One of the biggest concerns that people have when going solar is how much solar panels cost to install. We hate to hit you with “it depends” but it does! The type of your system, its size, the way you want to get it — all these things and more affect the final cost of your PV installation. Let’s go over them step by step.
When you consider a home installation, there are three ways you can set up your solar system:
• Grid-tie solar system. Your house is connected to the grid, and you can use solar energy for your home or export it into the grid. This is the cheapest type of system as it requires only solar panels, a grid-tie inverter and addons, such as mounting and wirings. It provides steady savings but your home is vulnerable to power outages.
• Off-grid system. When your house can’t be connected to the grid, you can use a solar system instead of a generator. This configuration always requires energy storage which increases the cost of solar installation.
• Hybrid system. Your house is connected to the grid but you also have energy storage to rely on in case of a power outage. This setup is more expensive than a grid-tie system but sometimes provides higher savings over the years.
Whenever your system has a battery, the cost of solar panel installation increases by up to 50% and the ROI tends to go down. The battery provides the comfort of being immune to power outages. In a hybrid system, a battery may increase savings through peak shaving. You can set your system to make your house draw energy from the battery at times of peak utility rates and save money this way.
Prices change all the time. Still, let’s look at the very approximate costs for different types of solar systems. The average size of a solar system in the US is 7 kilowatts.
• A 7kW grid-tie system — $7,000-$10,000 after the labor and incentives
• A 7kW off-grid system — $15,000-$20,000
• A 7kW hybrid system — $12,000-$17,000
Solar energy is getting popular among boondockers and sailors. Their energy needs are low and one-two panels are often enough. Besides, they often prefer to install the system themselves. A small kit for an RV or a boat under, say, 3kW can come for $1,000-$2,000 or even less.
Let us do the math for you
A1SolarStore Calculator will help you figure out the approximate cost of your future system and the savings that it may bring.
The price of installing solar panels depends on how you go about doing it. Technically, you could find a company that will design and install a “turnkey” solar system for your home. A much cheaper option would be to purchase the equipment yourself and find an installer. Read the article “5 tips on choosing a solar installer from A1SolarStore engineer” to learn more.
There is no fixed rate for labor when it comes to PV systems. The cost to install solar panels is going to depend on the size of your installation. Keep in mind that you’ll have to schedule inspections and get permits from authorities which may also increase your expenses.
Labor expenses make up 30-50% of your installation costs
If you are good with tools and you want a small DIY solar project in our garage, an off-grid PV system for a remote house or a small mobile installation for your RV, you can install the system yourself. In this case, you bring down the cost of installing solar panels to your equipment expenses.
The way you pay for a solar system also makes a difference. There are three options to get a solar panel system: you can buy it in cash, lease it or take a loan.
10.82%
— average personal loan interest rate in 2023
Leasing and using a loan make going solar easier but barely profitable for you. Paying interest or the lease brings your savings over 25 years of having solar down to $3,000-$5,000, according to Google’s Sunroof project data. The system only pays for itself and then you get a little extra.
There are also smart ways of going solar with a loan. Some banks offer special loans for energy-efficient upgrades for your home with an interest rate as low as 4%. Solar systems fall into the category of these upgrades.
To speed up the switch the clean energy, the state offers financial incentives for those who want to go solar. If you’re lucky, you can have the government pay for half of your system.
Dec. 31, 2034
— ITC expires
The incentive that is available to all Americans is Federal Solar Tax Credit or ITC. It allows businesses and individuals to claim a tax credit equal to 30% of the solar panel installation cost. It includes all equipment as well as shipping and labor expenses.
If you install a solar panel system for $20,000 at your home, the government lets you take off $6,000 from the taxes you owe. So, you end up paying only $14,000 for the system after the deduction. If there's any credit left, you can use it in the following years.
Claiming the tax credit is easy and involves three main steps:
1. First, check if your solar panel system qualifies for this tax credit.
2. Then, fill out a form called IRS Form 5695 to claim the credit.
3. Finally, add the information about your residential energy credit to Schedule 3 (Form 1040).
There is also a long list of smaller and local incentives that may contribute to lowering your solar panels installation cost. You can check some of them out in our article “10 programs & incentives to ease your switch to solar”.
Check solar programs in your area
Find out how can you make the state pay for your PV system in our State Solar Power Rankings
Solar energy is cheaper than ever and the price keeps going down. One watt of solar capacity cost $76 in 1977. By 2000, it went down to $5. The cost per one solar watt in 2023 reached $0.3 per watt and lower. “For projects with low-cost financing that tap high-quality resources, solar is now the cheapest source of electricity in history,” claims IEA.
All of this points towards the fact that going solar is better than ever. A solar installer is one of the fastest-growing jobs in the US. As the competition increase, the price to install solar panels should get more and more favorable for the customers.
Learn how to make your system cheaper
Find tips and ideas on how to save money when going solar in our A1 SolarStore Guide
Andrey had been a news editor and freelance writer for a number of medias before joining A1SolarStore team. Climate change and its impact on people's lives has always been among his interests and it partially explains his degree in Philosophy and Ethics.
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