How much do solar panels really cost in your city?

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Cost breakdown for each component in an installed solar power system

Based on $3.08 average cost of installing solar panels reported by solar-estimate.org for January 2018 the following is our estimate of the breakdown of the individual component costs that go into the total cost of installing residential solar panels.

Cost breakdown for each component in an installed solar power system

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How we get and calculate solar panel cost data

We have four ways in which we obtain information about the cost of installing residential solar panels in America.

1. The first source of our solar panel cost data is Solar-Estimate.org, a website originally funded by the Department of Energy that is now used by over 80,000 consumers a year to request quotes from solar installers. We aggregate the responses to these solar quote requests and summarize this data on SolarReviews.com.
   You can use the www.solar-estimate.org solar panel payback calculator here. This will tell you how many solar panels you need to zero out your utility bill, how much they should cost and your return, savings and payback period.
2. The second source is government solar cost data. In several key states when solar panels are installed on a home the cost of this installation has to be reported to various levels of government. Where possible we make this data available online and from this we have data on over 50,000 residential solar installations.
3. The third source of data is comments in the Solar Panel Talk solar forum, the most widely used solar panels discussion website in America. There are thousands of posts on this site discussing solar quotes consumers have received.
4. The fourth source of solar panel cost data is the ability we give for users of this site to upload a quote they have received from a solar company and compare it to other solar quotes other consumers have received from other solar installation companies.

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Why our installed cost data is different to solar panel cost data on government websites?

The solar panel cost information shown on this website shows lower costs than those reported on government websites.

For example at the time of reporting:

There are two reasons for this. Firstly the reported government data also includes PPA (Power purchase agreement) and third party lease installations. In these installations the consumer has not actually paid an upfront amount for the system and the solar companies often report a higher than market cost for these systems. They do this partly because they want to encourage their customers toward a PPA rather than a purchase and also because it means they get a larger solar tax credit for the job (which they then sell to investors).

The second reason our solar panel cost data is lower is that the Solar-Estimate.org platform attracts very competitive bids from installers. With over 80,000 consumers seeking solar quotes through this platform in the last year solar companies know that they have to submit a very competitive proposal to win your business. You can see this by requesting a solar quote on your own home here.

The lack of transparent cost data is a major issue for the US solar industry. Other bodies are also trying to make more cost information available including the Department of Energy through the openpv project. However, this is a voluntary scheme and appears to be suffering from the fact that reporting of cost data is voluntary. This site puts the cost of residential installations in California since August 2015 at $4.53 per watt but has only a very small sample set of data. There is also no data about the brands of equipment used on that site.

Here is a link to a site that sells solar panel kits for DIY solar panels installers.

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Archives - Monthly update on the real cost of installing solar around America

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March 2018 - SolarReviews analysis of the impact of the new 30% US solar import tariffs announced by the Trump administration in January 2018.

On the 22nd of January 2018 the Trump administration announced that they would be following the recommendation of the International Trade commission and imposing additional import duties on solar cells and solar panels imported into the United States. The rate of additional duty is 30% for the first year, 25% of the second year, 20% for the third year and 15% in the fourth year. Within hours of the announcement we set to work to analyze the effect of these duties on the retail cost of residential solar in America. Fortunately we were able to rely on our history of cost analysis for residential solar and simply feed these new numbers into financial modelling that we already had, particularly the research we had done on the breakdown of the various cost components that together make up the overall cost of solar panel installation in America.

Read our full analysis on the effect of the new import tariffs on the cost in residential solar panel installation.

In summary our analysis of the new solar import tariffs found that if we look only at the cost inflation on solar panels as a discreet input then you would expect price rises of around 4.9% on the residential cost of solar systems. However, reaction to the tariffs in terms of lower wholesale cost and business factors relating to the increasing volumes and competition in the retail end of the market means that overall we think by the end of 2018 residential solar system prices will be stable with January 2018 prices of around $3.08 per watt.

We may see some price inflation in the second and third quarters of 2018 as the impact of the tariff starts to be felt but competition and production efficiencies will combine to reduce cost in the fourth quarter of 2018 and bring in a flat cost result for the year.

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December 2017 - Update on the real cost of installing solar around America

On my final update for 2017 I reflect on solar panel cost trends over the year.

The first 9 months of 2017 saw falls in the cost of installed solar power systems averaging about 0.5% per month but in the last three months we have seen a stabilization of solar prices as solar companies scramble to secure stock before the Trump administration can levy import duties on solar panels. In fact, there have been some slight price increases at the wholesale level in November and December and so for the first time in a very long time we have seen successive months without a reduction in solar panels cost at the retail level.

The average retail price of residential solar panel installation in December 2018 remains at $3.08 per watt or $15,400 (before claiming the 30% solar tax credit) for a 5kw (5000 watt) system.

Next year we intend to start coverage of solar power system costs not only by location but also by brand. There is a difference in cost between the best and the worst brands of solar panels and solar inverters and so from a consumer perspective generic solar panel cost information is of limited use.

If a specific homeowner is considering buying a specific solar power system they will be looking at solar quotes containing specific equipment and what most people want to know is whether they are being offered a good deal for that specific combination of solar panel brand and inverter brand.

Update on the Suniva and SolarWorld trade petition
Although there have been hearings held in Washington as recently as last week at the time of writing the Administration has not announced if it will be following the recommendation of the trade commissioners who made various recommendations, the midpoint of which appears to be a 30% import duty on solar panels and solar cells.

We wish all SolarReviews readers a safe and happy holiday season and look forward to sharing more insights into solar panels cost trends on this page in 2018.

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November 2017

The Solarworld and Suniva trade case continues to be the big talking point when discussing solar panels cost in November. For those not aware, in September 2017 the U.S International Trade Commission found that petitioners Suniva and Solarworld had been injured by cheap imports. This is a classic example of where a law that was passed with good intentions is being used by manufacturers that have an inefficient cost base compared to their global competitors in a way that will clearly be detrimental to the wider economy.

I believe the truth of the matter is that even without the indirect subsidies given by the Chinese government to some of its manufacturers, and also the flood of cheap imports that happened after the Chinese feed in tariff was reduced suddenly in the middle of 2016, the petitioner's manufacturing operations were unprofitable. If the specific Chinese subsidies were the problem, then why is the trade commission now considering tariffs on many non-Chinese imports of solar panels. It does not make any sense.

There are now almost 300,000 workers in the solar industry in America, most of which sell and install solar panels imported from overseas, including China, for a living. It seems ridiculously stupid that their jobs be put under threat to try and save less than 1,000 manufacturing jobs. While the commissioners recommended different levels of import duty, a tariff of around 30% seems like a consensus result. The commissioners recommendations now go off to the administration for consideration. If accepted then I think it is likely that a 30% increase in the wholesale price of solar panels will lead an increase in the cost of residential solar panel installations of around a 15%.

This will increase the average cost of a solar panel installation in the US from its current level of $3.18 per watt ($15,800 for a 5kW system before the 30% tax credit) to $3.65 per watt ($18,285 for a 5kW system before the 30% tax credit). The average American homeowner wanting to reduce their cost of electricity by going solar will face increased costs of around $2,485 if 30% solar cell and solar panel import duties are imposed.

Solar is an industry that lives on the edge. Consumers face a choice between continuing to purchase their power from the utility or to own their own power generation. There is no capital cost to continue buying utility power but a large capital investment to buy solar. Import tariffs will drive up the price of solar, will increase the payback period for consumers buying solar and lead to less consumers buying solar.

My best guess is that this will lead to a loss of around 30,000 jobs in the retail solar panel installation sector in America. It will hit large scale utility projects, (which are currently done at prices as low as $1.40 per watt) the hardest because the cost of the solar panel is a higher percentage of the overall project cost in these projects. However, it will also hit the residential solar installations space, dampening demand and costing employment.

What makes the situation more farcical is that no one in their right mind would buy these panels if the petitioners manufacturing operations recommenced anyway because no-one would have any confidence that they would be around to honor the 25 year warranty solar panel manufacturers give on their solar panels. So in actual fact it is likely that not a single manufacturing job will be saved and 30,000 clean job will go. It is exactly this type of bureaucratic action by government that Trump campaigned against. He claimed that we would bring business and common sense to government decisions and this looms as a test of his ability to do that while in government.

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October 2017

The month has seen the forces of nature remind us all of how fragile our climate is and the reliance we all have on its stability. Our thoughts go out to all those affected by hurricanes Harvey and Irma and our thanks to the thousands of volunteers who have assisted people in need in these areas. Not surprisingly our site was flooded with people from the affected areas who were left without power and looking for solar and battery storage.

In relation to solar prices, the Solarworld trade case has led to a slight rise in the price of wholesale solar equipment as solar installers seek to secure stock before any possible ant-dumping tariff can be imposed. It is unclear at this point if anti-dumping tariffs will be imposed but if they are there will be a rise in the cost of solar systems. Homeowners should secure solar systems before any such tariffs can be imposed.

There are some really cheap solar offers out these in the market for less than $3 per watt installed but they are not gaining market traction as quickly as we thought. American consumers are showing that when it comes to solar they will buy on quality and reputation rather than the cheapest products they can get. Given the long term nature of solar as an investment this may prove to be a wise decision.

More loan products are now entering the market offering better and better financing terms for consumers. We expect this trend to continue as more financial institutions become aware of the stable returns generated by solar panels. Altogether this should further improve the ROI and shorten the payback period for consumers installing solar.

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September 2017

Solar panel cost has fallen off a cliff in the last month with noticeable drops in average cash system prices in California $3.18, New York $3.28, Massachusetts $3.27. Systems have stabilized a bit in Florida, Utah and South Carolina after sharp drops in the previous six months. Florida is still the cheapest state in the US to install solar panels for your home. Results for your state and for financed systems are below.

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Published: April 29, 2016, updated on January 24, 2018

Author: Andrew Sendy

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