solar panel installation cost

How Much Does Solar Panel Installation Cost? AVERAGE COST:$10,085 – $28,000 Solar panel installation costs around $18,500 for a 6kW solar panel system for a 1,500 square ft. home and the price per watt for solar panels can range from $2.50 to $3.50. Residential solar panels are usually sized at 3kW to 8kW and can cost anywhere from $9,255 and $24,552 in total installation costs. See average solar panel system costs by size (before tax credits or discounts).

Solar Panel Installation Cost

Solar Panel System SizeAverage Solar Installation Costs
2 kW$6,015
3 kW$9,225
4 kW$12,035
5 kW$14,893
6 kW$18,500
7 kW$21,008
8 kW$24,552

What Affects Solar Panel Installation Costs? 

These are a few main factors that will determine exactly how much you’ll spend to install solar panels on your home that we list out below:

  • Your home’s average utility costs and energy usage
  • Your rooftop’s solar potential – amount of sun it receives yearly
  • The average local cost for a solar panel system in your area
  • The average labor costs and demand in your area
  • Local incentives and rebates you could receive.

The Department of Energy expects lower solar installation cost trends to continue and estimates that one million plus homes will have solar panels installed by 2020. Solar costs dropped dramatically in the last few years when the Chinese government influenced the worldwide solar market by pouring low-cost financing into the sector which boosted solar panel manufacturing more than ten-fold.

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What Size Solar Panel System Do I Need?

The average home uses 905 kWh per month or around 10,850 kWh per year in electricity. The average sized home with a decent amount of sunshine could install a 5 kW to 6 kW solar panel system for their home to help reduce utility bills. You may want to learn about your sun number score for solar based off of your home’s location and average sunlight exposure discussed below.

The larger the solar panel system you install for your home, the lower the cost per watt will be. The cost per watt including solar panels, parts, labor costs, permits, and overhead is between $6 a watt and $8 a watt.

The money you save on your electricity bills can more than earn back your initial installation costs in 7 to 20 years. There are plenty of solar rebates and incentives available from both the government and local energy providers, which can significantly speed up your return on investment and give you an accurate solar panel cost. You may also be able to participate in selling excess electricity from your solar panels by net metering in your area.Ready to start
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Additional Solar Panel System Costs

There are a few things you’ll want to add in to your solar energy system’s total cost to get the most accurate price estimate. Here are a few additional factors that will

  • Labor costs – Local labor costs for solar installation will change depending on your area and the average costs solar installers charge in your area.
  • Installing solar mounts – The costs to install the racks that hold your residential solar panels will effect cost as well. There are a few options for solar mounting.
  • Installing solar inverters – A solar inverter will need to be installed to transform direct current (DC) power from the panels into the alternating current (AC) you can use in your home
  • Other costs: There may also be costs for any local permit fees, inspection fees, and taxes on the solar panels.

With the fall in solar panel prices, these “soft solar panel costs” now constitute the bulk of what you pay when you install solar on your home. Fortunately, as more people adopt solar power, soft costs have fallen as a result—a trend that’s very likely to continue in the future. It is always smart to find local solar installers in your area to discuss the average costs associated with solar installation in your neighborhood.

An analysis by the federal government’s National Renewable Energy Laboratory (NREL) discovered that installed prices have fallen at an average annual rate of 13% to 18%.


How Many Solar Panels Will You Need?

To know how many solar panels you will need, you will want to determine how much electricity you use in your home and the solar panel types installed. The average house in the United States uses about 900 kilowatt hours (kWh) a month—roughly 11,000 kWh a year. You can easily calculate your actual usage by looking back at your electricity bills.

  • As a general rule of thumb, a 3-kWh solar panel system will generate about 3,600 kWh to 4,800 kWh per year. A 5-kWh system produces about 6,000 to 8,000 kWh per year, and a 10-kWh system can produce about 12,000 kWh to 16,000 kWh per year.

Depending on the size of the system, the solar panels cost would be between $4,000 and $16,000. Add in another $3,000 to $10,000 for other necessary components such as racks for the panels, wiring, solar inverter costs, and the total solar panel installation cost would now be closer to $20,000.

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How Does Sunlight Amount Affect Solar Panels?

Southern states get more sun than northern states. But southern states with higher altitudes and less cloud cover—think of Arizona and New Mexico—get more energy from the sun than states such as Florida or Georgia. So, for the same size house, you would need more solar panels in Georgia than you would in Arizona.

Remember, the sun may be shining, but if it is behind a cloud, you’re not getting the same amount of solar energy absorbed by your solar PV system. This means that a solar panel in San Diego will produce more energy in a year than the same exact solar panel located in Seattle. The image below will help you determine the solar energy, known as solar insolation, in your area. If your roof does not get a good amount of sunlight and you live on a good size amount of land, you may have other options for mounting solar panels elsewhere with better sunlight.

photovoltaic solar resources

What is the ROI on Solar Panels?

You can calculate the return on investment for installing solar panels by calculating your total payback. Calculate the amount you spent to install a solar panel system and then figure out the amount you will save on energy bills monthly. These two numbers show how quickly your savings will cover your initial costs. Electricity rates will vary by region, being higher in the Northeast than in the Northwest. Solar tends to be more cost effective where electricity prices are high and sunshine is abundant.


Does Solar Net Metering effect ROI?

In states where net metering is in effect, consumers can sell the excess solar energy they produce back to their local utility. That lowers their electricity bill, shortening their payback period and raising their cost savings.


Should You Lease Solar Panels?

There are several payment options that bundle solar installation costs into a consumer’s electric bill, either as a solar panel leasing option or as a power purchase agreement. Solar leases allow the homeowner to install solar panels without paying anything (or much) up front reducing the overall solar panel cost. After the panels are installed, the homeowner pays only a flat monthly fee. The fee includes the installation costs, which are spread out over time, and the cost of electricity supply.

It is worth noting that under most solar lease arrangements, the solar company usually keeps any incentives that are associated with owning the solar panels. But the consumer gains other advantages. The solar company may offer a monthly fee below the utility rate, or one that doesn’t rise as utility rates do. At the end of the contract, homeowners can renew, purchase the system, or have the solar panel equipment removed.

These type of third-party financing arrangements have a lot of benefits for consumers—the best being no large out-of-pocket investment. And the solar system becomes cash flow positive from day one. Not surprisingly, these agreements have been a big factor in driving today’s solar energy installation boom.

Solar power may be simple in concept, but in application it can be bewildering. And the best approach for one homeowner isn’t necessarily the best for another. Take the time to gather the pertinent information —about house size, local solar insolation, existing electric rates, and consumption. It’s worth it in figuring out your potential solar cost for your home. Solar panels can not only power your home’s electricity for appliances but can also be fitted for other benefits such as heating and cooling your home with solar, solar water heating, and even heating a pool with solar energy.

TIPS FOR BUYING YOUR SOLAR POWER SYSTEM.

Buying a home solar power system can be a very exciting experience, but don’t get too carried away by advertising. Be sure to focus on the important aspects of your purchase as it’s a substantial investment and one you’ll be living with for a long time. The following are some buying solar tips on what to look for when purchasing a system.

Buying solar tips: Solar quotes online

Recommendations

Ask friends, family neighbours or colleagues who have had solar PV systems installed. Often the best buying solar tips com from right in your neighbourhood. They’ll be able to tell you about their experiences and perhaps alert you to any problems they experienced. Problems that you’ll be able to avoid. Learn more about potential issues in our consumers guide to solar power – avoiding tricks and traps.

Length of manufacturer’s warranty

Take note of what guarantees the manufacturer offers. If the manufacturer is reputable and the warranty period on the panels is substantial (at least 25 years) you would naturally expect your solar system to last long for a long time, long enough to pay for itself and make you a profit. However, for a warranty to be honoured, the manufacturer needs to be still operating. So, be cautious of brands without a track record in Australia.

Have realistic price expectations

If you are paying substantially less than many other similar size systems quoted, you may find poor quality equipment and/or poor installation work. Quality equipment and installation isn’t cheap and, like all other purchases, you often get what you pay for.

Compare components and warranty periods and check into the company providing the installation. While large, well established companies can pass on substantial savings due to increased buying power, other companies often reduce costs by cutting important corners.

Solar panel certifications

This applies to all solar panel purchases, but especially to the purchases that could attract a government rebate. The certification on solar panels indicates the type of testing that they have undergone. For instance, TUV IEC 61215 confirms that the solar panels have gone through testing by an independent laboratory and have met their advertised specifications. Other certification types are often self-assessed. Therefore, they rely on the company being honest in what it claims.

Decide on the type of panels

It used to be the case that if you had limited roof space you would need highly efficient (and very expensive) mono-crystalline solar panels. This is rapidly changing with advances in polycrystalline panel technology and some thin film technologies. Still, even if you have ample roof space you may still want to consider panel sizes vs. output. Filling up your roof with inefficient panels will affect your ability to add more panels at a later date, and does not maximise the power output of the space.

It’s also important to bear in mind that regardless of claim, no solar panel technology will produce a significant amount of power in full shade. Learn more about monocrystalline vs. thin film panels.

Solar panel mounting

Make sure that the roof, ground mounting or tracking system is engineer certified for the area you are in. For example, if you live in a cyclone prone area make sure the mounting system  and mounting brackets are also cyclone rated. Quality systems are wind certified. After all you do not want your system to take off during a wild storm . The mounting system is a very vital component and some suppliers skimp on this item. Make sure you ask about wind certification, warranty arrangements and get copies of relevant documents.

Solar inverter efficiency

A power inverter is the box between the panels and your appliances that converts DC electricity from solar panels to AC suitable for use in your home.

Not all solar inverters are equal and inverter efficiency will have a direct impact on the amount of time it takes for a system to pay for itself. Look at the inverter efficiency before purchasing a system. Obviously, the more efficient the inverter the better. Less electricity will be wasted as heat during the conversion from DC to AC. Industry leading solar inverters for grid connect systems in Australia include SMA, Sungrow and Fronius. Be cautious of  generic type brands.

Get a few solar quotes

It always wise to gather a few solar quotes when making a major purchase as you will find that prices vary widely between providers. But don’t be just swayed by price as inferior components can reduce the up-front cost of the system. However, they may wind up costing you more in the long run in terms of reliability and efficiency.

Buy solar power at discount prices

Avoid high pressure sales people

High pressure sales tactics are unfortunately common in the solar industry. Try not to make decisions on the spot, just ask the person to let you consider the offer. If it’s as good as they claim, it will still be a good deal tomorrow. Pressured decisions on the spot often turn out to be less advantageous in reflection.

High pressure sales people are only one of the pitfalls that may await you when you shop for a solar power system. Learn more about the potential issues and how to avoid them in our consumers guide to solar power – avoiding tricks and traps.

One of the best buying solar tips is to make sure to use an accredited solar power system installer, certified by the Clean Energy Council.

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