The average cost of solar panels in 2021 was $3.04 per watt. This price included soft and hard costs such as permitting and installation labour and excluded financing. It also included equipment and hardware costs.
This data was provided by the Solar Energy Industries Association (SEIA) in March 2022. This only shows no fixed price for a solar panel system. Your system cost is variable upon your individual needs. Solar companies add this need along with other factors such as:
- Your location.
- Your energy usage.
- The layout and condition of your roof.
- Solar rebates, tax credits, and incentives eligibility.
- Solar panel model and make.
- Local utility and permitting requirements.
- System efficiency and size.
Solar Energy Systems Pricing
The three most common ways of pricing solar energy systems are:
- Price per panel.
- Gross cost.
- Price per watt.
Let’s take a look at each pricing model in detail.
Price Per Panel
This is usually employed for pricing DIY solar panel kits that are suitable for RVs or boats but not homes. Panels vary in price due to their efficiency, make, and model. Higher efficiency panels tend to cost more.
However, you will not need as many of those panels to generate an equivalent amount of energy as created by a larger system that uses low-efficiency, inexpensive panels. This method leaves a lot of valuable information out of calculation which is why it is rarely used for residential solar panels.
Gross Cost
The total or gross cost of solar panels covers anything and everything you need to lawfully turn your system on before financial incentives are added to the mix. You need permission from government entities called “authority having jurisdictions” (AHJs) to lawfully power or install your system.
There are other entities to which you must apply for permission, like your utility company and the housing building department. Additional approvals will come from your area's homeowners association (HOA). Other side costs include:
- Labour and installation cost.
- System engineering and design.
- Inspections and permitting.
- Hardware and equipment.
Price Per Watt
Price Per Watt (PPW) is the maximum power output of a solar energy system. Its unit of measurement is the dollar amount per watt of solar energy a system can generate.
This way, homeowners can compare overall system performance prices rather than the square feet of roof space or number of panels. The calculation for PPW is taking the gross cost of a solar panel system and dividing it by its power capability or total wattage.
The main difference between PPW and the gross cost is that by using PPW, you can easily measure the comparable value of several solar power system quotes that may differ in solar panel types and wattage. In contrast, it's hard to pin down where the actual cost comes from in gross cost, and it is an overview of the total cost.
Size Of The Solar System
The size of the solar system you need mainly depends on a few factors:
- The solar offset you aim to achieve.
- Your energy usage (visible on the electricity bill).
- The amount of electricity you need from the solar panels.
Soft and Hard Costs
These are two confusing terms, so it is important to define them.
Soft Costs:
These include the time taken to get all the correct licenses, permits, and labour needed for a solar system. Also included are:
- Transactional fees.
- Supply chain costs.
- Permitting fees.
- Inspection costs.
- Sales taxes.
- Interconnection fees.
- Installation costs.
- Customer acquisition fees.
Hard Costs:
These are the costs for physical components of your solar system:
- Electrical equipment.
- Electrical panel.
- Solar inverter.
- Racking and mounting.
- Solar panels.
Leasing Solar Panels
The company installing your solar panel system holds complete ownership in a solar lease. You pay a fixed monthly amount for any electricity generated by the solar panels. This way, you can decrease your utility bills, which is great for homeowners with fixed incomes.
With a lease, you don’t have to pay any upfront costs for residential solar installation. The monthly payments resemble rent. Plus, you won’t be responsible for the system’s maintenance and installation since that is the solar installer’s job.