The overall costs of solar panels have dropped 67% percent since 2010 saving homeowners more money than ever before. Most of our clients see a whopping 35% reduction in their energy costs. In fact, the 2023 Heatmap Climate Poll found that 46% of US adults want to power their homes with solar panels in the future while 13% already do. So why doesn’t every American have solar already? The biggest roadblock is usually the cost of solar panel systems. However, inspecting the costs by breaking them down can turn solar pricing from a confusing mess to a digestible and reasonable investment.
Are Solar Panel Costs Changing?
The price of solar panels has decreased drastically over the last decade and is looking to continue to fall with an increase in global and domestic panel production. Since 2010, residential solar panel prices have fallen by roughly 50% while US solar deployment has grown by over 2,000%.
As seen in the chart, utility-scale solar is the cheapest out of all of them, in fact, solar takes the lead as the cheapest when compared to all other forms of power generation. While utility-scale solar installation is leading the pack with efficiency, residential solar is quickly catching up.
What is the Cost of a Solar Panel?
There are three main types of solar panels: monocrystalline, polycrystalline, and thin-film. Monocrystalline is the most commonly used of the three with 20% energy efficiency. Polycrystalline are less expensive to make and less expensive to buy with a slightly lower energy efficiency. They also look similar to monocrystalline panels and have a slightly lower life span. The last of the three is the thin-film solar panels which are lightweight, malleable, and significantly more affordable to manufacture and install than the other two options.
Average price per watt
- Monocrystalline: $1-$1.50 per watt
- Polycrystalline: $0.70-$1 per watt
- Thin-film: $0.43-$0.70 per watt
Understanding Cost per Watt vs Cost per kWh
There are two main ways to calculate the cost of a solar system
- Price per watt (PPW) is useful for comparing multiple solar offers
- Cost per kilowatt-hour is useful for comparing the cost of solar versus grid energy
What is Cost Per Watt
Calculating price per watt is pretty straight forward. It is simply the system cost divided by the number of watts in the system.
Price per watt ($/W) allows for an apples-to-apples comparison of different solar quotes that may vary in total wattage, solar panel brands, etc.
Pro tip: It can be helpful to know your solar price per watt before and after claiming the 30% tax credit.
What is Cost per kWh
Another measure of the relative cost of solar energy is its price per kilowatt-hour (kWh). Whereas the price per watt considers the solar system’s size, the price per kWh shows the price of the solar system per unit of energy it produces over a given period of time.
Net cost of the system/lifetime output = cost per kilowatt hour
Calculating the Cost of Solar Panels
There are many online calculators that will help you calculate the cost of solar panels in your home. In this example, we're going to demonstrate how to calculate the cost manually based on your home's electricity usage. Before you use a solar panel cost calculator it is important to understand that many variables affect the cost and many calculators estimate these prices. These calculators also vary by state.
Calculating the Cost of Solar Panels by Square Foot
Another way to get an idea of how much your solar panels will cost is searching for prices for homes similar to yours. On average, solar panels cost $8.77 per square foot of living space, after factoring in the 30% tax credit. However, the cost per square foot varies based on the size of the home.
Lowering the Cost of Solar Panels
Although home solar is already more affordable than paying for utility electricity, there are a few ways to reduce the cost of your system and maximize your energy cost savings.
Seeking Solar Incentives in Your State
There are solar incentives offered by federal, state, and local governments, in addition to utility providers.
The most notable is the federal solar tax credit worth 30% of what you pay for solar panels. So, if your all-in cost is $25,000, you can claim a tax credit worth $7,500 on your federal income tax return for the year your system was deemed operational.
Additionally, many states have incentives like tax credits, exemptions, and rebates. Even at the local level, many city governments and municipal utilities have incentives for energy-efficient home upgrades.
With solar prices falling and electric grid prices rising, there is no better time to get solar than now. Although the price may be alarming to some, think of solar as buying 25 years' worth of electricity in bulk. It costs more upfront but will save you a lot in the long run. There are also zero-down loan offers that can offer you immediate energy savings. However, be cautious of free solar panel offers as some might end up being scams. Reach out to us at Soar today to get a free customized savings plan to see how much you can save by making the switch.