The first and most obvious question we receive from people interested in solar energy is: How much do solar panels cost?
In this article, we attempt to answer that question to the best of our ability, but it's important to remember that each solar system is a custom solution. The price can vary drastically from system to system.
It's also important to understand what goes into determining the cost of a solar energy system. We dive into those components first, then provide the average installation cost for commercial and residential solar panels.
Factors that Impact the Cost of a Solar Panel Installation
Type of Installation
There are two main installation methods for solar: roof mounts and ground mounts. Roof mounts are attached to existing structures. Ground mounts and carports require additional posts that must be anchored into the ground. This often results in higher labor and component costs.
Type of Equipment
There are two basic variables with solar panels: power density and color. Power density is the amount of power that a solar panel can produce per unit of size. For example, a solar panel that is the same size may produce between 300-400 watts, depending on the power density. Generally speaking, the more power-dense the panel, the higher cost per watt. Color is the other variable with solar panels. The basic panel has a blue cell, white back sheet, and silver frame. Modules with a black frame, black back sheet, or black cell are generally more expensive.
There are three types of solar inverters: String, Micro, and Power Optimizers.
String Inverters link panels together in one or more groups. Each group feeds into one string inverter, feeding several panels into one inverter. String inverters tend to be more cost-effective than other types of inverters.
Microinverters are installed on each individual panel. Although this type of inverter has its benefits, they tend to be the most expensive type of inverter.
Power optimizers have many of the benefits of micro-inverters. They are generally more expensive than string inverters but less expensive than micro-inverters.
Solar can be installed on metal, shingle, and flat roofs. Each one requires different components and varying levels of labor. Shingle roofs require a specific flashing piece to attach the panel racking to the roof. For a ribbed or standing seam metal roof, the racking is attached directly to the metal. Panels are installed on a flat roof using a ballast mount - a tray held in place by a concrete block.
Most solar systems are designed to offset as much energy consumption as makes sense financially. The more energy production needed, the more panels and equipment the system will require.
Depending on how much shading a system will be exposed to will impact the amount and location of the panels. If a system is installed in an area with shading, it may require additional panels to meet the customer’s energy coverage requirements. On the contrary, a system in full sun could produce the same amount of energy with fewer panels.
Weather patterns in each region are different. Some locations receive more sun than others. Other regions receive more snow. Our systems are designed with this data in mind, impacting the system size and the necessary equipment.
Interconnection is the process of connecting the solar system to the power grid. Each local utility has specific requirements that must be followed. Some of these requirements could impact the type of meter you need or whether transformer upgrades are required. The interconnection cost is different for each project, depending on how much solar is already in your area, the age and strength of the equipment on your line, and the size of the solar array itself.
Distance from the Solar Array to the Interconnection Point
Since the power produced by the solar array must be transported to the utility meter, the farther the solar array is from the interconnection point with the utility, the higher the installation cost will be. This is due to the conduit installation or trenching required, as well as the size of the wire required (the farther the distance the larger the wire is required to be).
Incentives available for solar panel installations
There are many incentives available for solar owners. These need to be considered when examining the cost of a solar system.
Those incentives include:
- Reduced monthly electric bills
- Protection from rising energy rates and independence from your utility company - You're in control
- The 30% federal tax credit can be used to recover taxes from the prior three years and also carried forward 22 years for businesses and 12 years for homeowners
- Businesses and farms can quickly recover their investment through accelerated depreciation. Those who qualify can apply for a USDA Reap Grant and other local grants
- There are many local government and utility incentives
- It’s sustainable and good for the environment
With that in mind, we’ve listed below the average installation cost for commercial and residential solar energy systems.
The cost of solar panels for a business
The average size of a commercial solar system is between 50 kW ($600/mo. electric bill) and 200 kW ($1,200/mo. electric bill). Solar systems of this size will typically cost between $145,000 and $500,000 before incentives are utilized.
With the available incentives, most commercial solar owners could receive 60-90% of the system’s cost back within the first few years of installing the solar system.
The average agricultural and commercial solar owner can expect to save $150,000 to $375,000 over the 30+ years of the solar system’s life.
Without solar, the average business and farmer will spend $240,000 to $715,000 on electricity over 30 years.
|Solar System Size||Total Installed Cost
|Federal Tax Credit||Depreciation||Cost After the Tax Incentives|
The cost of solar panels for homeowners
The average size of a residential solar system is between 5 kW ($60/mo. electric bill) and 10 kW ($120/mo. electric bill). These solar systems will cost between $25,000 and $50,000 before incentives are utilized. Solar owners could receive 30% of the system’s cost back with the available incentives almost immediately after installation.
The average residential solar owner can expect to save $4,000 to $25,000 over the 30+ years of a solar system’s life.
The average homeowner will spend $30,000 to $60,000 in electricity over 30 years without solar.
|Solar System Size||Total Installed Cost
|Federal Tax Credit||Cost After Incentives|
Keep in mind these are average costs and system sizes for roof-mounted solar systems (Here's what it costs to install a ground-mounted solar system). The cost will vary depending on your specific requirements. We provide free estimates that will provide you with the exact cost and available incentives to help you decide if solar is the right investment for your business, farm, and home.
Get the exact cost for a solar panel system that fits your needs
The best way to determine the cost of your solar system is to request a free custom quote. With a custom quote, you'll see the complete installation cost, all available incentives, and the payback and ROI.
Not ready for a quote? Use our Solar Savings Calculator to get an instant estimate of how much money solar will save you.
You can also view The Solar Energy Channel on YouTube for short, educational videos that cover all things solar. Don't forget to subscribe while you're there!
Last updated on August 2023.