Solar is a popular renewable energy source that lets you tap into “free” electricity. However, for a long time, the upfront cost prevented average families from investing in solar panels.
In 2022, that’s all set to change. Solar panel costs have decreased significantly in the last few years. Now, they not only cost less initially but also allow for plenty of savings in the long run.
Whether you’re considering using solar energy for your RV road trips, as a backup generator, or to power your home, many factors determine the cost of going solar.
How Much Does a Solar Panel Cost?
Solar energy costs have decreased and will continue to decline as the industry matures and government incentives encourage homeowners to replace traditional energy sources.
The average cost for solar panels typically runs from $3 to $5 per watt. As a result, a typical 5-kW residential solar system will range between $15,000 to $25,000 before tax credits and incentives.
However, the cost varies significantly based on many factors, such as the size of the panels, the efficiency rating, the system set-up, and more.
How Much Does It Cost to Install Solar Panels?
Besides the cost of purchasing panels, there’s also the inherent cost of installing them. The panels are one component of the entire home energy system, and other components should be factors when evaluating your expenses.
A solar system typically includes components such as panels, inverter, batteries, electrical hookups, and a racking system. Standard solar installations may include soft costs like labor, permits, engineering design, and even marketing and sales costs may factor into the expenses.
Some solar companies offer installation, warranties, and maintenance. However, these additional services add additional costs as well.
The exact cost for installation depends on many factors, such as the size and type of panels. However, the consensus is that it can cost about $5000 to install a smaller system and over $12,000 for regular-sized panels.
Factors That Determine How Much Solar Panels Will Cost
Many factors can dictate how much your solar panel system will cost, including whether you purchase one panel or invest in a full solar system. Let’s get into the details below.
Solar Panel Capacity
Solar panels have varying capacities, or power production capabilities, represented by watts. The watts indicate the amount of energy captured in ideal temperature and sunlight conditions.
Typically, most panels can produce between 100 to 400 watts. The higher the watts, the fewer panels you need to achieve your ideal energy consumption needs.
PV Conversion Efficiency Rate
The PV conversion efficiency rate describes how much sunlight the panel can convert into electricity. In general, the PV rating indicates the quality, which impacts the panel cost. The typical industry standard for PV efficiency rating is between 15% to 20%.
You’ll need to connect the panels to other aspects of the solar system, such as the inverter, electrical inverter, generator, etc.
If your panel doesn’t integrate well with other products, it’ll lead to more system set-up costs, such as additional wiring and installation.
All you have to do is connect the panel’s wirings to the other system wirings, such as the inverter and generator or power station. Easy hook-up allows you to transfer the energy captured from sunlight and convert it into electricity for usage.
Not all solar panels are the same. The efficiency of the panel matters when it comes to cost.
Monocrystalline panels are made from a single silicon crystal, allowing more room for the flow of electricity. Polycrystalline panels have more crystals meaning less freedom for electrons to move.
In short, monocrystalline panels are more efficient than polycrystalline panels. However, that does come at an extra cost. Monocrystalline panels will be more expensive.
Solar System Set-Up
Your system set-up will impact the overall cost. Practically speaking, it will cost more to buy multiple individual panels instead of a bundle.
Considering that solar panels generally do not operate alone but require a generator or battery to store the electricity, it isn’t economical to just buy one panel—you’ll need to set up a whole solar system.
How Can I Calculate How Many Solar Panels I Will Need?
Your energy consumption determines how many panels you need, affecting the total cost. You’ll want enough panels to power all your appliances and devices to eliminate your electric bill. However, the number of panels you need also depends on the panel’s power rating. The more powerful the panel, the fewer panels are required.
The average household uses a little under 900kWh per month. Divide 900 kWh by 30 days, and you’ll get 30 kWh (30,000Wh), which is how much electricity the average household requires per day to run the lights, dishwasher, washer, dryer, television, etc.
To figure out how many solar panels you’ll need, divide the watt usage, 30kWh, by the hours in a day: 30,000Wh / 24 hours = 1250 Watts.
How Much Money Can Solar Panels Save?
When discussing savings, we’re talking about how much you would’ve spent on your electric bill if you didn’t use a solar system for your home.
If you use 900 kWh per month, and the average electricity rate is $0.14 per kWh, you’ll save about $126 per month on your electricity bill: 900kWh x 0.14 kWh = 126. That’s a savings of $1512 per year. Of course, the more you use solar, the more money you’ll save.
You’ll also receive a 26% tax incentive. If you spent $15,000 on your solar system, you’d receive $3,900 in tax credit.
Thanks to the declining cost of solar energy and other tax incentives, panels are a cost-effective investment for any person who wants an excellent return on investment. A solar system can help reduce dependence on your local utility company and power your home with clean, renewable energy.