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How Much Does a Solar Installation Cost?

Posted by Margaret Collins In Sunday, September 20 2009 under: Solar Homes, solar cost, Cost and Financing

Update for 2016: GetSolar has partnered with EnergySage to provide customers with fast, competitive solar quotes. The partnership leverages their Solar Quote Engine that was developed with backing from the US Department of Energy (DOE) to streamline the US solar consumer buying process. EnergySage Quote Engine

We at GetSolar feel so strongly about the power of consumer choice and the accuracy of EnergySage's new comparison quote system that we have made it the default solar calculator for GetSolar customers!  Check it Out here!

The cost of solar pv panels has dropped as much as 80% over the last five years, with total total system prices fully-installed running 50% to 60% lower. This is great news for solar shoppers. Add in the renewed 30% Federal Tax Credit on systems costs, and solar electricity can save homeowners a lot of money on their utility bill.

Original Post: This week I spoke with an unusually high number of people who just wanted me to answer the question: How much is a solar panel installation on my home going to cost me? I wish I could answer that easily. I wish anyone could answer that easily--but it's just not possible. On this blog, we try to talk a lot about the factors behind the cost of solar for both residential and commercial solar projects, and I do recommend you browse through our history if this is a topic you want to get into in-depth (try the "Cost and Financing" category, and definitely check out Adam's post on how to measure solar cost). But every once in a while it's a good idea to review the basic factors, so let me lay out the major ones:

  • State: While there is a nation-wide financial incentive for solar in the form of a federal tax credit, each state has the authority to offer additional incentives. In states where the cost of electricity is high, and/or there are few in-state energy resources, state governments may offer cash rebates, low-interest loans, tax credits or production-based incentives in order to make solar more affordable. Take a look at our interactive ap of solar incentives to see how your state measures up, and visit the thorough DSIRE website to see minute details of each state's solar incentives. Among the best states for solar currently are New Jersey, New York, Pennsylvania, California, Florida, and Arizona. Incentives can help reduce the net cost of solar by anywhere from 30 to over 70 percent.
  • Site: Exposure to the sun is the most obvious factor here, but that's not the only thing that matters when considering your home's suitability for solar panels. A southern exposure is ideal--this ensures the PV panels will receive the maximum sunlight throughout the day, increasing their energy output for your home. Southeast and southwest exposurs work too, though decrease efficiency slightly. Other exposures (primarily west) are occasionally used but they're nowhere near as efficient--and thus, not cost-effective. Getting 4 kilowatts of solar energy on your roof will take fewer solar panels if they're at their maximum efficiency, more if they're operating at lower efficiency due to shade or exposure.
  • Roof: Different roof surfaces require different mounting procedures, and occasionally different specific solar panels. Some are more expensive than others due to materials or to added labor costs.
    • Does your roof have at least 25 years of good house-sealing service left in it? If not, you may want to consider replacing your roof before pursuing a solar installation. Solar panels last a surprisingly long time: manufacturer warranties are often 20-25 years, and they can last even longer than that. If you need to replace your roof before that time is up, you essentially have to pay for a new solar installation. No major materials costs (unless you're replacing your inverters at the same time, which do need replacing every 15 years or so), but it's quite a bit of labor and most of it can't be performed by regular roofing contractors.
  • Energy Usage: This is less obvious, but the more you spend on electricity per month, the more a solar installation can save you, and the faster it can pay for itself. (To that, though, see Adam's post on why payback period is not necessarily the gold standard for solar financing.) The two factors here primarily are rate per kilowatt-hour of electricity, and how many kWh's you actually use per month. Here's one hard figure for you: if you're spending less than $100/month on electricity, chances are--no matter what your state--it will be difficult to make solar work as an investment for you.

And here's another set of hard figures for you: if you live in a competitive state for solar, you should expect quotes in the $7-8/watt range Update for 2016: $3-3.50/watt. If you live in a non-competitive (e.g., low incentive) state, expect more like $8-10/watt Update for 2016: $3.50-4.00/watt.. After incentives, of course, that figure can drop drastically.

So, don't be disappointed if you can't always get someone to give you a firm figure. Sometimes a site visit from an experienced installer is a necessary component to figuring out how deep into your pocket you need to go for a solar installation: there are just too many factors at play to allow for a simple answer to the question of solar cost. The good news is that GetSolar and Energysage have partnered using the Energysage Quote Platform, which pulls satellite imagery, along with real-time market pricing, and you can get a very good set of comparison quotes.

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