A common misconception in solar is that there is a flat rate and everyone pays the same. This can cause a lot of confusion when you get your first solar quote! Solar panel systems are unique to each home and there are many factors that come into play when choosing what’s best for you. Keep in mind that it will save you money whether that’s over the course of 25 years or from making your first payment. Solar is a cheaper and cleaner alternative to your utility.
How Are Solar Panel Costs Calculated?
Here’s a quick look at the factors that determine each home’s system size and cost:
- Average yearly electric consumption
- Roof size & sun exposure
- Market-set equipment costs
- Maintenance & warranties
Every home has different electric usage which is why there is no way to just quote a number without digging in. We’ll first want to look at your average yearly electric consumption. If your average electric bills are high, then you can expect to have a higher solar panel system cost, these numbers are correlated, so it’s important to have the right expectations when looking into solar. Next, we’ll want to see how much space is on your roof and the shading that might be covering it. Ideally, we will put panels on the south-facing roof spaces that have no shading by trees as this is where you’ll get the most sun exposure.
System costs include the system size, equipment, labor, permitting, and maintenance/warranties. These costs are often priced per watt with additional pricing per watt for anything added like a battery or main service panel upgrade.
There are many factors to consider before creating a ballpark number for your system. We’ve seen prices range from $13K to $72K in 2022. Right now, our average system cost is around $37K, which is spread out over the course of 25 years of energy.
Here’s how that cost is broken down by looking at the average cost/watt.
What Is the Cost to Have Solar Panels Installed
The average price per watt has drastically reduced over the last 15 years with most states being less than $3/watt currently.
For example; an average home in the U.S. needs 6KW (kilo-watts), there are 1,000 watts in a KW.
If you take $3/watt x 6,000 watts (6KW) = $18,000.
Most systems today are warrantied for 25 years so when you average out that $18,000 across 25 years you are paying $720 on electricity per year. That is $60/month!
You’ll also want to consider the government savings on solar. In 2022, you can claim a 26% tax credit towards your federal taxes when you go solar. That 26% goes towards the entire system cost. If your system is average like the example above, you’d get $4,680 back during the next tax season. In 2023 that tax credit reduces to 22% and will go down to 0% in 2024.
Calculating How Many Solar Panels You Need?
Once we know how much energy your home is using, what your roof space allows and what the sun exposure is in your area we can calculate how many solar panels you’ll need. Solar system pricing is also based off of a price per watt model rather than the number of panels since the wattage of each panel will differ. It’s important to pay attention to the overall system size in KW when comparing prices.
*System size in kWh/production ratio/watts of panel = number of panels
Average production ratios are between 1.3 (more sun) and 1.6 (less sun).
Production of solar panels is measured in watts (1,000 watts = 1 KW). The average wattage in panels we currently use is 400 watts.
10,400kWh/1.5/400w = 17.33 Panels
To cover 100% of an average home’s usage you would need at least 17 panels with little to no shading.
How to Pay for Solar Panels?
Paying for Solar Panels has come a long way and is more widely available to the average homeowner. Typically, there are three options; lease, loan or cash. Leasing a system means you don’t own the system, but a solar leasing company leases you the power and equipment and you’ll pay a monthly fee or purchase all of the power up front for a set amount of time. This option is no money down and you’ll save as soon as the system is turned on, but you will not get the tax credit since you are not the owner. Another financing option is to take out a loan for the system. This option is also no money down, you’ll see savings immediately and you can take the tax credit. The last option is cash. This is a large investment up front but you can take the tax credit and you’ll often times see a quicker pay back period with cash.
Call our solar experts today to see how much you can save by going solar!