“Solar School for Beginners” is a series of articles to guide you on building a Solar energy system for your home. Click here to read the previous article. For definitions of more technical Solar jargon, check out our Solar School Glossary.
Interested in solar? One of the top questions on your mind when you start to research will most likely be: How much will a solar panel system cost me?
Here’s some good news. Solar panel system installation costs have fallen significantly during the past decade. SEIA’s research on the installation cost of an average-sized residential system across the US shows a steep decline from a pre-incentive price of $40,000 in 2010 to roughly $20,000 in 2021. That being said, many factors come into play on the cost of YOUR solar panel system and its installation. Let’s break it down.
What impacts the cost of your solar panel system?
Just as your home’s features are unique to your preferences, each solar panel system should be customized to suit your own needs, such as electricity use and property. Here are six main factors that impact the cost of your solar energy system:
- System Size: The size of your solar panel system will depend on your electricity use. The bigger the system, the pricier it will be.
- Battery Storage or Not: There are various reasons why people choose to include batteries in their solar panel systems. If you add batteries, note that these can add some cost to your solar panel system upfront.
- Location: Installation cost varies by state. In their latest report, EnergySage found a $1.39/watt cost difference between the lowest and the highest states (Arizona and Minnesota, respectively).
- Your roof’s solar potential: If your roof receives fewer hours of sunlight, your system will need more solar panels.
- Equipment: The type and quality of your equipment, such as solar panels, inverters, and batteries, will impact the total cost of the system.
- Labor: Solar companies charge different installation rates.
Should you lease or own?
The installation costs depend on whether you own your solar panels or sign a lease or Power Purchasing Agreement (PPA).
In both cases of solar lease and PPA, your upfront cost will be lower. As discussed in this article, with a solar lease, you agree to a fixed monthly payment determined by your installation company. With a PPA, you pay a set price per kilowatt hour (kWh). If you signed a lease or PPA, moving to a new location or selling your home can be tricky. Make sure you discuss these policies with your installer.
Owning your solar panels does have its upsides. While it initially comes with a higher installation cost, you are eligible for local incentives and may save more in the long term. In addition, homes with eco-friendly features, such as solar panel systems can sell for higher values according to this real estate research.
Do you qualify for government incentives?
If you own your solar panel system, you might be eligible for federal and local government incentives and rebates! If you live in the US, websites such as DSIRE allow you to find incentives applicable to your area. US Department of Energy also provides a comprehensive US federal tax credit guide.
How to get started
Since there are so many factors that influence the cost of your solar energy system, it’s best to contact a local solar installer who can guide you through the process. Below are a few resources:
EnergySage Marketplace: EnergySage marketplace offers a simple online service that allows you to get multiple quotes from installers in your area.
Schneider Electric Preferred Installers: Try our installer search by entering your home address or zip code. Our installer network comprises experienced solar and storage installers with a long track record of services.
NABCEP Professional Directory: The North American Board of Certified Energy Practitioners® (NABCEP®) provides training and certifications for solar installers throughout North America. On this website, you can search for NABCEP-certified solar installers.
Before you contact solar installers, read this article to know more about what you should ask them!
Solar Lease: A leasing contract where the solar provider owns and leases the equipment to you at a fixed monthly cost.
Power Purchasing Agreement (PPA): Arrangement where a solar provider owns and operates an energy system on your property. You’ll purchase the electricity at a set price per kilowatt hour (kWh).