Why are solar panels so expensive? Understanding the cost of a solar panel system

The Cost of a Solar Panel System

While the most expensive part of going solar is paying for the equipment, it still only represents 25 percent of the overall expense. Soft costs, or the outlays that installers spend just trying to find you and appeal to you, also contribute a significant percentage. Here’s a breakdown so that you can understand the cost of a solar panel system, plus tips on how you can save money!

The National Renewable Energy Lab (NREL) has completed a number of pricing analyses of the cost of a residential solar installation. The lab broke down the total price of buying a solar energy system for one’s house as related to the total number of watts that the system should produce (a calculation sometimes referred to as the gross cost per watt.) The Lab then went on to break down that per watt cost into smaller subcategories.

We have built upon this analysis, augmented it with data culled from our own network of solar installers and distributors, and broken down the average cost of going solar into six categories.

As with so many things in life, there are some factors you simply can’t control. Fortunately, however, there are a number of ways that you can drive down the costs of your future your solar energy system.

Marketing and sales: your installer can help with saving money

Learn About Solar: Installers spend a huge amount of time and money simply trying to educate shoppers about solar energy systems. If you are a solar-interested shopper, you can lower the amount of time your installer needs to spend educating you on the technology by using free public sources of information, such as the Department of Energy’s website. The more educated you are about your potential installation, the more time you’ll save both you and them.

Shop Around For a Good Deal: Comparison-shopping websites are already popular when booking flights or hotel deals, and now that same technology is making its way into solar shopping. By using an online solar marketplace to obtain competitive bids from multiple installers, you can lower the “soft costs” that your installer must incur to find customers — and they, in turn, can pass those savings on to you!

Hardware choices: which solar energy systems are right for you?

Type of Panels: The more efficient the solar panel, . In most cases you actually don’t need the most efficient equipment to produce all the electricity that your home needs. EnergySage has , and classified panels by equipment rating.

Type of Inverter: There are three main types of inverters; centralized inverters, string inverters, and power optimizers. Centralized inverters serve the whole system, while string inverters and power optimizers are attached to each panel in a system. String inverters and power optimizers are generally more expensive than centralized inverters. Again, think of how efficient of a system you really need.

Type of Mounting System: A solar energy system can be installed on the roof of a building or on the ground. If the system is installed on the ground, it can be equipped with a tracking system to maximize its energy production. A more complex mounting system will increase your costs, so think about what’s really necessary for your own installation. Remember that you’ll want to have the solar panels facing south at a 30-degree angle for maximum production.

Labor, installation, and permitting: added complexity can increase cost

Warranties: From workmanship to equipment, having warranties on your solar energy installation can ensure that you get the most power from your system. Make sure you’re hiring the right installer that offers the right warranty to meet your budgetary requirements.

Complex Roofs: If your roof has multiple levels, an unusual angle, or dormers, installing your system may be more complicated than usual. Your installer should arrange the panels for optimal energy production, but the added effort will increase costs. Distributing solar panels across multiple levels will add complexity, as will installations on certain roof types (such as tile and slate).

Landscaping: If you need to trim branches or landscape your area for optimal energy production, this may also add to the total cost of your system. To save money, consider doing this work yourself ahead of time (safety permitting!) or hiring a local tree pruner.

Improving Your Electrical System: Though unlikely, your electrical system could require an upgrade in order to be brought up to code. If needed, this added work would increase the costs of your solar installation. To spread these costs out, consider upgrading your electric system in one month and then going solar in the next.

By taking simple steps, you can significantly lower the costs of installing a solar energy system. Remember, the lower these upfront costs are, the faster that you’ll reach breakeven and start to make money off of your new energy system.

This post first appeared on Mother Earth News.

7 thoughts on “Why are solar panels so expensive? Understanding the cost of a solar panel system

  1. Iron Edison

    There are several components in residential solar installations that affect the final price. Hardware is the largest expense for new solar installations. Panels, collectors, and batteries can account for up to 25% of the total cost for a new system.

  2. Al Kaholik

    Solar panels, despite being the most difficult part to produce, are the cheapest part of an install.
    Second is the electronic control and protection hardware (chargers and inverters if you have batteries as in an off-grid or hybrid system).
    By far the most expensive, yet easiest and cheapest parts to produce, are the mounting and racking components.
    Simple aluminum rails and feet will cost you (the end user) at least as much as the panel itself.
    Solar installation is an industry ripe for disruption!

  3. Vikram

    I have googled “why solar panels are expensive?”,but I didn’t find a relevent answer.So help me out why solar panels are expensive and disadvanteges of solar panels.

  4. Concerned Contractor

    The issue is that this study is grossly inaccurate. I was able to obtain all the equipment I need for my 17 panel solution a at a contractors price of $3000. I was quoted over $30,000 by many places for a similar system. Granted I have to get permits and do the installation myself – but this shows that there’s way more pork in this than is needed. The ROI of a 30,000 system is 25 years or more when figuring interest, where an ROI for a $3000 system is 2.5 years. This is why you don’t see everyone going this route – the ROI is still not there and the fallacy that the prices come down is also a lie. Over the last 25 years a 17 panel system went from just under $10K to $30K.

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  7. Lauren Woodley

    I have been thinking about putting solar panels on my roof, so the information you give about them was very helpful. Specifically, I didn’t know that there were three main types of inverters, however, I can see how understanding the different types and what they do can help you choose the more efficient ones for your situation. I will definitely be sure to do more of my research and use this information to help me choose the best panels for my roof. Thank you for sharing!


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