You’ve been considering solar panels for your home and have been doing your research. Use this residential solar panel cost breakdown for your decision-making.
In 2022, 50% of all energy-generating capacity added in the USA came from solar. According to the Solar Energy Industries Association, this is the largest annual share in the industry’s history.
Solar panels are the latest innovation for power stations, and residential solar panels are becoming more commonplace, too.
Are you keen to get onboard with this latest cost-saving trend, but worried about the costs? Keep reading for a residential solar panel cost breakdown and more about how you can save with solar energy.
Residential Solar Panel Cost Factors
Solar energy installations include several elements. Depending on your circumstances, you might not need them all.
These are the items that make up a complete solar panel installation:
- Solar Panels
Plus, you’ll need to pay for other services such as labor and balancing the system. Operational costs like design, connections, and permitting make up about 45% of the costs of a solar system.
Overall, the size of the installation you need has the biggest impact on costs. This, in turn, depends on how many kilowatts of energy you need to run your home.
The average cost of a solar system is about $2.96 per watt. Most American residences require at least a 5 kW system, which amounts to $14,800.
If you pay for your solar installation upfront, you will receive a credit on your annual tax return that amounts to 26% of the costs incurred. Once you’ve deducted these savings, you’ll end up paying approximately $10,592 for a 5kW system.
Solar Panels Cost Considerations
The cost of the actual solar panels you choose will also impact the cost of your solar installation. If you decide to DIY your solar installation, you’ll pay around $1 per watt, while installers who buy in bulk pay only $0.85 per watt.
Most solar panels can generate between 150 and 350 watts. So, you’ll pay between $212.50 and $250 per 250-watt panel, depending on who installs it.
There are three main types of solar panels available for residential installation, and these also vary in cost. Monocrystalline panels are the most effective and expensive type of PV panel.
Polycrystalline panels cost less, but they don’t generate power as efficiently as monocrystalline panels. Finally, thin film solar panels offer the lowest costs and the lowest power efficiency.
While it’s tempting to choose the cheaper types of panels, these won’t work out cost-effectively unless you live in an area that’s ideal for solar energy production.
How Much Will Your Solar Panel Installation Cost?
Naturally, every homeowner has different requirements when it comes to their electricity needs. In this light, there are a few other things that will impact the cost of installing solar energy for your home.
Size of the Installation
A small one-bedroom home with only basic appliances may need less than a 5 kW installation. A mansion with a hot tub and a heated pool needs a lot more power.
The best way to figure out how much energy your home requires is by looking at your electricity bill. It’s easy to figure out your average needs by analyzing the monthly electricity consumption printed on the bill.
Most homeowners opt to install more solar power than they need. This is to account for cloudy days or seasonal variations in their energy needs.
Where You Live
Solar energy prices per watt vary by state, but other locational factors also influence solar installations.
If you live in an area with few peak sunshine hours, or your roof is in shade most of the day, you’re solar panels can’t run at their best. In these cases, you’ll need to install more solar panels to meet your energy requirements.
Permitting costs will also vary depending on your municipality, and installation costs will also vary depending on the installer you choose to work with.
Other Ways to Save on Your Solar Installation
When you opt to use solar power in your home, you can choose from a grid-tied or off-the-grid installation.
With a grid-tied solution, you can still harvest electricity from a power company. An off-grid installation means you’ll need a battery backup if you want to use your solar power at night.
With a grid-tied installation, you can also feed power back into the grid and receive a discount on any power that you use.
Apart from buying your panels outright, you can opt for more cost-effective ways to enjoy solar power.
If you sign up for a power purchase agreement, a power company pays for the installation on your roof and gets the tax benefits. You don’t own the installation, but you do get to use electricity at vastly reduced rates.
In some cases, you can enjoy 18 months of free solar energy, and you’ll own the panels after a certain time frame (check the source).
With a solar lease, you pay the installer a monthly fee in exchange for using the solar panel installation. You’ll pay more per month than if you took out a solar loan, and you may or may not own the panels after a certain period of time.
As long as your monthly payments are less than your current electricity bill, you can still save when you go this route. For many, a solar lease is the best way to enjoy solar power without high upfront costs.
Get More Bang for Your Buck With Solar Savings
Regardless of these residential solar panel cost considerations, there’s no doubt your solar system will pay for itself within at least 10 years. You’ll save on your electricity bills, increase the value of your home, and enjoy the benefits of an uninterrupted power supply.
Are you keen to discover more budget-beating options for your home? Browse my blog for more innovative ideas on how to make your money go further.