standards, which provide utilities with the requirements to increase their reliance on renewable energy sources, including solar power.
Suppose you reside in one of the states in question. In that case, your solar panels can generate solar renewable energy certificates (SRECs) that are linked to the amount of electricity you produce with your solar panels. As part of complying with state-level requirements for renewable energy, utilities buy your SRECs to prove that you are generating solar energy that is as environmentally friendly as possible.
Depending on the SREC market that exists in your state, selling your SRECs can generate several hundred dollars (or even thousands) in additional income per year.
Performance-based incentives (PBIs)
PBI, or performance-based incentives, is another common solar incentive that provides you with credit for each kilowatt-hour that you produce through your system. The main difference between PBIs and SRECs is that SRECs refer to the environmental attributes of solar generation (i.e., emission reductions).
At the same time, PBIs represent the actual electricity produced (i.e., the kilowatt-hours of production). PBIs, on the other hand, do not have to be sold via a market, and incentives are determined at the time of installation. Policy for performance-based incentives can either replace or exist alongside net metering policies.
Solving Solar is your Solar Panel Information Resource
As you can see, choosing solar panel systems can be a significant purchasing decision with many different aspects to consider. Keep all these things in mind when you are shopping, and you should have an efficient system that saves you money and produces power in an environmentally friendly method for many years to come.
If you’d like to get a better idea for solar panel costs, you can use our helpful solar panel calculator to get a fast quote today.