Cost of Solar Panels in 2021: What to Expect
Embracing solar power means reducing both your reliance on traditional utility companies and your environmental footprint, but the high upfront cost of solar panels can be a big deterrent for some homeowners.
If you're considering solar, you may have questions like: How much does it cost to install a solar energy system? What are some of the factors that can impact pricing? What else should home- and business owners know about going solar? In this article, we'll touch on each of these important topics, with the goal of helping you make a fully informed, financially responsible decision about solar energy.
What Factors Determine Solar Pricing?
As mentioned, there are a few key things that can lead to variation in solar system installation costs. Analyzing these can help you determine whether solar panels are worth it for your home. Let's take a look at them in greater detail.
1. System Size Needs
The size of your residential solar system will depend on your energy usage. You can roughly estimate how many solar panels you'll need based on past utility bills, your available roof space and the amount of sunlight in your area, but to get an accurate system size, you'll need a consultation with a solar installer.
Your installer will evaluate your home energy needs based on total square footage, the number of people who live in your home, the number of appliances and power-draining devices you have connected and more. It can then recommend the ideal solar panel system size to accommodate your energy needs.
2. Type of Panels and Other Components
There are three basic types of solar panels, two of which are commonly used residentially: monocrystalline and polycrystalline panels. Monocrystalline panels tend to be more energy-efficient, which can lead to greater savings in the long run, but they're also a bit pricier on the front end. With that said, homeowners with a smaller roof surface area may benefit from getting the most efficient solar panels, even if the initial cost is a bit steeper.
Other components you may need to purchase include inverters, wiring, charge controllers, mounts, solar batteries and more.
3. Geographic Location
Another factor that can have a big impact on solar pricing? Your geographic area. Solar installation tends to be most cost-effective in parts of the country that get a lot of sun exposure, and thus a lot of photovoltaic light. This basically means that solar panels can operate more efficiently, and in many cases means that fewer total panels are needed. Those who live in states like California, Florida and Arizona — or really any areas of the Sun Belt or Southwest — will likely get the most out of their home solar power systems. The direction of your home can also impact your home's sun exposure.
4. Tax Incentives
Both state and federal governments have established incentive programs to encourage homeowners to buy solar panels. There is currently a 26% federal solar tax credit, called an Investment Tax Credit (ITC), available for homeowners who install residential solar panels between 2020 and 2022. It is scheduled to reduce to 22% in 2023 and may not be extended thereafter.
5. Additional Factors
There are plenty of other factors that can impact solar panel installation costs. Different vendors are going to offer different levels of customization, expertise and consumer protections (including guarantees and warranties).
The bottom line? It is wise to shop around a bit, determine the average cost of solar panels in your area and evaluate the value of services offered by a few solar installation companies. To start getting connected to top solar companies in your area, fill out our 30-second form below.
How Much Do Solar Panels Cost to Install?
To begin with, let's take a look at the basic price range for solar panel installation. According to the most recent U.S. Solar Market InsightTM report, in the first quarter of 2021, the national average price of a residential solar system was $2.94 per watt, which would mean a 5 kWh system would cost $14,700 and a 10 kWh system would cost $29,400.
The exact price you'll pay for solar panels will depend on a number of factors, including your geographic location, the size of your home and more.
Now, you might rightly wonder: What exactly are you paying for? The solar panels themselves usually make up just about a quarter of the total cost. Remaining expenses include labor, maintenance and additional parts and components (such as inverters).
Cost of Solar Panels by State
As mentioned, geographic location is one of the factors that plays into how much a solar panel installation costs. Each state has its own average cost of solar panels, which you can see below:
|State*||Average Cost Per Watt**||Average Cost of 7 kW Solar System||2021-2022 Federal Tax Credit Value (26%)|
*Data not available for Alabama, Alaska, Hawaii, Kansas, Kentucky, Mississippi, Nebraska, North Dakota, Oklahoma, South Dakota, Tennessee, West Virginia, Wyoming. **Data from EnergySage
How to Pay for a Solar Panel Installation
Different solar installers may offer different financing plans, allowing consumers some flexibility. With that said, there are three basic options for paying for your solar energy system:
- Purchase your solar energy system outright (that is, pay in cash).
- Take out a solar loan to purchase the system, then pay it back with interest.
- Lease your system; you will pay less month-to-month but won't actually own the system yourself.
Our solar financing guide breaks down each of these options to help you make the decision that best fits your needs.
Cost of Solar Panel Maintenance
In general, solar systems are designed to run smoothly for decades without requiring any maintenance or upkeep. As such, you should not really need to factor maintenance into the equation for the first 20 years or so after you install your system. (And the best solar companies will offer you warranties and guarantees to give peace of mind on this front.)
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Frequently Asked Questions About the Cost of Solar Panels
As you continue to weigh the pros and cons of solar energy, it's natural to have a few questions. The best way to resolve these is really to set up a solar consultation with a local expert, but in the meantime, here are a few general answers to some of the most common solar inquiries.
How will solar energy impact my property values?
Many homeowners want to know how going solar will impact the value of their homes. Going solar increases property values. In fact, the U.S. Department of Energy has reported buyers are willing to pay an average premium of about $15,000 for a home with a solar panel system. With that said, you are only going to see your property values go up if you own your solar system outright, as opposed to leasing it.
Which is better, buying or leasing my solar system?
It all depends on your motivation for going solar. If you want to maximize long-term savings and increase the value of your home, then purchasing your solar system is usually best. However, if you just want a low-maintenance way to reduce monthly energy costs and practice environmental stewardship, then leasing might be a better option. Also note that leasing can be a good option for those who do not plan on being in their home for exceptionally long.
How long will my solar energy system last?
Solar systems are designed to be exceptionally durable. With just the most basic upkeep, most solar energy systems should continue to work and produce power for anywhere from 25 to 35 years.
Make the Best Choice About Solar Energy
Solar energy is not right for every homeowner, nor for every home. With that said, many homeowners will find that the initial cost of solar panels is more than offset by the long-term, recurring energy savings. Make sure you factor in cost, energy needs, tax incentives, home value and more as you seek to make a fully informed decision about whether to embrace solar power.
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