According to a report from the Lawrence Berkeley National Laboratory, the median installed price for solar energy systems fell by as much as 8% in 2016. Prices were expected to decrease a further 10% more throughout 2017. Data from SolarReviews shows that although solar panels cost fell only 8% in 2017 the combined fall in solar power system costs has changed significantly the cost benefit equation offered by installing solar panels on your home.
Many homeowners looked at solar when it was more expensive are not aware of how price reductions in recent years have improved the return on investment from solar. However, even with 2018 residential solar prices now averaging just $3.12 per watt many still are shocked by how expensive solar power systems are. This shock is compounded when consumers hear that residential systems are much cheaper in some other countries and also when consumers see individual solar panels advertized online at a fraction of what is being charged for.
What factors affect the price of residential solar power? How can homeowners get the best deal on their new installation?
What Makes Up the Cost of a Solar System?
There are several components in residential solar installations that affect the final price. Hardware is the largest expense for new solar installations. Panels, collectors, and batteries can account for up to 25% of the total cost for a new system. The Office of Energy Efficiency and Renewable Energy estimates that up to 64% of solar system prices come from soft costs. These include:
- Permit fees.
- Sales tax.
- Transaction fees.
The decrease in solar energy prices is linked to lower prices for equipment. However, the soft costs that make up the bulk of new installation expenses continue to rise.
Working with the right equipment manufacturer is another way to control solar equipment costs. Find offers from solar battery manufacturers that could significantly lower your out-of-pocket costs.
How Do Recent Changes to Import Tariffs Affect Rooftop Panel Prices?
In January 2018, the United States government increased tariffs on imported solar panels to 30 percent. The tariffs drop by 5 percent each year, ending at 15 percent in 2021. During this short-term pricing spike, installation companies are trying desperately to pass very little of the increase on to their clients. In fact, consumers should only see an increase of 10 to 12 cents per watt from these tariffs, according to global electricity experts Greentech Media.
Want to know exactly how much more you’ll pay for your solar power with the new tariffs in place? Use this solar estimate tool to find out.
How Can You Lower the Cost of Your Solar Power Installation?
Even with soft costs and extra tariffs, consumers can find ways to reduce the final bill for their residential solar power system.
- Take advantage of the federal tax credit for new installations to receive up to 30% of your investment back. Some states also offer their own incentives.
- Choose an installation company with financing terms that fit your budget.
- Consider purchasing used equipment. While this may save you some cash up front, used equipment can hide internal damage that keeps your system from producing the maximum amount of usable power, so proceed cautiously.
In some areas, community solar farms make renewable energy accessible and affordable for everyone. Find one in your area or organize your neighbors and start a new project.
How Much Does It Cost to Maintain a Residential Solar System?
As components wear out, get damaged, or become obsolete, regular inspections and maintenance are key to protecting power sources. Once the installers are done, the homeowner is solely responsible for the cost of any upkeep.
An annual inspection by a local solar installation company costs roughly $150. Repairs and equipment replacement vary. A professional cleaning to free panels of dirt and debris averages $10 to $20 per panel. Not sure how many panels your home will need? Use this solar calculator to find out.
Using these estimates, a home with 5 solar panels would spend $200 to $300 each year to keep their system running smoothly. A family with 30 collectors would need between $450 and $750 for regular maintenance fees. Frugal energy users can try cleaning their own panels to reduce their costs. However, periodic professional cleanings are still needed to maintain optimal system performance.
Does the Installation Company Affect the Price?
Solar power companies often offer incentives to lure interested customers. These deals can have a positive impact on the final price of residential solar power systems. Check with several installation companies to ensure you get the best price available. Keep in mind that lower prices do not always mean a better deal. Take time to read reviews and get an idea of the company’s quality of work before committing to work with them.
How Much Will I Save With Solar Energy?
While the cost to install solar systems is falling, the actual cost of generating power is decreasing as well. According to the International Renewable Energy Agency (IRENA), photovoltaic solar energy costs roughly $.10 per kilowatt hour. Producing the same amount of energy with fossil fuels ranges from $.05 to $.17. However, how much each household actually pays depends on many factors.
- The number of panels and how much energy each can produce.
- Battery storage capacity.
- Hours of sunlight received on the property each day.
- Your agreement with your local utility provider.
The solar payback period is the length of time it takes you to recoup your initial investment costs. After that time, every watt of energy you make is profit. This calculator will help you understand how soon your new residential solar system will start paying you back.
Is Going Solar Worth It?
Solar energy is clean, safe, environmentally friendly, cost-effective, and reliable. Homeowners across the country are enjoying lower monthly utility bills and greater energy independence with solar energy installations. Talk to an installer in your area for a more personalized assessment of your property and potential savings.