A Quick Guide To Solar Panel Cost

The number of solar energy installations have skyrocketed in recent years. The industry has experienced an annual growth rate of 42% in the last decade! One of the big drivers has been that solar panel costs have plummeted. But how much exactly do solar panels cost, and how many does a house need?

Figuring out what solar panels will cost for your home can be one of the most frustrating roadblocks. But, there are certain indicators you can look at to get a good estimate of how much generating solar power will cost you.

Let’s examine the cost of a renewable energy system for your home.

• Solar panels: The greater your energy needs, the more panels you’ll need. The good news is that the cost of solar panels has come down considerably in the last decade. So, the best way to know how many panels you need is by looking at your energy bills and considering your climate. If you live in a sunny climate, you won’t need as many solar panels to produce the same amount of energy as in an overcast climate. For example, an identical solar system in San Diego, California, will produce more solar electricity than a photovoltaic (PV) system in Seattle, Washington, throughout the year.

Also, solar panel costs vary by manufacturer and model. In general, high-efficiency solar modules with long warranties cost more.

• Inverter: Solar panels turn light into direct current (DC), and inverters turn that into alternating current (AC) that our homes and the grid can use. It is also like the brain of the system and sends data to your solar monitoring system, so you know how much power your solar panel system is producing.
  • Central inverters: One or two large inverters links all the panels together. However, there’s a limit on how many modules the inverter can handle, and the system will produce less solar power if the inverter is undersized.
  • Microinverters: Some solar panels have inverters on each module instead of a central inverter for the whole system. One big advantage is that you can add more panels as needed in the future without worrying whether a central inverter can handle it. This is especially common if a family starts driving an electric vehicle (EV) and consumes more power than before to charge it.
• Ground mounts: Although most residential solar systems are installed on the roof of the home or garage, some are mounted on the ground or on a pole. Ground-mounts and especially pole-mounts typically increase the total cost of the system due to the additional hardware, labor, and permitting fees.
  • However, if it results in additional energy production, it might be worth the extra cost. In other cases, it might be unavoidable if there are issues with the roof.
• Solar panel trackers: These devices turn the solar panels to face the sun more directly as it moves across the sky, and they are available in single-axis or dual-axis models. Solar trackers are used for ground-mounted systems only and can increase solar energy production. However, these gadgets also increase the total system cost and require maintenance because they are moving parts. Nevertheless, the additional expense is worthwhile in some cases because it increases power production.
• Electrical panel upgrades: Your electrical panel distributes energy from the panel to the loads throughout your home. Most homes, especially new ones, do not require an electrical panel upgrade before installing solar panels. However, if you have an old electrical panel or don’t have sufficient amperage to accommodate the energy from your solar panels, an electrical panel upgrade is necessary. Other signs that you need to replace your electrical panel include that the breakers are often tripped, it smells like something is burning near your service panel (also a safety concern), or the panel makes strange sounds.
  • Most homes require a 200-amp panel as a minimum. If needed, upgrading the electrical panel can add $1,000 – $3,000 to the solar installation cost.
• Solar storage battery: Some homeowners want to have backup power during blackouts, and solar batteries are a great way to achieve this. Also, batteries can reduce electricity bills more for homes with time-of-use rates where the electricity rate varies by the time of day. However, adding a battery can significantly increase the cost of the solar power system. Also, most states have net metering policies that enable homeowners to sell surplus power to the utility grid, so adding a battery doesn’t necessarily increase the utility bill savings.

The additional cost varies depending on the type and capacity of the batteries. Installing PV batteries can add anywhere from $5,000 – $20,000 to the system cost before solar incentives like that federal tax credit.

Many solar homeowners install systems that produce most of their power throughout the year.  However, it’s not typically advantageous to oversize a system and produce more than 100% of the power because of net metering restrictions. In addition, the larger the capacity of the system, the higher the cost. To determine how many solar panels you will need, start by looking at a year of electricity bills.

Home Energy Use

Typically, residential utility bills use kilowatt-hours (kWh), which is a measurement of electricity use over time. A kWh is equal to consuming 1,000 watts for 1 hour. To calculate the daily consumption of a device, multiply the number of hours used per day by its wattage.

For example, running ten 100-watt light bulbs for one hour, will consume 1 kWh. If your refrigerator consumes 500 watts when it runs and it cycles on and off for a total of 2 hours, it will consume 1 kWh. The power consumption for charging an EV varies by the battery's capacity and the current battery level. Charging an EV uses 28.9 kWh for a Mini Cooper SE to 200 kWh for a GMC Hummer EV.

Residential Utility Bills

The average home in the United States uses about 30 kWh daily or almost 900 kWh a month, and the national average cost per kWh is a bit over $0.14 kWh. In 2022, the average home power bill was about $117, but this cost is rising due to electricity rate hikes.

Remember, utility bills vary considerably by area, rate structure, and home energy consumption. For example, Hawaii has the highest electricity rates in the nation at nearly $0.34 a kWh. However, Washington, Utah, and North Dakota have some of the lowest rates, between $0.10 and $0.11 per kWh.

Energy-Efficiency Upgrades Before Going Solar

One excellent way to reduce the cost of your solar energy system is by making your home more energy-efficient. Start by determining if you have appliances that waste a lot of electricity using a home energy-monitoring system.

For example, if you have electric heaters and live in a cold climate, upgrading to a heat pump and air sealing cracks and gaps can save a lot of electricity. If you have an old refrigerator that doesn’t properly seal or runs a lot, consider replacing it with an energy-saving model. In homes with electric water heaters, installing a water-saving showerhead and washing clothes in cold water can save a lot of energy. Whenever possible, replace incandescent light bulbs with LEDs.