Solar panels are expensive as they are made of huge amounts of high-purity silicon. They also need qualified installers and are to be complemented with electrical protections and inverters for a reliable power supply. Cost depends on the efficiency and number of panels needed and is directly proportional to both.
The most expensive part while going solar is the payment for the equipment. It counts for 25 percent of the total expense. Soft costs or outlays also have a significant contribution. The breakdown below will help you understand the expense of a solar panel system and also provide tips on how to save.
- Soft Costs – 49%
- Labor – 8%
- Inverter – 7%
- Hardware Materials – 25%
- Structural Mounting – 11%
Big solar contractors mark their quotes 2 to 3 times the cost of equipment. So if you want to save money you may go for local contractors. It is always wise to hire an independent contractor than a full-service solar company. The cost of equipment is the same wherever you go. But large installers have overhead costs as they need to cover office rent, labor, supply equipment and a fleet of service vehicles, insurance and so on. These operating costs get added to your charge of the installation. Also, turnkey installers charge 1 to 2 times the cost of equipment.
Also, keep in mind that solar is an investment and the initial cost is high. But you will make savings on your monthly electric bills. The time taken to break even is called the payback period. The payback period will depend on how much you save and so it would be wise to contact a qualified solar provider for a professional assessment of your property and its solar potential. Again solar panels are more productive in sunny locales. Also, it is more beneficial where electricity costs are high.
It is always wise to start small which will cover part of your energy requirements. Thereafter, you can expand as your budget permits.
What is the Payback Period?
Solar saves you money in the long run by decreasing electric bills. The saved money adds up over a period. The payback period is the amount of time taken for energy savings to pay off the up-front cost of the system.
What constitutes the cost of a solar system?
There are several constituents in residential solar installations that have their effect on the final price. The largest expense for new installations is the hardware. Collectors, batteries, and panels count for 25% of the entire cost of the new system. According to the Office of Energy Efficiency and Renewable Energy 64% of solar system price comes from soft costs which include
- Sales Tax
- Transaction fees
- Permit fees
Solar energy prices can be reduced with the lowering of prices for equipment. Though the soft cost involved in installations have continued to escalate.
How have the recent changes in import tariffs affected the prices of rooftop panels?
The tariff on imported solar panels has been increased to 30 percent by the US government in January 2018. The tariffs drop by 5 percent every year. So it will end at 15 percent in 2021. This rise is definitely to be felt by the consumers through the installation companies are trying to pass very little of this rise to their clients.
What are the ways by which you can lower the cost of solar power installation?
The ways consumers can lower the final bill for their residential power systems are –
- Choose the ideal installation company which have financing terms to suit your budget
- The federal tax credit gives the advantage to receive 26% of your investment back for a new installation. Avail the same and also if any incentive is offered by your state. There may be renewable energy credits or solar power rebates too.
- You might go for used equipment. But be cautious while doing so. Used equipment may have internal damage which will hinder the performance of your system.
- You can go for low-interest loans and in such cases, the net cost might be just zero. The installation cost is borne by the bank. And then the loan can be covered by the savings you make from the power bill.
- The maintenance and operation costs are quite low with solar panels. They also have a long service life. Thus the upfront cost of solar panels is recovered.
- You can become a solar power generator and provide electricity to others.
How much expense is needed to maintain a residential solar system?
Regular maintenance and inspection are needed as the components get damaged, wear out or become obsolete. The cost of the upkeep is to be borne by the homeowner. The cost of equipment replacement and repairs is highly variable. The average cost of professional cleaning to free solar panels of debris and dirt is around $10 to $20 per panel. Once you know how many panels your home will need, the calculation is easy! You may also consider cleaning your own panels to reduce the cost. But for optimal performance of your system, periodic professional cleaning is necessary!
Does the installation company have any effect on price?
Most solar power companies often provide incentives to the customers and this will have a positive impact on the final price of residential power systems. It would be wise to check with various installation companies to get the best price. But just don’t go by the price. Read the reviews to understand the quality of service offered by the company before choosing. You may use an online solar marketplace to obtain competitive bids from multiple installers.
You may also use free public sources of information like the Department of Energy’s website to educate yourself. The more educated you are about installation, the better choice you will be able to make.
What are the other factors you need to consider?
There are several other deciding factors you need to ponder on.
Inverter – There are three main kinds of inverters – centralized inverters, power optimizers, and string inverters. While the centralized inverters serve the entire system, the power optimizers and string inverters are attached to each panel in a system. The power optimizers and string inverters are usually more costly than centralized inverters.
Panels – The cost of a solar panel is directly proportional to its efficiency. But it is for you to find out whether you need the most efficient equipment to produce energy enough to meet your home requirements.
Mounting System – You can install a solar energy system on the ground or the roof of a building. When installed on the ground, it may be equipped with a tracking system to maximize energy production. Costs will escalate with a more complex mounting system. So give a thought before going for your installation.
Complex Roofs – If your roof has an unusual angle or multiple levels or dormers, installing your solar system can be complicated. The panels are to be arranged in a way to maximize energy production, but this added effort will escalate the costing.
Improving your Electrical System – Your electrical system may need an upgrade to be brought up to code. This extra work will increase the expense of your solar installation.
Warranties – You will be able to get the maximum power from your system with warranties on workmanship to equipment on your solar energy installation. But be sure to hire the correct installer who offers the right warranty and meets your budget. Solar panel manufacturers usually offer a 10-year warranty against factory defects and a 25-year warranty for energy production more than 80% of the rated value.
Landscaping – If trimming branches or landscaping your area is needed to maximize the production of energy, it is better to do it yourself to minimize cost.