Are solar panels expensive?
The simple answer is yes – in the beginning. Installing solar panels on your home involves a significant initial investment. The average homeowner will spend $3 to $5 per watt for their solar panels, giving a total price of between $15,000 and $25,000, although there may be incentives and tax credits available to help. to reduce the overall cost.
Over time, as you pay less each month on electricity from your utility, a good solar system not only pays for itself, it can pay you back two or even three times that.
Estimating the initial cost of a solar system is relatively simple, but each system is unique. There are several factors, which can vary greatly from home to home, that combine to determine the perfect solar system for your home and therefore its cost. Factors include everything from the type of solar panel you choose, how many solar panels will you needyour location’s sun exposure, government tax credits available and if you qualify, and installation costs.
As mentioned above, you can expect to pay around $15,000 to $25,000 before the incentives. That may seem like a lot to many, but luckily from day one the system starts paying you back, one reduced or eliminated electricity bill at a time. In most states, the system pays for itself in 6-9 years, and that’s when the real economic benefit of solar power begins.
Since the lifespan of a modern solar system is estimated to be around 30 years, you should have around 20 years of “free” electricity once it is paid for.
Here’s an example of how much someone could save in utilities once their system is paid off:
Assume a household that uses 10,715 kilowatt hours (kWh) per year in a state where residents pay 15.95 cents per kWh (both figures are US averages in 2022). This homeowner would expect to pay the power company about $1,709 for electricity in 2022.
10,715 x 0.1595 = $1,709.0425
If we very conservatively project that the system will pay for itself in 10 years and that it will perform well for 30 years, we can calculate that this owner will actually save over $34,000 over the life of the system in dollars. today ($1,709 x 20 years of use = $34,180).
The price of solar energy drops in the United States
For homeowners who want to install solar power but have reservations about the solar panel prices, the weather has never been better. Costs have dropped dramatically in the last decade alone. Rising demand and improved manufacturing efficiencies have lowered the cost of a solar system by more than 25% per watt, from $3.86 in 2014 to $2.70 today today. Residents who qualify for the federal investment tax credit and/or any state tax relief can reduce the cost even further, closer to $2.20 per watt.
This is impressive progress, and evidence suggests that prices may still come down more significantly. In Australia, for example, where solar power is adopted far more widely than in the United States, the cost of a solar home system has fallen to around $0.70 per watt. This is largely due to the streamlining of licensing and inspection regulations in Australia.