The good news is that solar panel cost has declined considerably over the last 10 years and now solar systems offer homeowners much more value for their money as compared to earlier. You need to understand that solar panels are not the only component of your complete solar system, but also you need to consider the solar installation costs too.
So, in this article, we shall try to understand why solar panel cost has come down dramatically, and what are the few key factors that will ultimately influence the exact price of your solar system.
What are the costs?
Solar panels will be approximately 25 – 30% of the total system cost. and few other costs will be the following:
- A solar inverter, for which you can account for almost 10% of the hardware cost
- Solar mounting and also electrical equipment, for which you will need another 10% of the cost.
- The other 40 to 45% of the cost will go for the permit, connections, etc.
- Balance are miscellaneous items that will also account for another 10% of the cost.
Here is a breakdown of the soft cost involved:
- Permit fee: 2%
- Labor cost for interconnection: 2%
- Sales tax: 5%
- Transaction cost: 6%
- Developer profit: 9%
- Indirect corporate cost: 9%
- Customer acquisition: 9%
- Installation labor cost: 11%
- Supply chain cost: 12%
Few key terms while considering the solar panel cost
Let us define a few key terms that will be commonly used in this industry for communicating the relative value of any solar panels and also the energy that they produce.
1. Solar panel price/watt
This is the price of your solar system that you will pay for every wattage of the solar system installed. It is a straightforward calculation – simply your gross system cost divided by the watts in the system.
This figure will allow you to compare the relative value of different solar panel offers so that you can make an apple-to-apple comparison.
2. Solar panel price/kilowatt-hour
A kilowatt-hour is the unit of energy to consume 1,000 watts of power over 1 hour. The kilowatt-hour will be the basis to evaluate the energy costs from both the solar as well as electric utility point of view.
This price per watt will be helpful to compare the relative costs of different solar bids. With price/kilowatt-hour, it will be possible to illustrate the value of your solar system relative to the base case if you continue to buy the power from the electric utility.
3. Solar panel installation cost
Any basic solar system may include multiple components e.g. panels, inverter, mounting/racking system, electrical hook up, and conduits. A few systems may also need upgrades like roofing upgrades to your home’s main electrical panel.
For the overall cost of your solar system, incentives for solar and also batteries are important components. The most available incentive is the tax credit offered by the federal government which is at present set at 26%. There are few other important incentives based on the location too.