Naturally, one of the first questions we’re asked is how much do solar panels cost.
Unfortunately, a solar panel system is not a one-size-fits-all solution. This is a difficult question to answer without knowing your site details and other information. We discuss several variables (system size, location, equipment, etc.) below that will impact the final installation cost.
While we may not be able to provide an exact price for your particular site, this blog offers estimated numbers for the average-sized commercial and residential systems. These estimates will give you a general idea of what to anticipate as you begin researching your solar investment.
Understanding Solar Panel Costs in 2024
Over the past decade, the cost of solar panels has seen a dramatic decrease. This price drop is largely due to advancements in technology and the increased efficiency of solar panels, which allow for greater energy production at a lower cost. Additionally, market competition has intensified, leading to lower prices as manufacturers and installers vie for customers.
In 2010, the average cost of a residential solar system was about $7 per watt. Fast forward to 2024, and that cost has decreased by more than half. This significant reduction has made solar power a viable option for many more homeowners and businesses.
In addition to the natural decrease in costs, various state and federal incentives further reduce the financial burden of installing solar panels.
The 30% federal tax credit for residential solar systems substantially lowers the overall cost, making solar energy even more affordable. After applying these incentives, a typical homeowner can expect to pay between $18,000 and $38,000 for 5 kW to a 15 kW solar panel system.
For commercial solar systems, tax incentives and grants can cover 60-90% of the total cost within the first few years after installation. This means that after applying these incentives, a business can expect to pay between $65,000 and $210,000 for a system ranging from 50 kW to 200 kW.
Why House Size Doesn’t Impact Solar Panel Costs
Contrary to popular belief, the size of a house doesn't directly impact the cost or amount of solar panels needed for installation. This is a common misconception that often confuses homeowners considering solar energy. When installing solar panels, the primary goal is to offset as close to 100% of your electricity usage as possible, regardless of the size of your home.
Electricity Usage Determines Solar Needs
The key factor in determining the number of solar panels required is the household's electricity consumption, not the physical size of the house. Different households have varying energy needs based on their lifestyle, appliances, and the number of occupants. For example, a 1,200 sq ft home with electric heating, an electric vehicle, and four residents is likely to use significantly more electricity than a 2,000 sq ft home with a single occupant who uses oil for heating.
Roof Size Can Be a Factor
The only time the size of the house plays a role is in relation to the roof size. The roof must be large enough to accommodate the necessary number of solar panels to meet the household's energy needs. A small house with high energy consumption will require a larger system and, therefore, more roof space compared to a larger house with lower energy consumption.
A ground mount system is an option for those who do not have adequate roof space for solar panels.
Average Solar Panel Costs by Solar Panel Type
When considering solar panel installation, it's essential to understand that not all solar panels are created equal. Different types of solar panels have varying efficiencies, lifespans, and costs. In this section, we'll compare the costs and characteristics of monocrystalline, bifacial, and thin-film solar panels. We'll also examine the emerging technology of solar shingles and how they compare to traditional solar panels.
Monocrystalline Solar Panels
Monocrystalline solar panels are the most efficient and longest-lasting type available. They are made from single-crystal silicon, which allows electrons to flow more freely, resulting in higher efficiency rates. Due to their high efficiency and durability, monocrystalline panels are typically more expensive than other types.
Bifacial Solar Panels
Bifacial solar panels are designed to capture sunlight on both the front and back sides of the panel, thereby increasing their overall energy production. They are typically made with transparent or semi-transparent back sheets with dual glass layers, allowing them to harness additional reflected and diffused light from the environment.
Thin-Film Solar Panels
Thin-film solar panels are made from a variety of materials, including cadmium telluride, amorphous silicon, and copper indium gallium selenide. These panels are lightweight and flexible, making them ideal for certain applications. However, they are generally less efficient and have a shorter lifespan compared to crystalline panels.
Solar Shingles vs. Solar Panels
Solar shingles are an innovative alternative to traditional solar panels, designed to blend seamlessly with your roof. They serve a dual purpose by acting as both a roofing material and a source of solar energy. While they offer a sleek and aesthetically pleasing option, they come at a higher cost compared to standard solar panels.
Tesla’s Solar Roof is another competing option for solar shingles, but it is significantly more expensive than other solar shingles and, especially, solar panels.
Average Solar Panel Costs by Solar System Size
Every home or business has its own unique energy demands, and the cost of solar panels can vary significantly based on the size of the system needed to meet those demands. Larger systems that produce more energy will naturally come with higher upfront costs, while smaller systems will be less expensive. It’s important to choose a system size that aligns with your energy usage to maximize savings and efficiency. Here’s a breakdown of solar system costs by size.
What Goes into the Cost of Installing Solar Panels?
Selecting the Installation Method: Rooftop, Ground, or Carport
There are two main installation methods for solar: roof mounts and ground mounts. The third, less common method is a carport.
Roof mounts are attached to your existing roof structure. They generally cost less than ground mounts or carports due to lower labor and fewer components.
Solar can be installed on metal, shingle, and flat roofs. Each one requires different components and varying levels of labor. Shingle roofs require a specific flashing piece to attach the panel racking to the roof. For a ribbed or standing seam metal roof, the racking is attached directly to the metal. Panels are installed on a flat roof using a ballast mount - a tray held in place by a concrete block.
Ground mounts and carports are great options for homes and businesses without suitable roofs for solar panels. In most cases, this type of system can be installed at a location that offers optimal sunshine for the best performance.
The trade-off is ground mounts, and certainly, carports tend to cost more than installing solar panels on your roof. This is mainly due to the increased amount of labor and the additional structure needed to hold the panels.
However, there are instances where a ground mount, being situated in the perfect location, may require fewer solar panels, ultimately balancing out the cost.
Type of Equipment You Select
Solar Panels - Where the Power Comes From
There are two basic variables with solar panels: power density and color. Power density is the amount of power that a solar panel can produce per unit of size. For example, a solar panel of the same size may produce between 400 and 600 watts, depending on the power density. Generally speaking, the more power-dense the panel, the higher the cost per watt.
Color is the other variable with solar panels. The basic panel has a blue cell, white back sheet, and silver frame. Modules with a black frame, black back sheet, or black cell are generally more expensive.
Solar Inverters: The Brains of Your System
There are three types of solar inverters: String Inverters, Microinverters, and String Inverters with Power Optimizers.
String Inverters link solar panels together in one or multiple groups. String inverters tend to be more cost-effective than other types of inverters.
Microinverters are installed on each individual panel. Although this type of inverter has its benefits, they tend to be the most expensive type of inverter.
Power optimizers have many of the benefits of micro-inverters. They are generally more expensive than string inverters but less expensive than micro-inverters.
Your Energy Consumption
Our goal is to design your solar panel system to offset as much of your electricity consumption as possible while ensuring the highest possible return on your investment. The higher your electricity bill is, the more solar panels, inverters, and equipment the system will require.
The Amount of Shading on Your Solar Panels
The amount of shade that a system will experience has a direct impact on the placement and quantity of solar panels. It can also impact the type of inverter that is used.
If a system is installed in an area with shading, it may require additional panels and microinverters to meet the customer’s energy coverage requirements. On the contrary, a system in full sun could produce the same amount of energy with fewer panels and string inverters.
Your Local Weather Patterns
Weather patterns in each region are different. Some locations receive more sun than others. Other regions receive more snow. Our systems are designed using local weather data. This data will impact the system size and the necessary equipment.
The Utility Interconnection Cost
Interconnection is the process of connecting the solar system to the power grid. Each local utility has specific requirements that must be followed. Some of these requirements could impact the type of meter you need or whether transformer upgrades are required.
The interconnection cost is different for each project, depending on how much solar is already in your area, the age and strength of the equipment on your line, and the size of the solar panel system.
The Distance from the Solar Panels to the Interconnection Point
Since the power produced by the solar system must be transported to the utility meter, the farther the solar panels are from the interconnection point with the utility, the higher the installation cost will be. This is due to the conduit installation or trenching required, as well as the size of the wire required (the farther the distance, the larger the wire is required to be).
The Cost of Solar Panels For A Business
The average commercial solar panel system will cost between $1 and $2.50 per watt. Businesses should expect to pay between $125,000 and $500,000+ before any tax incentives or grants are utilized. This cost will vary greatly depending on the size of the system, installation type, and various other factors we covered above.
With the available state and federal incentives, most commercial solar owners could receive 60-90% of the system’s cost back within the first few years after energizing the solar panel system.
The chart below shows average installation costs for commercial solar systems, covering an average monthly electric bill of $600, $1,200, and $2,400.
The Cost of Solar Panels For Homeowners
The average residential solar panel system costs between $2 and $3 per watt to install. This means you should expect to pay between $25,000 and $50,000 for solar, depending on various factors such as the size of the system and the type of equipment used.
After utilizing the 30% federal tax credit, homeowners can expect to pay between $18,000 and $38,000 for solar panels.
The chart below shows average installation costs for residential solar systems, covering an average monthly electric bill of $60, $120, and $180.
The Overlooked Costs of Solar Panel Installation
If you’re considering installing solar panels at your home or business, it’s crucial to be aware of more than just the upfront costs. While solar energy offers numerous long-term benefits, there are several often-overlooked costs that homeowners and businesses should be aware of before making the investment:
1. Maintenance
While solar panels are generally low maintenance, they do require occasional cleaning and inspection to ensure optimal performance. Depending on the location and environmental factors, regular maintenance may be necessary to keep the panels free of dirt, debris, and shading from nearby trees or buildings.
2. Potential Roof Upgrades
Before installing solar panels, it's essential to assess the condition of your roof. If your roof is old or in need of repairs, it may be necessary to invest in upgrades or replacements to ensure it can support the weight of the solar panels and withstand the installation process.
Additionally, if your roof requires maintenance or repairs in the future, it may be necessary to remove and reinstall the solar panels, adding to the overall cost.
3. Inverter Replacement
Solar inverters are essential components of a solar panel system that convert the direct current (DC) electricity generated by the panels into usable alternating current (AC) electricity for your home or business. Over time, inverters may need to be replaced due to normal wear and tear, technological advancements, or malfunctions.
Thankfully, your manufacturer’s warranty will most likely cover the replacement of your inverter. However, you would be responsible for the labor to diagnose and fix the issue (unless you have Paradise Energy’s Triple Ten Guarantee).
4. Repair Costs
While solar panels are designed to be durable and long-lasting, they are not immune to damage from severe weather events, accidents, or other unforeseen circumstances. Repairing or replacing damaged panels can be expensive, so it’s essential to consider the potential for repair costs when budgeting for solar panel installation.
Solar Panel Cost vs. Return on Investment
It’s natural to weigh the initial cost of solar panels against the potential return on investment (ROI). While the upfront expense may seem significant, understanding how solar panels pay for themselves over time is crucial for making an informed decision.
The upfront cost of installing solar panels can vary depending on factors such as system size, location, and available incentives. However, it's important to consider the potential long-term savings on energy bills. On average, a 10-kilowatt solar power system can save a typical household about $1,440 per year or $120 per month. Over time, these savings can offset the initial investment, leading to significant financial benefits.
Three Ways Solar Panels Pay for Themselves:
1. Reduced Energy Bills
One of the primary ways solar panels pay for themselves is through reduced energy bills. By generating your electricity from solar energy, you can significantly decrease or even eliminate your reliance on traditional utility providers, resulting in substantial savings over time. These savings can help offset the initial cost of installing solar panels and contribute to a positive ROI.
2. Pay Fewer Taxes
Additionally, homeowners and businesses can take advantage of various federal and state incentives to offset the upfront costs of solar panel installation. These incentives, such as the federal solar investment tax credit (ITC) and depreciation for commercial installations, can significantly reduce the overall cost of installing solar panels, making them more financially accessible for many individuals and organizations.
By leveraging these incentives, you can accelerate the payback period for your solar panel system and increase your overall ROI.
3. Increased Property Value
Another way solar panels help pay for themselves is by increasing the value of your property. Homes and businesses with solar panel systems are often valued higher than those without, making solar panels not only a smart financial investment but also a valuable asset that can enhance the resale value of your property. This increase in property value can further contribute to a positive ROI over time.
Understanding the ROI of Solar Panels
The average ROI of solar panels in the U.S. is approximately 10%. This means that, on average, you'll make a profit of $10 for every $100 you spend installing a solar system. However, it's important to recognize that ROI percentages can vary based on factors such as location, system size, and available incentives. While some homeowners may experience lower returns or longer payback periods, others may see higher returns exceeding 20%.
If you want to learn more about the ROI of residential solar panels, or the ROI of solar panels in a particular state, read our blog: The Payback and ROI of Residential Solar Panels.
If you want to learn more about the ROI of commercial solar panels, or the ROI of solar panels in a particular state, read our blog: What is the Average ROI for Commercial Solar Panels?
Reducing Solar Panel Costs
Federal and State Incentives for Solar Panels
When evaluating the cost of a solar panel system, it is crucial to take into account the numerous incentives available for solar panel owners. These incentives can significantly impact the overall cost and make solar panel installation a more financially viable option.
The readily available incentives for a solar system investment are:
- Reduced monthly electric bills - that's sustainable savings that you can bank on
- Protection from rising energy rates and independence from your utility company - You're in control
- For commercial projects, the 30% federal tax credit can be used to recover owed taxes from the prior three years. Additionally, this can be carried forward 22 years for businesses and 12 years for homeowners.
- Businesses and farms can utilize accelerated depreciation to quickly offset additional tax liability.
- Farmers and other rural businesses may qualify for a 50% USDA Reap Grant
- There are many local government and utility incentives
- It’s sustainable and good for the environment
Comparing Quotes
Obtaining multiple quotes from different solar companies gives you valuable insight into the range of pricing options available in the market. Each solar installation company may offer different packages, equipment options, and financing plans, all of which can impact the overall cost of your solar panel system.
Ensuring Competitive Pricing
By comparing quotes, you can identify outliers and ensure that you're getting the most competitive pricing for your solar panel installation. Some companies may offer discounts or special promotions, while others may provide more comprehensive warranties or additional services at no extra cost. Without comparing quotes, you may miss out on potential cost-saving opportunities.
Finding the Best Deal
Ultimately, the goal of comparing quotes is to find the best deal for your solar panel installation. This doesn't necessarily mean choosing the cheapest option; instead, it's about finding the most value for your investment. Consider factors such as equipment quality, installation experience, warranty coverage, customer reviews, and ongoing maintenance support when evaluating quotes to make an informed decision.
Tips for Comparing Quotes
- Request quotes from multiple reputable solar installation companies in your area.
- Ensure that each quote includes detailed information about the proposed solar panel system, including equipment specifications, installation costs, warranties, and financing options.
- Don't hesitate to ask questions or seek clarification on any aspects of the quotes that are unclear.
- Take your time to carefully review and compare each quote before making a decision.
In conclusion, comparing quotes is an essential step in the solar panel installation process. By obtaining multiple quotes and carefully evaluating them, you can ensure competitive pricing and find the best deal for your solar energy needs.
DIY Solar Installations: Pros, Cons & Costs
Thinking about taking the DIY route for your solar panel installation? It's an appealing idea for many homeowners looking to save money and take control of their energy production. However, DIY solar installations come with their own set of pros, cons, and costs to consider before diving in.
Pros of DIY Solar Installations:
1. Cost Savings
One of the most significant advantages of DIY solar installations is cost savings. By eliminating labor costs associated with professional installation, you can potentially save thousands of dollars on your solar panel system.
2. Hands-On Experience
DIY installations provide homeowners with a hands-on experience, allowing them to learn about solar technology and gain valuable skills in the process. It can be a rewarding and educational project for those interested in renewable energy.
Cons of DIY Solar Installations:
1. Complexity
Solar panel installation is a complex process that requires technical expertise and knowledge of electrical systems. DIY installers may encounter challenges with permits, wiring, interconnecting with the utility, and safety compliance, leading to potential issues and safety hazards.
2. Safety Risks
Working with electricity and climbing on rooftops poses inherent safety risks, especially for inexperienced individuals. Without proper training and safety gear, DIY installers may be at risk of accidents, injuries, or electrical hazards.
3. Warranty and Insurance
DIY installations may void warranties on solar panels and related equipment, as manufacturers typically require professional installation for warranty coverage. Additionally, homeowners insurance policies may not cover damages or accidents resulting from DIY installations.
Costs of DIY Solar Panel Installations
While DIY solar installations offer potential cost savings on labor, homeowners must still consider the upfront costs of equipment, permits, and tools. Additionally, unforeseen expenses for repairs or modifications may arise during the installation process.
It's essential to weigh the pros and cons carefully and assess your skills, resources, and comfort level before embarking on a DIY solar installation. If you decide to pursue this route, thorough research, proper training, and adherence to safety protocols are crucial for a successful outcome.
Frequently Asked Questions (FAQs)
What is the average solar panel monthly cost?
The average monthly cost of solar panels depends on factors such as system size, energy consumption, and financing options. However, homeowners can typically expect to pay between $100 to $200 per month on solar panel financing or lease payments.
How do solar panel costs vary for commercial vs. residential installations?
Commercial solar installations tend to be larger and more complex than residential systems, resulting in higher upfront costs. Additionally, commercial installations may require additional engineering, more permitting hurdles, and utility upgrades to transformers and other equipment, further impacting the overall cost. On the other hand, residential installations are typically smaller and more straightforward, leading to lower upfront costs.
How much does it cost to get solar panels?
The cost of solar panels varies depending on factors such as system size, panel type, installation complexity, and location. On average, homeowners can expect to pay between $25,000 to $50,000 for a residential solar panel system before incentives.
What is the expected maintenance cost for solar panels?
If properly installed, solar panel systems require minimal maintenance. Most solar panels and inverters come with lengthy warranties. Any maintenance costs will typically be associated with occasional cleanings, system inspections, and warranty diagnostic work.
At Paradise Energy Solutions, we build average maintenance costs into the cash flow we provide with our proposals. This will give you insight for how these costs will impact your ROI and payback. We also offer a Triple Ten Guarantee that covers most maintenance costs in the first ten years.
How much do ground-mounted solar panels cost?
Ground-mounted solar panels tend to be more expensive than rooftop installations due to additional material and labor costs associated with mounting structures and wiring. On average, homeowners can expect to pay between $20,000 to $40,000 for a ground-mounted solar panel system before incentives. Businesses can expect to pay $150 to $500,000+ for a ground mount system.
Do you really save money with solar panels?
Yes, solar panels can lead to significant savings on energy bills over time. Homeowners and businesses can reduce or eliminate their reliance on grid power by generating clean electricity from the sun, resulting in lower monthly energy expenses and long-term savings. System owners can also enjoy significant tax savings.
Are solar panels worth buying?
Yes, investing in solar panels can be a wise financial decision for homeowners looking to reduce energy costs, increase property value, and contribute to environmental sustainability. With favorable incentives and decreasing installation costs, solar panels offer an attractive return on investment for many homeowners.
Take The First Step Towards Energy Independence
While this blog provides estimates of what you can expect to invest in a solar panel system, each solar installation is truly a custom solution. That's why it's important to request your free custom quote to get an accurate cost for your installation.
Contact our team of solar consultants to get started with your custom quote.
