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In 2019, a typical residential solar system may set you back between $11,200 to $14,400 to install after tax credits and rebates.
Solar energy is a long-term investment. To budget correctly, you must look at costs and savings over 20 years and determine the payback period and payback amount. The right calculation includes:
Put it all together and you can calculate the actual solar panel cost for your home. If you want to skip all the math, we advise getting a free quote from a solar power professional. If you’d like to figure out the costs yourself, then keep reading and learn how the math works.
The standard way to evaluate a solar panel system cost is cost-per-watt or dollars-per-watt. This measurement is calculated by taking the total cost to install the system (parts and labor) and dividing by how much power it produces in kilowatts (electrical output). For reference, the average U.S. home would use a 4kW-7kW solar system.
Solar panel price will also vary based on the state you live in, the installation company, and any rebates and incentives you collect. In 2019, someone in California can expect their cost-per-watt to range anywhere from $4.39 for a small system to $3.56 for a vast system.
At the time of this writing, solar panel installation costs range between $7-$9 per watt. So a 5kW system would cost around $25,000-$35,000 before rebates. While that cost is a stiff pill for many households to swallow, it’s common for utility companies to offer incentives or subsidies to offset solar system costs.
For example, a system that costs $18,000 has a payback period of about 20 years. The cost of a solar panel today is around $3 per watt, and the extra cost of installation brings expenses up to $5- $6 per watt. Installation costs for PV systems include both labor and the electronics needed to tie the solar array into your existing electrical system.
Homeowners interested in solar roofs should note solar shingle systems are more expensive than the traditional roof installation. Energysage estimates solar roofs can range from $4.15 cost per watt to as much as $8.14 for the more advanced offering from Tesla’s Solar City.
Find Out How Much You Can Save with Solar
Find Out How Much You Can Save with Solar
The rule of thumb is that the average U.S. household consumes electricity at the rate of one kilowatt per hour (kWh). There are about 730 hours in each month, and the national average price of a kWh of electricity is $0.10. So an average monthly bill would be around $73 for 730 kWh of electricity.
The average electricity bill can vary considerably if you have non-standard items, such as a hot tub, or some electrical appliances running continuously. Extended computer use, plasma screen TVs and video games consoles can also make an impact. Your usage will also increase significantly in months when you run an air conditioning unit or heater. Finally, the cost of electricity varies widely across the USA, from as low as $0.07/kWh in West Virginia to as much as $0.24/kWh in Hawaii. To get a precise estimate, you’ll want to adjust our estimated calculations to fit your electricity usage patterns.
A conservative value to use as a solar panel’s generating capacity is 10 watts/sq. ft. This value represents a panel conversion efficiency of about 12 percent, which is typical. This means that for every kW you generate, you need about 100 sq. ft. of home 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.
The average sunshine across the country varies. In Seattle, Chicago, and Pittsburgh you’ll likely get up to three hours of direct sunlight. In states like Colorado and California, you’ll probably absorb five or six hours of sunlight. Homes in sunny Arizona can get nearly 7 hours of sunlight per day.
The amount of average sunshine means 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 panels if you live in a location that gets more sunshine.
If your utility company allows you to have net metering — that is, they supply you with a special meter that will spin backward when you generate more electricity than you use — your annual bill can average out at zero. Because of shorter days in the winter, you’ll likely be a net purchaser of electricity in that season and a net producer in the summer months. A grid-tied system like this is different than off-grid systems used in remote locations with no electrical service; those require batteries, which can significantly increase overall system costs.
As we mentioned earlier, equipment is another factor to consider when calculating how much it costs to install solar panels. Each standard residential solar array uses four components:
Solar panels – captures the sun’s energy and converts it to electricity
Controller – protects batteries by regulating the flow of electricity
Batteries – store electricity for later use
Inverter – converts energy stored in a battery to voltage needed to run standard electrical equipment
The entire system, plus installation, is what drives solar panel costs. Plus, equipment like batteries sometimes need to be replaced over time.
The good news is that the costs for solar panels are expected to continue to drop as thin film panels from companies like First Solar, Nanosolar, and AVA Solar become available to the residential market, which could drop prices to $1-2 per watt — and at volumes that are several times today’s total output.
Assuming that installation and auxiliary equipment costs can be reduced to around $1 per watt, then a 5 kW system in upcoming years may cost as little as $10,000, with a payback period of about 10 years. This makes the future of PV solar installations much more attractive.
How much solar panels cost vary across a multitude of factors. Want to get an idea for how much you can save? Try our solar savings calculator or give us a call to find out!