Cost of Solar Panels Continues Massive Drop
The cost of solar panels continues to dominate headlines, and with good reason — solar power is clean, it’s effective, and it’s cheaper than ever.
The cost of solar panels has never been lower. Here’s how the solar drop breaks down throughout the past several decades, why we can expect it to continue to drop even further and what factors do you need to consider before calculating the costs of going solar.
- Cost of Solar Over Time
- The Future of Solar Energy
- Before You Install Solar Panels
- Solar Panel System Costs
- Roof Mounted vs. Ground Mounted Systems
- Do I Need Storage?
- Do I Need Tracking Mounts?
- Solar Panel Installation Costs
- Solar Panel Maintenance and Operational Costs
Cost of Solar Panels Over Time
Solar in the 1970s to 1980s
This graph from Bloomberg (BNEF) shows the extremely stark difference in pricing between solar in 1977 and today:
The price per watt in 1977 began at over $76. In 2015, it was down to $0.57/watt. That makes solar over 130 times cheaper within 38 years.
Solar from the 1990s to 2000
Fast forward to 1992, when the University of South Florida developed a 15.9 percent efficient thin-film photovoltaic cell made of cadmium telluride, breaking the 15 percent barrier for the first time for this technology. Throughout the decade, greater leaps would be made in solar technology, but prices would still not drop to a point that would peak consumer interest.
Nonetheless, this second chart shows prices continued to fall:
Solar from 2010 to 2016
By the time we hit the current decade, solar was really heating up. Thanks to dropping prices per watt, new federal incentives, and new financing options, the cost of solar for the average homeowner really began to drop — and fast — allowing residential homeowners to finally install solar rooftop panels at a much more reasonable rate than in the past.
Just how much more was installed? The Solar Energy Industries Association (SEIA) found the U.S. installed 4,751 MW of solar PV in 2013, up 41 percent over 2012 and nearly fifteen times the amount installed in 2008. More solar had been installed in the U.S. in the last 18 months than in the 30 years prior. And solar accounted for 35 percent of all new electricity generation capacity in 2015, up from 10 percent in 2012. Why, you ask? It’s in part because the average photovoltaic system price fell by 15 percent in that year.
This report from SunShot (part of the U.S. Department of Energy) explains it further, breaking down how module prices in general fell and led to further price drops all around:
Following a period of relatively steady and sizeable declines, installed price reductions began to stall around 2005, as the supplychain and delivery infrastructure struggled to keep pace with rapidly expanding global demand. Beginning in 2008, however, global module prices began a steep downward trajectory, which has been the driving force behind the roughly 50% reduction in the installed price of PV from 2008 through 2013. Those module price declines ceased in 2013, and given the limits to further reductions in module prices, continued deep reductions in installed prices will necessarily require significant reductions in non-module costs.
As for those savings in solar system prices, the National Renewable Energy Laboratory (NREL) published that photovoltaic system prices of residential and commercial PV systems declined six to seven percent per year, on average, from 1998 to 2013, and by 12 to 15 percent from 2012–2013, depending on the system size. Moreover, the average reported prices also fell by roughly $0.24-0.48/watt (from five to 12 percent) during the first half of 2014, relative to 2013.
Another NREL report points out that solar electricity generating capacity grew by a factor of 35 between 2000 and 2013 and accounts for half a percentage of annual U.S. electricity generation. In fact, U.S. states with extensive solar incentives led in both cumulative and annual American photovoltaic solar system installations in 2013, specifically in Arizona, California, Massachusetts, New Jersey, and North Carolina.
Just in the last five years, the solar energy capacity in the U.S. has grown by an astounding 418 percent, according to the U.S. Energy Information Administration’s April 2014 Electricity Monthly Update. Yes, you read that right. It’s just not possible that capacity could have quadrupled had prices remained as high as they were even in 1999.
The Future of Solar
Projects built in 2014 had a lower lifetime cost per kilowatt-hour than projects built in 2010, according to Vox. Conversely, other energy sources like biomass, geothermal, and hydropower haven’t seen big drops in cost lately. The more efficient technologies right now belong to solar.
Despite price drops, there is still a lot of uncertainty surrounding how low those solar system prices will keep dropping over the next five to 10 years. Solar in large measure thanks to government incentives, including a 30 percent tax credit on new installations. Those tax credits are set to expire in the next couple of years, which leaves solar companies and investors asking whether or not the greatly reduced price will still draw new consumers. The alternative left for homeowners who may think it’s too expensive to buy solar panels is leasing, which is generally a bad deal for the consumer.
That said, the consensus seems to be that reducing carbon emissions and increasing solar energy production is well within reach. That’s why states from Hawaii to New York have set out ambitious solar energy goals to meet, as well as why major tech companies like Amazon, Google, and Apple are investing their own capital to build solar farms.
So what is next for solar? Will prices drop even more, down to 50 cents per watt? What states will dominate solar in 2016? Will solar systems being installed generate twice as much power? Only time will tell. Now let’s address all the practical questions of installing a residential solar system.
Before You Install Solar Panels
You are considering purchasing solar panels for your home or business, and you are wondering, how much does a solar panel cost? Actually, you have to think about a great deal more than simply the panel or panels. Every building is different, and there can be incidental costs. In the sections that follow, we will talk about what you need to look into before installing a solar panel system, and what it might cost. We will also discuss some of the ways that you can reduce the potential cost, and you will be able to make an informed decision.
This could affect your solar panel system cost in a huge way. If your roof is not in good shape, and you think that you will have to replace it soon, it would definitely be to your advantage to do so before you have your solar panel system done. The cost of having your solar panel contractor remove the panels and re-install them in a new roof is just one expense. You also have to think about the time that you will not benefit from solar power while the roof is replaced.
How do I Know if Need to Have My Roof Fixed First?
You probably already have some idea as to whether your solar panel cost is going to include roof replacement. If you have noticed any leaks or staining in your attic, or on your walls, or if you have found mildew in your home, then moisture is getting in from somewhere, and the most likely source is your roof. Other indications that roof replacement will factor into your solar panel system cost include dark spots on your roof and an otherwise unexplainable increase in your energy costs.
If you have noticed none of these signs, then chances are your roof is in good repair, and suitable for solar panels. The cost of an inspection, though, is usually non-existent – most roofing companies will do it for free.
Average Costs of Roofing
What you can expect to pay to ready your roof to receive solar panels will vary depending on the nature of the work required. You might just need some repairs to fix a few issues, or you could need a complete new roof. Your out-of-pocket costs will depend on how much needs to be done, as well as the materials you choose if you do require a full roof.
A solar panel system usually weighs about four pounds per square foot. This doesn’t sound like much, but if your roof is already sagging, the additional weight of the solar panels is not going to help. Also, a sagging roof will inevitably begin to leak over time. So, if your roof is not in good shape, it really does make sense to include a new roof in your solar panel system cost.
Now, to get down to actual numbers, your cost for a new roof will depend on the square footage that needs to be covered. Homewyse estimates that for a shingle roof, you should expect to pay anywhere from $5.43 and $7.05 per square foot. So, if you need a 200 square foot expanse of roofing replaced with shingles, then you can expect to pay between $1,086 and $1,409. If you have to replace your roof, you will have to factor this into your solar panel cost, and that is just for materials. You also have to consider labor, and that takes the average cost of a new roof for the standard 1,200 square foot home to anywhere between $4,100 and $6,000.
Asphalt shingles are your most cost-effective option. If you go with more expensive materials, then obviously the cost is going to go up. You can expect to pay twice as much for metal roofing, and five times as much for slate.
How much you choose to invest in your new roof may also depend on how long you plan to be in the home. Asphalt shingles will usually last at least 20 years. Metal and slate are good for 50 or more, so when considering your roof as part of your solar panel cost, keep this in mind.
Solar Panel System Costs
As we have previously stated, you need to think about the cost of the entire system, not just the panels. So keep reading to learn more.
Average Price of One Solar Panel
You are still wondering about the solar panel cost for just one, so let’s address that first. For one thing, you are hardly ever likely to want just one panel, but if for some reason you do (perhaps for a camper or small out-building), then your price will depend on the wattage of the panel. Most solar panels are about 200 watts, and you will usually pay anywhere from $1.00 to $1.50 per watt in any of the top solar states (Arizona, California, Colorado, Hawaii, Massachusetts, New Jersey, New York, Nevada and North Carolina). So, on average, a single solar panel will cost you from $200 to $300.
How Many Panels Do I Need?
This will depend on your goals. People go with solar electric systems for many reasons. Perhaps you want to save money on your energy costs. Or you want to maximize the potential return on investment in your home. Perhaps you are completely altruistic, and care less about the solar panel cost than you do about minimizing your carbon footprint. For most people, it is a combination of the desire to save money while doing their bit for the environment.
So to determine how many solar panels to get, and the cost involved, you need to be clear on your goals. Then, you will have to assess how much energy your family typically uses in any given billing cycle.
You also need to consider:
- how much of your roof is available to accommodate solar panels,
- which parts of the roof get the most sun,
- the wattage of your panels and their PV (photovoltaic) technology,
- and the availability of net metering.
The quality of the solar panels you buy will also affect how many you are likely to need. This is where wattage comes in. Most residential solar panels will have a wattage of anywhere from 150 to 345. So, what you need to do is find out how many kilowatt hours your family uses in a typical day. A quick glance at your energy bill will tell you how many kilowatt hours you have used. If you are on a monthly billing cycle, divide your total kilowatt hours by 30.
If you are billed bi-monthly, divide by 60. And so on. Now break it down into hours – divide the total that you got on the first division by 24, and that will give you your hourly kilowatt usage. And finally, take your hourly kilowatt usage and divide it by the wattage of the panels you are considering. Do this for both high- and low-wattage panels. The total should at least match your hourly kilowatt usage.
Once you have a good idea of the number of solar panels and the cost that you are likely to incur, your solar panel installer can take a look at your roof and determine if your configuration is realistic – in other words, if he or she will be able to arrange the right number of panels in order to meet your daily energy requirements.
Roof-Mounted vs. Ground-Mounted Solar Panel Systems
So far, we have talked mainly about roof mounting, but you can also mount your solar panels on the ground. Cost wise, ground-mounted systems can be more expensive. However, there are both advantages and disadvantages to either system.
Rooftop solar is frequently the better option. First of all, it is generally more aesthetically pleasing. You also don’t have to worry about devoting ground space to your solar panel system, so the cost will not include bringing in equipment to prepare your land. Because rooftop installation is easier and faster, your solar panel cost will also be lowered by virtue of requiring fewer man-hours.
On the other hand, there are circumstances in which rooftop installation may not be the best course of action. If there are a lot of obstacles on your roof (chimneys, antennae, vents and so on) then rooftop installation could be problematic. And if you have a lot of trees shading your roof, the panels may not get enough sun. Then, a ground system could actually be better despite the extra cost.
Image credit: via FlickR
Perhaps you live in a neighborhood where your homeowners’ association prohibits the installation of panels that can be seen from the street. Your solar panel cost will almost certainly be higher than if you were permitted a roof installation, but realistically, no one ever fights a homeowners’ association on such matters and wins.
Now, it is also worth mentioning that if you have a large expanse of land, you can actually install a much bigger solar panel system, and get cost savings by virtue of being able to harness considerably more solar power than you could with a rooftop system. So, when you are considering whether to go with a rooftop system or a ground mounted system, there really is no perfect answer. Either has benefits and disadvantages, and much will depend on the type of house and property you own and your personal preferences.
Do I Need Energy Storage?
Most people, when considering solar panel system cost, want to know about whether they should think about storing energy. You could simply go with a panel system and not worry about storage, if you are confident that your solar panels will meet your energy needs, or if you are comfortable with paying a certain amount to your energy utility each billing cycle. It really depends on how independent you want to be.
If you want to rely exclusively on solar power, then this is what is known as “going off-grid.” This means that you no longer have to depend on your energy utility for power, and if you are storing power, it may even mean that you can sell your unused energy back to the energy utility.
Most of the time, though, going totally off-grid is not practical, especially if you don’t have unlimited space for solar panels. The cost of the setup, too, can sometimes actually outweigh the savings that you will realize by being off-grid, once you add it up over the course of your lifetime, or over the length of time that you plan to own your home.
The advantage to going off-grid with a storage solution is, of course, that you do not have to worry about power failures. The disadvantage is that you will need a good enough storage system to back you up in the event of a power failure that might last for days, and this will dramatically increase your solar panel system cost.
There is also another disadvantage – power failures usually occur in very bad weather. So, if you have a snowstorm that lasts for a couple of days, during that time, your solar panels will not be receiving much, if anything, in terms of energy from the sun. Ergo, you will be using your storage system without being able to replenish it. A storage system that will get you through several days without power is going to be much more costly than one that powers your clothes dryer for a few extra loads or lets you binge-watch Netflix from time to time.
So, in the final analysis, yes, you probably will benefit from storage, but it may not enable you to be totally off-grid.
Average Prices of Energy Storage Systems
To purchase a battery that will give you enough power for the typical home, you can expect to lay out approximately $40,000. It is worth noting, though, that the technology is relatively new, and the cost of technology typically goes down, not up.
As research continues into energy storage, the solar panel system cost including storage will likely also become considerably lower. Ideally, you might consider installing a solar energy system, and waiting a bit to see if the price for batteries drops.
Do I Need Tracking Mounts for my Solar Panels?
Tracking mounts hold your solar panels and move them in the direction of the sun. Obviously, this way a solar panel will move, and the cost of energy delivered to your home will be reduced because you are getting that much more from the sun.
Sounds like a good idea, right? However, solar tracking mounts are not typically used in home settings – they are more common in solar farms. This is because they are expensive.
Average Prices of Tracking Mounts
Tracking mounts will typically cost anywhere between $6-7000, and depending on your family’s energy needs, you may need more than one. So, for the typical family, they are not usually practical. Think of it this way – is it cheaper to be on the grid to the tune of anywhere from $6,000 to $14,000 or more over who even knows how many years, or is it cheaper to buy a tracking mount or two?
Solar Panel Installation Costs
Right now, solar panel cost is anywhere from $7 to $9 per watt for installation. A 5 kw system would cost anywhere from $25,000 to $35,000. That includes parts and labor. The labor cost is usually about 10% of the total cost – $2,500 to $3,500.
Pros and Cons of DIY Solar Installation
Sounds like a lot of money, right? But unless you are extremely handy, this really is a job that is best left to the pros. You have to think about things like configuration and orientation, and the more complex your system, the more complex the job.
The other thing you should consider when debating your solar panel system cost as regards installation is that if you do it yourself, you may miss out on many of the financial incentives that are available. So think about the perils and pitfalls regarding incentives, and also remember that you want your system to function properly.
Professional installers have the benefit of years of research and insights into product design. If you try to do it yourself, you might get it right, but there is also a chance that you will end up spending more to have a bad installation fixed than you would if you had it professionally done in the first place.
Solar Panel Maintanence and Operational Costs
Now that you have your solar panel system, cost of maintenance and cleaning can be issues. Fortunately, solar panel systems require very little in the way of either maintenance or cleaning.
#1 Solar System Maintenance
Most of the time, if something goes wrong, you will be covered under warranty, and some of the warranties on these types of systems are truly stupendous – up to 25 years for maintenance. The conventional wisdom suggests that you should expect to pay no more overall than about $30 per year in maintenance even after your warranty expires.
#2 Solar System Cleaning
You do not have to clean your solar panels the way you do your windows, and in fact, manufacturers recommend that if you do feel the need to clean them, you should just hose them off. Professional cleanings are hardly ever needed, but you might want to have it done every 20 years or so.
Right now, the cost to have your solar panels professionally cleaned is about $20 per panel, but who knows what it will be in 20 years’ time. You can probably not worry about crossing that bridge until you get to it, well down the road.
There are many incentives available for people who want to go solar. To begin with, there is a 30% ITC (Investment Tax Credit) that is offered by the federal government. Also, many municipalities, counties and states also offer incentives and rebates. Your best source for information on rebates and incentives is your solar energy installer. You can also check out the DSIRE (Database of State Incentives for Renewables and Efficiency) to find incentives that are available in your state.
Solar for $0 Down – Good Deal?
There are many programs that will allow you to install solar energy panels in your home. Your solar panel cost could actually be zero dollars down, but is this really a good deal?
There are pros and cons to the zero down deals. First of all, you need to decide if you are going to lease the solar equipment, or buy outright using a zero interest loan. If you go with a loan, then you own the equipment, and you have all the rights to it, and you also benefit from any incentives that may be attached to going solar. If you lease the equipment, you do not own it. You cannot sell it along with your home if you move. And the company that is leasing the equipment to you will benefit from any incentives – you will not.
That said, either option will give you immediate savings.
One huge benefit to a leasing arrangement is that they can usually be approved immediately. Loans take ta bit longer.
If you sell your home, though, and you are on a lease, you will either have to buy it out, or transfer it to your home’s buyer. If the buyer does not want to take on the lease, then you will have no choice but to buy it out.
Of course, this may not be an issue, since solar-equipped homes do tend to sell faster and higher than non-solar-equipped homes.
So, how much does a solar panel cost? Not much, in and of itself. The cost you incur in going solar will have far more to do with the type of additional equipment you choose. And when you sell your home, the type of payment agreement you have chosen could affect the price you get and the benefits you reap from installing solar panel technology.
Is solar energy for everyone? No. But if you are willing to make the initial investment, you could save a great deal of money over the long term, reduce your carbon footprint, and have a more desirable home should you choose to sell.