What Impacts Their Cost and Why?

Key Takeaways

• Solar panel costs depend on a variety of factors, including panel size and number, panel type, and installation complexity.
• Consulting with a solar panel installation company is ideal for balancing your energy needs and goals with your budget.
• Federal, state, and local tax credits and other incentives can help offset the large upfront cost associated with solar panel installation.

The solar industry continues to shine as more homeowners realize that investing in solar panels can benefit the environment and their wallets. But before going solar and delving into this renewable energy source, it’s essential to understand the true cost of solar panels so you can decide which options suit your needs and budget.

Learn more about the cost of solar panels, what affects price, and the best ways to lower costs and fund your solar panel project with minimal upfront expenses.

Understanding Solar Panel Costs: What You Need to Know

How much do solar panels cost? Well, the answer varies. Solar energy itself might be free, but the equipment, upfront installation expenses, and long-term maintenance can add up. However, the cost of solar panels doesn’t have to be prohibitive. To give you a fuller picture of the average price, here are some of the expenses you’ll need to consider.

Initial Cost of Solar Panels

The initial investment is what most people think about when it comes to solar panels. This includes the cost of the solar panels and equipment like inverters, mounting hardware, and batteries. Also wrapped up in this initial investment is the professional installation cost. The size of the system and the number of solar panels required greatly influence this cost.

For instance, the bigger the home, the more kilowatts (kW) you’ll need to power it — and the larger system you need. Generally speaking, you can expect to pay about $3 per watt installed. However, the cost will vary by the type of solar panel you choose. (More on this soon.)

Before purchasing a solar panel system, be sure to accurately assess your energy needs and determine your goals. Your best bet is to reach out to a solar panel provider to review your energy consumption and goals to determine the right size system and how many panels you need.

You can offset some of the initial cost of solar panels through available federal, state, and local government incentives and rebates. These financial incentives help lower the overall cost of solar panels.

Maintenance and Repair Costs

Solar panels generally have minimal maintenance requirements, but some may arise over time. Factors that can impact this include local climate and potential for extreme weather conditions and installation quality.

Some maintenance you can handle yourself if you’re handy. For example, many owners can perform periodic solar panel damage inspections and regular panel cleaning. These DIY maintenance procedures can help maintain panel efficiency.

If your inspection turns up any damage, you may incur some repair costs. Keep in mind that solar panel manufacturers often offer warranties covering repairs and replacements for a specified period. These warranties don’t cover all issues, but they offer peace of mind and help protect your investment.

Potential Savings Over Time

While there’s a relatively high initial cost of solar panels and potential ongoing costs, you must also consider the potential savings they offer over time. For starters, solar energy can greatly reduce and even eliminate your monthly energy bills. Of course, the more you spend upfront on a large solar panel system, the more long-term savings you’ll reap in most cases.

Another point to remember is solar power is a long-term investment. Solar panels generally last 20 to 30 years — some even 40 years — before displaying notable degradation in energy output. Plus, they don’t just suddenly stop working. Instead, they slowly lose efficiency over time so they can still save you money beyond their estimated lifespan.

This longevity means solar panels can provide decades of financial benefits. With electricity rates constantly in flux, solar panels can become an increasingly valuable asset in the long run.

What Factors Influence the Cost of Solar Panels?

When considering the cost of solar panels, it’s important to keep in mind several influencing factors on the overall price. When you understand these variables, you can make a more informed decision.

System Size and Number of Panels

Two key driving factors in the total cost of solar panels are the size and number of panels you require to meet your energy needs — and budget. When you bring a professional into the planning process, they can help you determine the ideal size and number of panels. They will review your household energy consumption and goals and then give you insights to maximize your returns.

Type of Solar Panels

Not all solar panels are the same, and the type of solar panels you choose will impact your overall cost. There are three types of solar panels, each with benefits and drawbacks.

• Monocrystalline: Featuring solar cells made from a single (mono) crystal, these panels are the most efficient, often providing more than 22% efficiency. They also feature a sleek, black color that looks good in almost any setting. The big downside to monocrystalline photovoltaic (PV) panels is they have the highest average cost.
• Polycrystalline: These panels aren’t as efficient as monocrystalline solar panels (they rarely go over 17% efficiency), but they make up for that with a lower cost. The other downside to polycrystalline PV panels is that they’re more susceptible to efficiency loss due to heat. Yes, solar panels need sunlight to create energy, but excessive heat can reduce a solar panel’s efficiency.
• Thin-film: These solar panels have the lowest efficiency of available solar panel types, but they offer some unmatched benefits. First, they are lighter than other panels. Also, they are flexible in some cases, so they’re great for portable setups and rooftops that require the panels to bend slightly. They also usually cost less to install.

Solar Panel Quality

Solar panel quality also plays a key role in the cost of solar panels. Opting for a higher-quality PV panel often makes for a more efficient and durable system. While these panels may cost you more upfront, they may offer better energy generation and savings over time. This could help offset the extra cost, depending on the system.

These high-quality panels generally come from reputable brands with solid warranties and support. The best solar panel brands, such as Panasonic, REC Solar, and Q Cells, also tend to have track records of delivering high-quality products capable of withstanding various weather conditions while providing consistent clean energy production.

Installation Complexity

Just as solar panel prices vary, so can solar panel installation costs. If you have a rooftop that requires a more complex installation process, it can increase the overall cost of solar panels. Factors that can influence the installation complexity and cost include roof type, accessibility, and electrical wiring. Roof condition also plays a role, as additional structural modifications or reinforcements to support the solar panels will add to the overall cost.

What Are the Financing Options or Incentives for Installing Solar Panels?

With the average cost of solar panel systems ranging from $15,000 to $22,500, financing is key to installing these panels. Fortunately, you have several financing options to make solar power systems attainable.

Solar Loans and Leasing

Solar loans and leasing are popular because they allow homeowners to install solar panels with minimal and sometimes zero upfront costs.

• Solar loans: These loans give homeowners access to the funds they need for the installation. Like traditional loans, solar loans have interest rates and monthly payment plans attached to them. With a solar loan, you can still qualify for government and tax incentives.
• Solar leasing: In this arrangement, the homeowner rents the panels and pays a monthly fee. Since you don’t own the panels, you cannot claim the government and tax incentives. That said, you pay no upfront system cost, the solar leasing company handles all the installation and maintenance costs, and you get the energy savings of any other solar power
• Home equity loan: If you have equity in your home, you can use the equity to get a loan and pay for the solar panels. Some of the benefits of a home equity loan include relatively low interest rates and longer repayment terms, which can lower the monthly cost. However, if you default on this loan, you could lose the home and solar panels to foreclosure.

While these options may still require some investment, they can significantly reduce the initial financial burden. If you’re confused where to start, solar companies often have resources to help you secure financing.

Government Incentives and Rebates

To help lower carbon emissions and fight climate change, there are solar incentive and rebate programs to spur renewable energy adoption. These can come in several forms, such as tax credits, cash incentives, and grants. Leveraging these programs helps offset the initial cost of solar panels, making them more accessible and affordable to the masses.

For example, the federal solar tax credit gives you up to a 30% tax credit based on the price of any residential solar system installed through 2032. So, if your system cost $10,000, you’d get a $3,000 federal income tax credit. This credit falls to 26% in 2033, 22% in 2034, and expires in 2035. Plus, you can stack this on top of any local and state incentives.

What’s the Long-Term Value of Going Solar?

Investing in solar panels can provide long-term value beyond the direct cost savings, from lower electricity bills to higher property value. Let’s review some of these potential benefits when installing a solar energy system.

Lower Utility Bills

The first thing most people think of with home solar systems is a lower power bill. Generally, producing your own electricity using only the sun’s rays will lower your monthly electric bill. However, it’s much deeper than that, as a high-kW system can actually earn you money too.

If your electric company offers the option of net metering — where the electric company also tracks how much energy you put into the grid and subtracts that from the energy you use — you may earn money. If your residential solar system is powerful enough to fully offset your energy usage and put more power into the grid, you’ll get a credit on your bill.

Depending on your net-metering and power purchasing agreement, this credit can go toward future bills, or you may even get a payout for it.

Over time, these lower electricity bills and credits can eventually make up for the total cost of your solar equipment.

Higher Property Value

An sometimes overlooked factor in the cost of solar panels is how they can increase your home value. Homebuyers often recognize the benefits of solar investment, so properties with existing solar home energy systems have become more desirable.

Research from the Appraisal Journal indicates that a home’s value goes up by  reduction in annual electricity costs. Therefore, you can also view solar panels as an investment that reduces energy costs and adds value to your property.

Energy Independence and Security

You can distance yourself from traditional energy sources with the right home solar panel system. This energy independence shields you from unpredictable energy rate hikes due to fossil fuel market volatility.

Solar energy enhances your control over energy consumption, all while reducing your carbon footprint and combating climate change.

Solar panels can serve as a reliable backup during power outages. If you live in an area with frequent power outages or blackouts, you’ll always have power when the sun’s shining.

You can further free yourself from reliance on the power grid with solar battery storage systems. In lieu of selling excess electricity back to the utility company at a wholesale rate, you can store this energy in batteries for use during power outages or after the sun sets. And if you have large enough solar and battery systems, you can switch to full off-grid living if local laws permit it.

Get the Facts to Make the Right Solar Decision

Understanding the cost of solar panels and what affects it is a key part of making an informed decision. Solar energy’s initial investment and maintenance costs are important considerations. However, there are potential long-term benefits, such as long-term savings, a higher property value, and an eco-friendlier household that could make solar a worthwhile investment for you.

By exploring your energy needs and goals, researching financing options, and considering solar energy’s overall value, you can find the right system that aligns with your goals and lifestyle.

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