Why are solar-panel prices so high?

Solar panels are unquestionably expensive, typically costing between $10,000 and $30,000 for a typical home. The high cost of solar panels is mostly caused by two factors:

Cost of the equipment comes first. Advanced manufacturing techniques and pricey raw materials, such premium silicon for solar panels and lithium for solar batteries, are needed to produce it.

The second is a result of soft costs, such as a qualified solar system that is secure, in compliance with regional codes and manufacturer warranties, and capable of passing required inspections.

Of course, it is the quick response. The entire story is that there are a number of elements that affect how much solar panels cost. According to our examination of solar panel cost data, prices substantially vary based on the brand chosen, the size of the system, the location, the type of roof, and other factors.

However, how have these prices evolved through time? How can homeowners negotiate the greatest price for a new installation? Are solar panels financially viable at the current price? All of these queries will be addressed in this blog.

How expensive are solar panels?

Before federal and state incentives, the average cost of solar panels for a typical home is between $15,000 and $20,000 per panel. Typically, solar installers will provide a pricing in dollars per watt of electricity production capacity. According to the figures above, a typical 6 kW system will cost between $2.55 and $3.35 per watt.

The large price range is brought about by variations in solar equipment, individual residences, and regional markets. Depending on the type of roof, the age of the roof and the home electrical panel, and the numerous laws and regulations that each jurisdiction’s solar market is subject to, different amounts of effort go into establishing a residential solar system.

Depending on the needs of the homeowner, there are variations in the final cost of a solar installation. Compared to a large home with electric heat and air conditioning, a compact home with a gas furnace and water heater consumes far less electricity. While the larger home in a frigid climate could need a system of 15 kW or more, which might cost the homeowner over $45,000, the smaller home in a moderate zone might only need a 4 kW system.

Sticker shock?

You might have been shocked when you first realized how much solar panels cost. When you learn that some other nations’ home systems are significantly less expensive, the shock is increased.

But compared to even a few years ago, solar panels are far more affordable now, and in many areas, they now provide a great return on investment.

Solar panels cost less than before

The price to install solar panels on a home has decreased by approximately 60% since 2010, from $7.53 per watt in 2010 to $2.95 per watt in 2021, according to the National Renewable Energy Laboratory.

A 6 kW household solar panel system, which costs an average of $17,700 at current rates, would have cost $20,160 in 2015 and a staggering $45,180 in 2010. Based on the figures above.

Here’s our analysis of solar panel cost trends:

• The cost-benefit analysis of home solar has been considerably altered by the price drop.
• The solar payback period ranges from 4 to 9 years in several states.
• Due to supply chain issues brought on by the pandemic, increased material prices, and trade restrictions, solar panel costs have not moved between 2017 and the present.
• Due to the maturity of solar manufacturing technology, significant price reductions are unlikely to occur in the near future. However, as more manufacturing takes place in the United States, the Inflation Reduction Act will probably contribute to cost reductions in the future.

What makes up the cost of a solar system?

The final cost of home solar installations is influenced by a number of factors.

Hardware costs and “soft costs” are two categories in which the costs can be divided. Our data show that:

• 46% of the average solar panel’s cost is hardware. This section addresses solar panels, solar inverter(s), and system balance (racking and mounting, wiring, etc.)
• 54% of the average cost of a solar panel is made up of soft costs. This covers labor and installation costs, outlays for sales and marketing, charges for permits and inspections, and profit margins for installers.

Cost breakdown

Based on the national average solar panel installation cost of $2.95 per watt, below is a more thorough breakdown of solar panel installation costs.

*Cost before incentives

Why are soft costs so high?

Consumers are frequently surprised by the substantial soft cost component of the overall price of solar panels. The figure, however, makes sense when you take into account the nature of solar panel firms and the installations they perform.

Every house is unique and needs a special installation and design. Solar enterprises require personnel with the necessary training and credentials. Additionally, they must account for profits, operating expenditures, and marketing expenses, just like other businesses.

How can you lower the cost of your solar power installation?

Consumers can find ways to lower the overall cost of their residential solar power system, even with soft expenses and additional tariffs.

• Utilize the federal tax credit: To recoup up to 30% of your investment, take advantage of the federal investment tax credit for new installations. Every taxpayer is eligible for this reward.
• The state, utility, and local levels all provide a variety of incentives, some of which are worth thousands of dollars. Look for these incentives.

Does the installation company affect the price?

Companies that use solar energy frequently provide incentives to entice customers. The final cost of household solar power systems may benefit from these offers.

To guarantee you receive the greatest deal possible, check with several installation businesses. Remember that a better deal is not necessarily guaranteed by reduced prices. Prior to hiring a company, take the time to read reviews and get a sense of the caliber of their work.

How much does it cost to maintain a residential solar system?

Regular inspections and maintenance are essential to safeguarding power sources as components deteriorate, get damaged, or become obsolete.

While the solar firm will pay for any warranty claims, the homeowner is solely responsible for all additional maintenance.

Approximately $150 is spent on an annual inspection by a nearby solar installation business. The cost of a professional cleaning to remove dirt and debris from a panel ranges from $10 to $20. The price of repairs and replacing equipment varies.

According to these calculations, a residence with 10 rooftop solar panels would need to pay $250 to $350 year to maintain its system. Regular maintenance costs for a family with 30 solar panels would be between $450 and $750.

To cut costs, thrifty homeowners can attempt cleaning their own panels. However, in order to keep the system performing at its best, routine expert cleanings are still advised.

How much will I save with solar energy?

Solar panel savings are realized in the form of significantly reduced electric costs. In the United States, a typical installation of 6 kW solar panels results in annual savings of roughly $1,500.

Calculating the payback period for your solar installation is another method to look at savings. The time it takes you to recover the costs of your first investment is known as the payback period. Every watt of energy you produce after that is money. The payback period for solar panels is currently 4–9 years in the majority of states.

It’s important to remember that annual savings vary greatly from state to state and even from home to home. A household’s actual ability to save money depends on a number of variables:

• The size, direction, and pitch of the roof
• The number of panels and their rated energy production
• Hours of sunlight received on the property each day
• Whether or not battery storage is installed
• The cost of electricity in that particular area

Is going solar worth it despite the high cost?

Solar panels do cost a lot of money. A typical 6 kW system costs $17,700 on average before incentives, making them a considerable financial commitment for home improvements.

But solar panels also have the potential to save you a significant amount of money over the course of the panels’ lifetime, in addition to providing energy independence and renewable energy that is friendly to the environment.

Moreover, the high upfront expenses should not be a deterrent because the majority of solar companies collaborate with lending providers to give a variety of financing options.

Get a solar cost and savings estimate first, if you haven’t already, to determine if the numbers work in your favor.