A large roadblock homeowners run into when beginning their solar journey is determining the true cost of solar panels. These answers seem to be encrypted in confusing conversions and masked by appealing benefits and incentives. In this article, we will clear up the confusion. Cost per watt is simply a way to ‘normalize’ the total cost of solar installation. Essentially, the cost per watt is the total price of the installation of the system divided by its wattage capacity, to give you a clear number of how much money you are paying for each watt you are receiving. Solar panel cost per watt (PPW) is the most widespread and useful way to compare multiple solar costs to calculate which is the best for you.
Calculating Solar Price Per Watt
To calculate solar price per watt you simply divide the cost of the system (in dollars) bu the size of the system (in watts).
PPW = System Cost / System Wattage
Note that systems are usually sized in kilowatts (kW), so you will have to multiply that by 1,000 to get your price in watts. Also remember to distinguish between the PWW before accounting for incentives and the PPW after accounting for incentives.
- If the system size is 5,500 Watts, and the gross cost is $19,250, the PPW is $3.50 per watt
- If the system size is 5,500 Watts, and the cost is $13,475 after the 30% tax credit, the PPW is $2.45 per watt
Using Price Per Watt to Compare Solar Quotes
Calculating the price per watt of solar is helpful to estimate how much solar would cost for your home and to compare solar quotes for various-sized systems.If you are comparing three different solar companies, they will likely have differences in size and cost of the system. PPW is the only way to see a baseline comparison of how much solar capacity you are getting for your money. Sometimes the highest price tag will bring you the best deal.
What is Factored into a Solar System's Price Per Watt
There are different factors that can be used to determine a solar system's price per watt. Every project requires certain needs that will incur fixed costs such as a project permit which is needed in order to get started regardless of the size of the project. So what other expenses can be factored in? We'll highlight them below:
Size of Your Solar System
Whether you have a small or large system, the installer still must bring a truck to your house. This carries fixed prices with it. The installer will also need a permit for your project. These necessities generally have a fixed price that won’t change based on how small your project may be. Because of this, the larger the system, the lower the installer can offer you on a price-per-watt basis.
System add-ons are some of the unavoidable costs that sneak up on you in the process. These may increase the solar cost per watt simply because they call for more labor, risk or materials.
Some examples include:
- Electrical work
- Roof work
- Electric vehicle charger
- Interior conduit
- Atypical roofs
You may also see add-ons for certain roof times that are more difficult to install solar panels on.
These usually include:
- Spanish Clay Tile
- Metal Standing Seam
- Flat Roofs
Solar Equipment Costs
Solar equipment costs vary but understand that if you want to have premium solar equipment installed in your home, you will pay a significantly higher amount. Premium equipment may be necessary for your project because higher-efficiency panels are sometimes needed due to space constraints. Although premium panels will increase the PPW of your project, they may be the most cost-efficient option in the long term because of their higher efficiency and stronger warranties.
With so much competition in the solar space, company sales tactics may vary. Some company sales reps will overpromise in order to make the sale but will mark up the sale to expand their profit margin.
There’s no fixed value for what a sales markup can be, but a significantly higher solar cost per watt can be a red flag regarding the quality of the company you’re working with.
That’s why getting multiple quotes is so important to identifying outliers and solar scams. Always get three or more bids from local installers to get a sense of fair pricing!
PPW is a great tool for comparing solar quotes and ensuring you get honest prices. The first step in turning to clean energy is educating yourself about the process. Lowering the cost per watt is important to maximize the savings you earn from installing solar panels in your home. Get a customized savings plan today to see if solar is right for you.