Solar Panel Cost

The cost of solar panels has declined dramatically over the last decade, and solar systems now offer more value to homeowners than they ever have before. That said, solar panels are only one component of a complete solar system, so there are other solar installation costs to consider as well. In this article, we’ll take a look at why solar panel cost has fallen so dramatically, the key terms for evaluating the cost of solar systems, and the many factors that will ultimately impact the price you pay for your solar system.

The Cost of Solar Panels Over Time

The cost of solar panels has declined substantially over the last decade as the industry has matured and reached production at the largest global scale. Since 2010, solar panel prices have fallen by roughly 90% while global solar deployment has grown by over 400%, and this incredible growth rate along the entire global solar supply chain has dramatically reduced prices.

(Source: https://www.greentechmedia.com/articles/read/solar-pv-has-become-cheaper-and-better-in-the-2010s-now-what)

Just like computers, big-screen TVs, and cell phones, the economies of scale that solar panels now enjoy have produced a dramatic cost curve that has fundamentally changed the energy industry. Utility-scale solar installations are now cheaper than all other forms of power generation in many parts of the world and will continue to replace older, dirtier power plants run on coal and natural gas. Additionally, homeowners are now able to own their power production more cost-effectively than ever before. There has never been a better time to install solar!

The Key Terms for Considering the Cost of Solar

To begin with, let’s define a couple of key terms that are commonly used in the solar industry to communicate the relative value of solar panels and the energy they produce.

Solar Panel Price Per Watt

The price per watt (PPW) of a solar system is the price that the homeowner will pay for every watt of solar being installed. Calculating the price per watt for a solar system is very straightforward – it’s simply the gross system cost (contract value) divided by the number of watts in the system. 

This figure allows homeowners to directly compare the relative value of various solar offers. Price per watt ($/W) allows for an apples-to-apples comparison of different solar quotes that may vary in total wattage, solar panel brands, etc.

Ultimately there are many factors that figure into the price per watt of a solar system, but the average cost is typically as low as $2.75 per watt. This price will vary if a project requires special adders like ground-mounting, a main panel upgrade, EV charger, etc. 

Solar Panel Price Per Kilowatt-Hour

Another measure of the relative value of a solar system is its price per kWh. Whereas the price per watt considers the solar system’s size, the price per kWh shows the price of the solar system per unit of energy it produces.

A kilowatt-hour is a unit of energy and is equivalent to consuming 1,000 watts – or 1 kilowatt – of power over one hour. You can think of watts and kilowatt-hours as speed versus distance – your instantaneous rate of power consumption is measured in watts (speed), while the total volume of power consumed over a period is measured in kilowatt-hours (distance). The kilowatt-hour is the basis for evaluating the energy costs from both the electric utility and solar. 

While price per watt is most helpful comparing the relative costs of solar bids, price per kilowatt-hour is mostly used to illustrate the value of solar relative to the base case of continuing to buy your power from the electric utility. While electric bills are subject to continuously increasing rates, purchasing a solar system can be thought of as pre-paying for 25-years of power at a locked-in price, protecting you from decades of rate increases. The average price per kilowatt-hour from electric providers in the United States is about 13 cents/kWh (and always increasing), the typical price range on Solar.com’s platform is 6-8 cents!

Solar Panel Installation Cost

It’s important to understand that solar systems involve a lot more than just the solar panels themselves. The panels are only one component of the overall solar system, and these other components actually form the majority of the cost of the project. Even the most basic solar system includes multiple important components, including the panels, an inverter, a mounting/racking system, conduits, and electrical hookups. Some systems can also require upgrades like roofing improvements and upgrades to the home’s main electrical panel.

Source: U.S. Solar Photovoltaic System Cost Benchmark: Q1 2017, NREL

As long as they’re undertaking the work to install a solar system, homeowners today often choose to incorporate additional upgrades along with the solar system. For example, solar batteries are an increasingly popular option for homeowners seeking resiliency against grid outages, and installing a home battery requires additional components like the battery, backup gateway, and critical loads panel. Another popular upgrade is installing an electric vehicle charger to accommodate for a future EV purchase.

In addition to these physical components, solar installations also involve significant soft costs like labor, engineering & design, permits, interconnection applications, and sales & marketing.

While it may seem surprising that the actual solar panels aren’t a greater share of the total project cost, it’s important to understand that these other components are critical to a well-functioning, high-quality solar system. 

Incentives

Incentives for solar and batteries are also important components of the overall cost of a solar system. The most widely available incentive is the federal tax credit, currently set at 26%. There are other important incentives as well depending on location, such as New York’s 25% state tax credit and California’s SGIP program for solar batteries. 

Be sure to consult a professional energy advisor to make sure you understand the full costs and available incentives for your solar system. Between the current incentives available for solar and the price reductions for panels over the last 10 years, there’s never been a better time to go solar!

The Solar.com Advantage

Now that we understand how to evaluate the relative cost of solar systems and the factors that contribute to overall installation costs, let’s consider the big question: how much do solar panels cost to install on your home?

The short answer is that it depends. Solar system costs vary widely depending on many factors like the amount of energy needed, the amount of roof space available, the kinds of panels and inverters being used, and whether a battery is included with the solar system. The average cost for a solar system is around $20-30,000 (before incentives), but the system size is proportional to the amount of power needed. Especially in places like California and New York, system payments are typically lower than the electric bill the homeowner is paying for anyway!

With an investment of this size, homeowners typically have two primary concerns:

1. That they have great pricing for the system they’re having installed, and
2. That the great pricing they get doesn’t come at the expense of high-quality workmanship and a fantastic customer experience 

Fortunately solar.com was founded to address these concerns and ensure a positive experience throughout.

As a virtual platform, solar.com has been structured from the very beginning to have the lowest costs in the industry. Most companies rely on expensive marketing campaigns and in-home salespeople to sign up homeowners, which leads to an extremely high cost of acquisition for every system they install. By operating virtually, solar.com saves installers on those costs, and those savings are passed along to you!

Here is a direct comparison between average market pricing and solar.com’s average pricing in some of the largest solar markets in the country, according to data from the National Renewable Energy Laboratory:

That said, fantastic pricing isn’t enough. Homeowners also need to feel confident that they’ll have the highest-quality workmanship on their home and have a smooth installation process. To that end, solar.com employs a rigorous vetting process to ensure that only the best solar installers have access to our platform and customers. Homeowners who use our platform also have a dedicated Customer Success Representative who will advocate to the installer on their behalf to make sure their system is installed as quickly and seamlessly as possible.

Conclusion

Solar panel costs have fallen dramatically over the last decade and made solar systems more accessible to homeowners than ever before. Knowing the key terms for evaluating solar system costs and the primary components of solar systems helps to understand the most important considerations that factor into the cost of solar systems. While it might seem like a lot to consider, our Energy Advisors are ready to guide you through the process and connect you with bids from fantastic installers at industry-leading prices!