Saturday, March 19, 2016

Solar Panel Cost

Since 2013 solar electricity has become cheaper then energy from the grid in most places.  With every drop in the price of solar energy, switching to solar becomes more appealing.  The government also makes the switch to solar power enticing with various rebates and tax credits to make solar panel cost more reachable.

Solar Panel Cost Average For Install In The US

solar panels on a homeIn the USA, a rule of thumb is that the average house consumes electricity at the rate of 1 kW per hour (kWh). There are about 730 hours in each month, and the average price of a kWh of electricity is $0.10. So an average monthly bill would be around $73 for 730 kWh of electricity.

A conservative value to use as a solar panel’s generating capacity is 10 watts/sq. ft. This represents a panel conversion efficiency of about 12%, which is typical. This means that for every kW you generate, you need about 100 sq. ft. of solar panels. If the sun shone 24 hours a day, you could put up 100 sq. ft. of panels and have enough energy to power the average home.

But, as we all know, the sun is available only during daylight hours, and the amount available per day is highly dependent on the extent of cloud cover. Also, the length of each day is dependent on the season. Fortunately, there are resources on the web to help you figure out how many hours per day (on average) you can count on the sun to shine, based on where you live.

The averages across the USA vary from around 3 hours per day in places like Seattle, Chicago, and Pittsburgh, to 5 or 6 hours per day in states like Colorado and California, to a high of 7 hours per day in Arizona. What that means is that the size of the panel array required can vary, anywhere from 400 sq. ft. to 800 sq. ft. (i.e., 4 kW to 8 kW), depending on where you live. You’ll need more panels if you live in a location that gets less sunshine per day, and fewer if you live in a location that gets more.

At the time of this writing, the installed cost of solar panels was between $7-$9 per watt: A 5 kW system would cost around $25,000-$35,000. Many utility companies offer incentives, and some subsidize as much as 50% of system costs. Even at half the cost, though, a system that generates an average $75 of electricity per month could take a long time to pay for itself.


So as you can see the price of solar is still quite pricey.  With the advancements in solar technology, the price continues to drop every year.  Solar companies are even talking about releasing residential solar with an aggressive price point of around $1-2 per watt.

 sun thru trees

Factors Affecting Solar Cost

Prices vary based on building and system configuration, the type and brand of equipment used and what company does the installation. The type and quality of panel as well as the size of the array affects the final price of an installation. Manufacturers price their products based on their efficiency and longevity. Panels that retain their efficiency longer are usually more expensive. Monocrystalline units are the most costly but generate the most watts per area, so you will need fewer panels and not as much space. Building integrated panels are also on the expensive end, but they are a good choice if appearance is important.

You location can also have a big impact on the final price of a solar energy project. Federal and local governments in many countries offer financial incentives to make buying and installing systems more affordable. Prices also depend on local weather conditions. Due to limited sun hours per day, the cost per kilowatt installed is higher than in sunnier countries like Mexico.



System Costs

As mentioned in the introduction, residential solar systems are typically sized from 3 to 8kW and end up costing somewhere between $15,000 and $40,000. In this section, we will look at the costs of the various components of a solar system (not installation or operational costs).

Note that all numbers discussed in this article are dependent on a boatload of different variables such as where in the country you live – they do however represent typical costs.

Solar Panels

solar cellsThe solar panels themselves usually account for about 30% of total costs. Residential solar panels with a combined capacity of 3-8kW typically cost between $4,000-$16,000.

The best solar panels are not necessarily the most expensive. Cost per watt ($/W) is a more convenient way of looking at the costs of solar panels. This metric indicates costs relative to electrical power output. The cost of solar panels have decreased significantly over the last decade and are currently selling for under $0.70/W in industrial quantities. For homeowners, this translates to about $1.5/W.

Balance of System

Balance of system (BoS) refers to all components of a solar system except the solar panels themselves. This typically includes one or several inverters, mounts, wiring and other electrical components. Balance of system makes up for about 20% of total costs – homeowners should expect to pay somewhere between $3,000-$10,000 for these components.


Inverters convert direct current (DC) from your solar panels into alternating current (AC), which is used by home appliances and enables you to grid-tie your system. Inverters typically account for 10% ($1,000-$4,000) of total costs.

Also note that solar panels usually come with a warranty of 20-25 years, but conventional central inverters will need replacement before this.

If you choose to go with micro-inverters instead of a central (string) inverter, the costs will increase along with a boost in power output and an extended warranty.


Installation Costs

solar panel installationIn this category we`ve included labor costs (15%), as well as permits and inspection fees (15%). The cost of both categories are highly dependent on what state you live in, but in most cases end up between $2,000-$5,000 per installation.

Here`s a few things you might have to take into account:

• Building and electrical permits at Department of Buildings
• Neighborhood covenant requirements
• Approval from homeowners association


Your solar installer might not be educated on what is involved in obtaining the various permits where you live. Choosing a reputable and large installer is often the best choice.


Operational Costs

Operational costs include monitoring, maintenance, repair, insurance and overhead costs – typically $4,000-$8,000 (20%).

This is a cost category where there is a lot of potential to cut costs. Not everyone will need monitoring and you can probably get away with little maintenance. You will hopefully never need any repairs.


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