Solar panels have been a hot topic of conversation in the green energy space for years. This isn't just because they are better for the environment than traditional energy sources, but also because they can save a significant amount of money in utility costs. However, determining the cost of solar panels and how big your returns will be can be complicated. Find out how you can get a better idea of your solar panel costs.
What Is the Average Cost of Solar Panels?
While solar panels can reduce your overall spending on energy during your lifetime, there are some major upfront costs to consider. In 2019, the average cost of installing solar panels is $3.05 per watt, according to solar comparison-shopping marketplace EnergySage. With the average system size tallying in at 6 kilowatts, this means that the average solar panel system cost in the U.S. is around $12,810 after tax credits are applied.
The cost of panels only continues to fall as the technology becomes more advanced and cheaper to produce. Additionally, the federal solar tax credit (ITC) deducts up to 30% from the total cost. This makes the solar panels much more affordable than they have ever been before.
Factors that Impact the Cost of Solar Panels
Before committing to getting a solar panel system, it's important to keep in mind that the cost can vary significantly based on the state you live in, as well as other factors. Find out more about the other elements that will influence your solar panel costs.
1. System Size and Quality
The most obvious factor that impacts the cost of solar panels is the size of the system you purchase. Generally speaking, the larger the solar panel array, the more costly it will be. However, this doesn't always translate to increased energy savings. The quality of the solar panels you purchase as well the type of hardware and accessory equipment you use can boost performance. Optimizing the efficiency of your solar panel system will depend on a variety of factors, including how much energy you use, the build of your roof, the local weather conditions, and more.
2. Labor Costs
Labor and transportation costs can impact the cost of solar panel installation. A good installation company will include its labor costs into the quote. However, these costs can vary dramatically depending on your location, the size of the array, and even the individual installation company. To get the best deal, be sure to obtain quotes from several different installers in your area before committing.
3. Home Type
The build of your roof will influence the cost of the solar panels themselves, as well as how complex the installation process will be. If your roof is small, it may not be able to accommodate larger solar panel arrays, which will cost more. An optimal roof for housing solar panels has an average pitch that isn't too steep or too shallow, and is also oriented to face south or west. While solar panels can be installed on less-than-ideal roofs, it will decrease the efficiency of the system overall and lower your energy savings overall. Multi-tiered or oddly shaped roofs will drive up costs by making the installation process more complicated.
While solar panel costs are relatively affordable everywhere, your location will influence a number of factors that contribute to the overall cost and efficiency of your system. The average cost per watt will vary across the country, though typically prices vary within the 50-cent range. The climate of your area can also influence the kind of equipment needed to optimize your solar panels, as well as the returns you will receive on your investment overall. Additionally, each state has different taxes and other incentives around solar panel installation to take into consideration.
Average Cost of Solar Panels by State
To best determine what solar panels might cost, it's important to take into consideration what state you live in. Here is the breakdown of current cost per state. Keep in mind that these costs are based on the installation of a 5 kilowatt system after tax credits are applied, which is slightly below the average size of solar panel systems across the U.S.:
- Alabama: $12,085
- Alaska: $13,125
- Arizona: $13,251
- Arkansas: $13,874
- California: $14,902
- Colorado: $14,110
- Connecticut: $11,840
- District of Columbia: $11,921
- Delaware: $14,457
- Florida: $12,006
- Georgia: $11,287
- Hawaii: $14,200
- Idaho: $11,038
- Illinois: $10,885
- Indiana: $9,618
- Iowa: $10,020
- Kansas: $8,509
- Kentucky: $13,884
- Louisiana: $11,485
- Maine: $11,439
- Maryland: $11,528
- Massachusetts: $13,979
- Michigan: $17,147
- Minnesota: $14,034
- Mississippi: $10,549
- Missouri: $11,370
- Montana: $11,521
- Nebraska: $9,804
- Nevada: $9,548
- New Hampshire: $12,403
- New Jersey: $13,037
- New Mexico: $13,873
- New York: $14,325
- North Carolina: $16,076
- North Dakota: $8,196
- Ohio: $11,893
- Oklahoma: $9,826
- Oregon: $13,237
- Pennsylvania: $11,074
- Rhode Island: $14,034
- South Carolina: $16,272
- South Dakota: $11,058
- Tennessee: $10,150
- Texas: $12,292
- Utah: $14,374
- Vermont: $11,876
- Virginia: $11,286
- Washington: $12,137
- West Virginia: $16,051
- Wisconsin: $10,325
- Wyoming: $14,673
How Much for One Solar Panel?
For some, it might make more sense to install one solar panel at a time rather than purchasing an entire set. The average cost of one solar panel lands anywhere between $200 to $300, depending on how many watts the solar panel has. However, this does not take into account any equipment that will need to install or labor costs.
It's also important to keep in mind that purchasing one solar panel at a time can actually be more expensive than purchasing an entire array. Professional installers have established relationships with their suppliers and can purchase panels in bulk, making them significantly cheaper. However, if you can identify a reliable supplier for solar panels or want to build your array slowly over time, buying one solar panel at a time may be a more cost-effective decision.
Are Solar Panels Cheaper Than Other Forms of Electricity?
The average American home spent $124.47 a month on electricity in 2019, according to current stats. Solar panels may require an upfront investment, but they can save you money over the course of your lifetime by cutting the cost on your electric bill. Considering that electricity is frequently cited as one of the priciest monthly utility expenses, it's little wonder that solar panel installation is an intriguing proposition for many.
How To Determine Savings From Solar Panels
However, the amount that will save depends on a variety of factors. This includes the number of hours that the panels receive direct sunlight each day, the size of your solar panel array, and the conditions of your roof. However, it is your local electricity rate that plays the biggest part in how much money you can expect to save. Here is a step-by-step look at how you can determine your savings.
1. Monitor Your Electricity Use
The first step is to look at your electric bills from the past year. What was your average bill total? While electric bills can fluctuate, this is the closest data point you have for estimating your yearly spend on electricity. The more you spend, the more likely you are to benefit from solar panel installation.
2. Calculate Your Energy Consumption
Utilizing your electric bills from the last year, find out how much energy you consume on average. This should be listed on your electric bill. The average American household utilizes 10,400 kilowatt-hours per year. From here, you can determine what type and size of solar panel system will meet your needs.
3. Calculate the Cost of Solar Panels
Once you have identified the type of solar panel system you need, you can calculate the cost of the system. Ask for a few quotes from your local installers or utilize the average costs per state above for a general estimate. When calculating the cost of your solar panels, be sure to take into account the federal solar tax credit, as well as any additional incentives your area may offer. Keep in mind that many of these incentives are temporary and will not always be available as solar becomes more prevalent.
4. Calculate Your Projected Energy Spending
Utilizing the amount of energy you consume on average and the average cost of energy per kilowatt in your area, calculate how much you will spend on normal electricity within the next 25 years. This is the typical lifespan of a solar panel array with minimal maintenance involved. When you make these calculations, be sure to account for utility cost inflation. You can make the assumption that your electric bill will increase by 2.2% per year.
5. Check Energy Bill Against the Cost of Solar Panels
Take the number you have calculated for the amount of electricity spent within the next 25 years. Subtract out the cost of the solar panel array as well as equipment, installation, and other associated costs to get a rough estimate of how much you would save from installing solar panels.
How Long Will It Take to See Savings With Solar Panels?
On average, solar panels can take anywhere from seven to eight years to break even. However, the savings after those seven to eight years can be quite significant. However, the length of time it will take to see savings will vary based on a number of factors, including your household's energy use, the amount of energy the solar panel system creates, and the upfront price you paid for the solar panels after incentives, and the payment plan you selected. In some states, solar panels can increase your home value. Also, some states allow you to sell the extra power that your solar panels produce, allowing you to see ROI faster.