Category: Cost of Solar

“Free Solar Panels” Are a Bad Deal. Here’s Why.

“Free Solar Panels” Are a Bad Deal. Here’s Why.

Ever seen a solar company promote an offer for “free solar panels?”

The offer sounds too good to be true…and unfortunately, it is.

Yes, there are (legitimate) installers that will put free solar panels on your home. But the catch is that they require you to enter into a solar lease or power purchasing agreement (PPA).

These offers entice people with a no-cost way to go solar. But when you examine the contracts, they heavily favor the solar installer over the 25-year life of the system.

This article explains the economics behind leases and PPAs to show how the offer of “free solar panels” ultimately costs the end user money in the long run.

What are Solar Leases / Solar PPAs?

Solar leases and PPAs offer people a way to go solar with no up-front cost.

Under a solar lease, the installer builds a system on your property and charges you a monthly fee to lease the equipment from them. You pay a flat monthly fee and get to use 100% of your system’s production.

Power purchasing agreements (solar PPAs) are similar, except instead of renting the equipment for a set fee each month, you buy power from the installer at a flat rate per kWh. So if you use less power than your system produces, you don’t have to pay for any excess generation.

Drawbacks of Solar Leases & Solar PPAs: “Free Solar Panels” Aren’t Free

Under both agreements, the main drawback is that you don’t own your system. The installer owns it.

They structure it this way so that they can claim the Federal Tax Credit and any local incentives for going solar. As of 2019, that represents a 30% credit on your total costs to go solar.

A system that costs $10k rewards a $3k tax credit to the system owner. Under leases and PPAs, it is the installer—not you—who gets to pocket this credit. You miss out on the largest financial incentive for supporting renewable energy.

solar guide

Free Federal Tax Credit Guide

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Yes, they’ll put free solar panels on your roof, but they also reap most of the long-term value from owning the system. They make more than enough profit over the life of the system to recoup the cost of equipment—savings that should end up in your pocket.

A Better Way To Finance Your System

Of course, we understand why leases and PPAs are appealing. You get the benefits of going solar immediately, like making a positive impact on the environment and locking in a flat electric rate for the next 25 years.

Leases and PPAs let you enjoy the benefits of going solar without the up-front cost. But there’s another financing option that gives you a much better return on investment: a personal loan from your bank or another 3rd-party lender.

Solar leases and PPAs are essentially high-interest-rate loans from a solar installer. You tend to get better rates and terms from your bank, especially if you’ve been a long-time customer.

But the major distinction is that by taking out a personal loan, you are the owner of your system. This allows you to claim the 30% tax credit for going solar—which can immediately be applied to your loan balance to accelerate the payback schedule, if you so choose. (Check out the video below if you want to know more about how the tax credit works.)

The Hidden Cost of “Free Solar Panels”

So how does buying solar stack up to leases and PPAs?

We did some math to figure out the return on investment into solar under four different payment plans:

  • cash purchase
  • personal loan
  • solar lease
  • solar PPA

Our math is based on the cost to own this 5.2 kW system under each of the four payment plans. We assume the cost of electricity starts at $0.16/kWh and raises by 3% each year for 25 years (the length of a solar panel warranty).

For the purchase and personal loan options, the value of the 30% tax credit is included because you own your system. We also factor in a $1/watt installation charge for these options.

For leases and PPAs, we did not add the installation charge because it is included as part of the package. We also leave out the tax credit, because that belongs to the solar company that owns the system.

See how all four payment plans stack up over 25 years:

As you can see, buying your system outright represents the best value over 25 years, even though the cash payment puts you in the red up front.

The next best option is taking out a personal loan. The initial cost is $0, but interest payments eat into energy savings for the first 7 years until the loan is paid off. It quickly rebounds after year 7 when the owner starts to keep 100% of the energy savings from their system.

After that, we come to solar leases and solar PPAs. Though they don’t cost you anything up front, the value is dampened by the solar company taking a cut of the savings each month. By the end of the warranty period, leases and PPAs have chewed up more than half the potential energy savings as profits for the solar installer.

This is why we strongly recommend choosing a personal loan over a solar lease or PPA If the option is available to you. An offer of “free solar panels” may be tempting, but it could potentially cost you $25K in energy savings over the life of the system.

We want everyone to go solar—but we also want them to fully reap the benefits. If you need to finance your system, personal loans are by far the superior option to solar leases or PPAs.

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Solar Panel Cost Guide | Your Complete Guide to the Cost of Solar in 2019

Solar Panel Cost Guide | Your Complete Guide to the Cost of Solar in 2019

Editor’s note: This article was updated on 1/21/2019. Solar panel prices change on a regular basis. Check our solar panels page for current pricing.

Welcome to our comprehensive solar panel cost guide, updated for 2019! Our goal with this article is to answer the first question many people have when they start their research: how much does it cost to go solar?

First, we’ll go over the factors that affect solar panel prices. Then we’ll look at individual panel prices, complete system prices, and historical pricing trends to see how the cost of solar might change in the future.

  1. How Much Do Solar Panels Cost in 2019?
  2. Complete System Pricing (Grid-Tied)
  3. Complete System Pricing (Off-Grid)
  4. Solar Panel Installation Costs
  5. Factors Affecting Solar Panel Cost
  6. Historical Pricing Trends

How Much Do Solar Panels Cost in 2019?

Let’s get right to the good stuff. Here’s how much our most popular solar panels cost in 2019.

For the sake of comparison, we will start with the standard 60-cell or 72-cell panels that we use by default in our system packages. These are the “full-sized” panels you are going to use when you build a complete system for your home or office.

ManufacturerPrice (as of 1/21/2019)Output (watts)Cost per wattMaterialMade in...
Mission Solar$199305W$0.65Mono PERCAmerica
Mission Solar$245360W$0.68Mono PERCAmerica

And here’s the picture for small panels with more limited use cases. These are the ones you’ll use on your RV/boat, industrial worksites, and other remote applications.

ManufacturerPrice (as of 10/30/18)Output (watts)Cost per wattMaterialMade in...
Solarland (Industrial Rated)$337.13150W$2.25PolyChina
Sunpower (flexible)$249100W$2.49FlexibleFrance

These panels are more expensive because they are produced in smaller quantities. They may also have extra features, like the flexibility of the Sunpower panels, or the heavy-duty Solarland panels which are certified for industrial use.

In summary: “standard” solar panels cost anywhere from 70 cents to over $1.50 per watt, depending on their output, quality, and where they are manufactured. When you look at more specialized panels that are manufactured in lower quantities, the price climbs up above $2/watt.

Related: Find the right panels with our free Solar Panel Guide »

Solar System Costs in 2019 (Grid-Tied)

Panels only represent about half of the total cost of your system. Other parts like inverters and racking also contribute a significant piece of the pie.

Let’s look at prices for complete grid-tie system packages. This chart shows the costs to buy all of the equipment for your system, but it doesn’t include costs like shipping or installation. (We’ll look at the total installed costs later in this article.)

The prices in this table come from real grid-tied systems featured on our site (prices current as of 11/7/18).

Not sure what size system you need? Grab a copy of your electric bill and look for your kilowatt hour (kWh) usage. Then input that info into our solar cost calculator, which will tell you what size system you need to cover your monthly usage.

System SizeCost Per WattCost (before tax credit)Cost (after tax credit)Monthly Output
2.88 kW$1.60$4,611$3,228398 kWh
3.6 kW$1.49$5,360$3,752498 kWh
4.32 kW$1.48$6,391$4,474598 kWh
5.4 kW$1.39$7,518$5,263747 kWh
5.76 kW$1.42$8,157$5,710797 kWh
7.2 kW$1.36$9,784$6,849996 kWh
8.64 kW$1.31$11,286$7,9001195 kWh
10.8 kW$1.32
$14,218$9,9531494 kWh
11.52 kW$1.30$14,969$10,4791594 kWh
12.96 kW$1.29$16,771$11,7401793 kWh
14.4 kW$1.34$19,135$13,3951992 kWh
18 kW$1.29$23,140$16,1982490 kWh
21.6 kW$1.29$27,861$19,5032988 kWh
28.8 kW$1.26$36,396$25,4773984 kWh

Solar System Costs in 2019 (Off-Grid)

Off-grid systems cost a lot more because you need to add batteries to store the energy you generate. Batteries are a significant expense. We estimate you might spend $8,000 to $13,000 to power a 5 kW system for the first 10 years of ownership.

The chart below shows the cost to purchase an off-grid system with an appropriately sized battery bank. While lithium batteries are much more expensive up front, the cost of ownership levels out in the long run because they last 2-3 times longer than lead-acid batteries.

We have paired the system with our least expensive battery bank – in most cases, a set of appropriately-sized Crown flooded lead-acid batteries.

Take a look at our comparison of lead-acid vs. lithium batteries to see the math on battery costs for off-grid systems.

System SizeCost Per WattCost (before tax credit)Cost (after tax credit)Daily Output (summer)Daily Output (winter)
1.22 kW$6.41$7,818$5,4735.49 kWh2.74 kWh
1.83 kW$4.79$8,759$6,1328.23 kWh4.12 kWh
2.74 kW$3.52$9,638$6,74712.35 kWh6.18 kWh
3.66 kW$3.23$11,820$8,27416.47 kWh8.23 kWh
4.57 kW$2.77$12,673$8,87120.59 kWh10.29 kWh
5.49 kW$3.13$17,196$12,03824.7 kWh12.35 kWh
7.32 kW$3.75$27,430$19,20132.94 kWh16.47 kWh
9.15 kW$3.18$29,136$20,39541.17 kWh20.59 kWh
10.98 kW$2.81$30,842$21,58949.41 kWh24.7 kWh
13.72 kW$2.82$38,727$27,10961.76 kWh30.88 kWh
16.47 kW$2.51$41286$28,90074.11 kWh37.06 kWh

Solar Panel Installation Costs

In addition to equipment costs, you’ll need to figure out a way to install your system. One option is to have a local contractor install it for you. In these cases, they may charge you anywhere from 75 cents to $1.50 per watt for the installation. $1/watt is a good benchmark to estimate installation costs.

If you want to figure out your “all-in” cost of going solar, pick a system above and find the wattage. 1 KW = 1000 watts, so for example, a 7.8KW system is 7800 watts. At $1/watt, a contractor might charge you an additional $7,800 to install your system.

There are several factors that influence how much your installation will cost, the main one being the availability of qualified contractors in your area. To learn more about installation costs, check out our article: “How to Find a Solar Installer You Can Trust.”

The other option is a do-it-yourself installation. It turns out this is easier than it sounds – it’s a matter of bolting the racking together and fitting the panels in place. Even without DIY experience, many of our customers can get their system built in a weekend and save thousands on installation costs.

Factors That Affect Solar Panel Prices

1. Technology advancements.

The first computer, the Harvard Mark I, filled an entire room and took more than 15 seconds to complete one division problem. Now, we can buy powerful computers that fit in our pockets for just a couple hundred dollars.

I bring this up because solar panels are following the same growth trajectory. Thanks to rapid technological advancements, panel prices have consistently dropped 6-8% per year.

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Free Solar Panel Guide

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For example, in 2012 you could buy an Astronergy 235W panel for $275. Today, you can buy a 280W Astronergy panel for $155.

We’ll look at historical pricing trends later in this article, but this is the main factor that dictates how much solar panels cost. Advancements in technology have made panels much more affordable, and future developments will shave prices even further.

2. Market Forces (Tariffs, Subsidies, etc.)

While prices have trended steadily downward over the past few decades, we’ve also hit a few “bumps in the road” in the form of tariffs, regulations and other political influence on the solar industry.

For example, recent tariffs on materials like aluminum and steel, as well as products specific to the solar industry, caused a temporary uptick in prices earlier this year.

However, these tend to be blips on the radar rather than lasting changes. The long-term trend shows that solar panel prices are consistently falling.

3. Panel Material

There are two main types of panels: monocrystalline and polycrystalline, or mono and poly for short. Mono panels have traditionally been more efficient than poly panels.

However, new variations on panel technology (including PERC and half-cut cells) have made the distinctions less clear-cut. Today, you can find poly panels equipped with newer technology which are comparable in efficiency to traditional mono panels.

In the end, your best bet is to check the spec sheet for an efficiency rating, then go with whatever panel gives you the best bang for your buck. Take a look at our article on the best solar panels of 2019 for a side-by-side comparison.

4. American vs. Imported

American-made goods cost more to manufacture, mainly due to the high cost of labor. Solar panels are no exception: American panels cost more than those imported from places like China or Germany.

Companies like SolarWorld USA and Mission Solar make their panels in America, while Astronergy panels are a bit cheaper because they import from their manufacturing plants overseas.

5. Wattage

As technology improves and panels get more efficient, the wattage on each panel goes up. The physical size of the panel doesn’t change (most are 60 or 72 cells), but the efficiency means you can squeeze more production from each cell.

When I put solar on my home, I held out until Astronergy upgraded from 305W to their new line of 310W panels. That was in 2014. Now, the successor to that line of panels is sized at 335W. In four years, technological advancements allowed them to squeeze an extra 25 watts of output into the same physical form factor.

As you compare panels, the best metric to go by is cost-per-watt. As long as you have enough room on your property to build your system, don’t worry too much about size or wattage for individual panels. Just focus on how much you pay per watt of output for your entire system.

6. Supply & Demand

The last big factor is supply and demand.

60 and 72-cell panels cost less because they are widely used and manufacturers can sell them by the container. The economies of scale drive the manufacturing price down, which makes the cost-per-watt on these panels much lower.

On the other hand, specialty panels (like flexible/industrial panels or those with very low wattage) get produced in small quantities. The smaller manufacturing run means higher production costs get passed on to the consumer.

Historical Solar System Pricing Data (Since 1998)

Lastly, here’s some context on the historical price of solar power systems over the past 20 years. This chart shows the average cost to install a residential solar power system for every year dating back to 1998.

This data has been stitched together from reports by SEIA and NREL.

YearCost-per-watt (systems)

Is Solar Worth It?

If you’re just starting to research the solar landscape, hopefully this data is a good starting point to help you figure out how much it costs to go solar.

For more info, we recommend watching the above video on solar payback period – the amount of time it takes for you to recoup your investment into solar, based on reduced energy bills and tax incentives.

For more personalized advice on how much your system might cost and whether solar is worth it for you, grab a copy of your electric bill and head to our solar cost calculator. This tool can tell you what size system you need and how much you stand to save on your electric bill based on your energy usage patterns.

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The Cost of Solar is Rising. Here’s Why.

The Cost of Solar is Rising. Here’s Why.

If you want to go solar, now is the best time to do it.

The price of solar has been trending down rapidly in recent years due to technological advancements in the field. Solar panels cost less than half as much as they did just a decade ago. [PDF link]

With prices sinking all the time, we don’t blame people for holding out for the best possible deal on their system.

But that trend has come to a halt this year. Between new tariffs and the disappearance of key tax incentives, we expect prices to start climbing back up over the next few years.

So we wanted to put out a PSA for our readers: if you were waiting for prices to bottom out, this is the sweet spot. The cost of solar will rise steadily over the next few years.

Two big changes will impact the industry:

  1. The federal tax credit is disappearing.
  2. Tariffs have prompted price hikes across the board in the solar industry.

Let’s take a look at the impact these factors will have on the cost of your solar system.

Federal Tax Credit Disappearing

We’ll start with the tax credit. It’s not only easy to understand, it has the biggest impact on the true cost of your system.

In practical terms, the federal tax credit is money back on your system. Right now, the government offers a 30% tax incentive for going solar, which is applied toward the taxes you owe. So if you buy a $10,000 system, you get a $3,000 credit the next time you go to file taxes.

And that applies not just to system cost, but installation as well. Save the invoice if you hire an installer, and keep your receipts when you make trips to the hardware store for extra materials. All of that can be claimed.

Installation can cost quite a lot if you hire an installer. In some cases, installation charges can be higher than the cost of equipment itself. Don’t underestimate the huge impact this can have on the size of your tax credit.

There’s a bit more nuance to the tax credit, but here’s the simple explanation: if you buy a system now, you can qualify for a 30% credit on your project come tax season.

solar guide

Free Federal Tax Credit Guide

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But that credit is being phased out over the next few years, and it will disappear completely by 2022. The tax credit schedule for residential projects looks like this:

  • 2018: 30%
  • 2019: 30%
  • 2020: 26%
  • 2021: 22%
  • 2022: 0% (Commercial-scale projects retain a 10% tax credit.)

So each year you delay, the true cost of your system goes up a little bit. By 2022, the tax credit will be gone completely, and you foot the bill for an extra 30% of your solar project.

Each year you postpone your system build is a little bit of free money you’re never getting back. We always tell people to build before the end of 2019, when the tax credit starts scaling down.

Three Tariffs Driving Up Solar Prices

We’ve known about the tax credit for a long time.

But the more recent development is the introduction of a series of tariffs that are driving up prices across our entire industry.

There are three tariffs we’re concerned about right now:

  • a 30% tariff on solar modules + 25% tariff on Chinese module imports
  • a tariff on steel (25%) and aluminum (10%)
  • a proposed 10% tariff on inverters, AC modules and non-lithium batteries (which isn’t in effect yet, but is likely to pass)

30% tariff on solar modules.

This one got a lot of publicity in the solar industry, and we covered it on our blog a couple of months back.

In January, the U.S. government imposed a 30% tariff on imported solar panels and solar cells. They followed that with an additional 25% tariff on Chinese solar module imports in June.

(The first tariff applies to all module imports. The second tariff comes in addition to the first, but applies to Chinese imports only, which make up just 11% of the solar panel import market.)

These tariffs came about after two American solar manufacturers, Suniva and SolarWorld, claimed their business was being harmed by cheap imports from China. They requested a 50% tariff on solar imports. The tariff eventually went into effect at the 30% rate.

Back then, we estimated the tariff would add about 5% to the cost of grid-tied systems (which is what most people choose if they have access to the utility grid). And we expected off-grid system prices to climb by around 2%.

Impact of solar tariff on home solar

While prices went up slightly, we found that manufacturers absorbed most of the impact of these tariffs. In fact, several foreign companies are opening U.S. manufacturing plants to avoid future tariffs.

If it was just these module tariffs, you wouldn’t see the pricing needle move too much, as companies can absorb some of the tariffs by moving their manufacturing plants.

But a more recent tariff on raw materials has had a larger impact on the industry…

25% tariff on steel and 10% tariff on aluminum.

This is the interesting one because it’s flying under the radar right now in the solar world. Since it’s not specific to solar, we haven’t seen too many news sites covering the impact it will have on our industry.

It’s a new tariff on raw materials: 25% on imported steel and 10% on imported aluminum.

Since most solar equipment is built from steel or aluminum components, this tariff will impact almost everyone in the industry, no matter what they produce.

As the purchasing manager for Wholesale Solar, it’s my job to track pricing trends in the solar industry. Over the past few months, several manufacturers have emailed me to let me know price increases are on their way.

And they cite the raw materials tariff – not the module tariff – as the reason for those price hikes.

One vendor cited “accelerated raw material inflation that has greatly impacted our industry.” Other announcements followed a similar tone.

Ten companies have emailed me so far to warn that the raw materials tariff has impacted business, leaving them no choice but to increase prices soon.

In all, vendors across the entire industry have bumped up prices from 5-22% on their product lines.

(Note that some companies are going to be hit harder…racking manufacturers have it rough, as their product is made almost entirely from steel and aluminum.)

Here’s what’s happening: once the tariff was announced, everyone stocked up on as much steel and aluminum as possible to weather the impact of the tariff.

But of course, it’s not just the solar industry that uses steel and aluminum in their products. Manufacturers everywhere scrambled to stock up.

That created a scarcity of raw materials, which in turn causes inflation of the price of those materials. So everyone is stockpiling goods and materials at pre-tariff prices (including us). But when that supply dwindles, our vendors will need to kick prices up a bit to cover the cost of raw materials.

That cost increase will be passed on to you, the customer. Several companies have already put those changes into effect, and a the rest are slated to roll out pricing increases by the end of the year.

Here’s what all this means for you.

We are anticipating the price of a solar system to increase by 1-3 cents per watt. For example, a system with thirty 300-watt solar panels would come out to 9000 watts. This tariff would increase the cost of this system by $90 to $270.

That’s noticeable, but not an extreme difference for residential customers. Commercial and utility-scale solar projects will feel the brunt of this tariff’s impact.

Since margins are razor-thin, a slight increase in material costs can jeopardize those large-scale projects. According to The Hill, $2.5 billion worth of these projects have been frozen or canceled as a direct result of these tariffs.

10% tariff on inverters, AC modules and non-lithium batteries.

This one was just proposed this month, but we think it’s going to pass based on how the recent tariffs were handled.

The government has proposed a 10% tariff on inverters, non-lithium batteries and AC modules. Like the panel tariff, this one is specifically targeted at the solar industry. Manufacturers will attempt to eat a portion of the costs, but we won’t be immune to small price increases across the board.

PV Magazine forecasts an increase of 1-2 cents/watt for the affected products.

This round of tariffs will be reviewed on August 20-23. If it passes (and we think it will), that’s yet another bump in production costs that will trickle down to the consumer.

This all may not sound like too much, but it adds up. When you add the impact of the tariffs to the disappearance of the tax credit, suddenly you’re looking at paying 40% more for solar in 2022 than you would have in 2018.

So What’s the Best Time to Go Solar?

Right now. And we’re not just saying that.

The very best time to build your system was in 2017, before the first tariff hit.

The second best time is right now in 2018, while the tax credit is still in effect and companies still have “pre-tariff” pricing on materials.

We stocked up on solar panels to soften the blow of the price increases over the next few months. Other solar companies have made the same preparations.

We plan to sell these at pre-tariff pricing to ease the transition. But after that batch disappears, we may need to nudge our prices up a bit to keep pace with rising manufacturing costs. And we expect to see a similar approach across the industry.

To wrap things up, I’ll just say this: we’re big on educating our customers, and that includes letting you know how to get the absolute best deal on your system. Even if that means acknowledging our prices will get a little bit higher later on.

It’s never fun to announce that prices are going up. But we can make people aware that these are the best prices you’ll see before the tariffs take hold.

If this PSA prompts you to stop procrastinating and start your solar project, we feel like we’ve done our due diligence here.

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Why Are Solar Panels So Expensive?

Why Are Solar Panels So Expensive?

Why Are Solar Panels So Expensive?

Large solar installers mark up their quotes to 2-3x the cost of equipment, turning a $10,000 system into a $30,000 project. You can save money by hiring a local contractor for much less (or even installing it yourself), turning your system into a sound long-term investment.

Over the long term, solar energy is the cheapest way to power your property. But it requires a significant up-front investment that slowly pays back over time.

Everyone loves the idea of saving money on energy bills. But when someone puts a quote in your hands for a system that costs more than a new car, you might start to have your doubts…

“Seriously, why are solar panels so expensive?”

We get this question all the time. Here’s our explanation:

1. Huge Markup on Turnkey Installations

Did you get a quote from a full-service solar company that installs their own equipment? If so, they’re probably marking up installation costs like crazy – as much as double the cost of materials. You can save a good chunk of money by installing it yourself or hiring an independent contractor for less.

2. 30% Federal Tax Credit

You get a 30% federal tax credit for going solar. Just know that whatever you pay, you’ll deduct 30% of the cost of your system and installation from your taxes. (Heads up; the tax credit is being phased out by 2022.)

3. Solar is an Investment

The initial cost of solar is high, but the money you save on electric bills pays for the system over time. The amount of time it takes you to break even is known as the payback period.

This is a significant concept for anyone trying to understand why solar is a smart investment. Watch this video to learn how to calculate payback period on your system:

4. It’s Fine to Start Small

You can always start small and cover part of your energy needs, then expand as your budget allows.

It’s hard to give a conclusive answer, since this is such an open-ended question. But we hear it most often from people who have quotes out with a turnkey installer.

A system that costs about $10,000 in materials, like this 6.6kW grid-tied system, might be marked up to $30,000 after installation costs from a turnkey provider.

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Which explains why sticker shock is a common phenomenon in this industry.

So here’s our advice: the best way to save money on solar is to install it yourself, or hire an independent contractor to complete the installation at a fraction of what a turnkey provider would charge you.

If the up-front cost is still a concern, the next solution would be to scale back to a more modest system design and then expand on it as your budget allows.

Don’t Overpay for Installation

Most of the time when someone asks us why solar panels cost so much, they’re working from a quote from a turnkey installer (a company that offers an all-in-one solution to source the equipment and perform the installation).

Here’s the trick: the cost of equipment is pretty much the same wherever you go. The markup is in the installation.

Large installers have overhead costs. They have to cover labor, pay rent on their office, maintain a fleet of service vehicles, supply equipment, take out insurance, and so on…

All those operating costs get rolled into the charge of installation.

And the markup is obscene.

A typical installation might take a team of 3 laborers a full 8-hour day to complete. At $25/hr, that’s $600 in total labor costs. Add a bit more for tools and overhead, and the installer might spend about $1000 to send a crew to complete the job.

And yet…turnkey installers charge 1-2 times the cost of equipment to install it. If your equipment costs $10k, your final bill may come out to $20-30k once everything is bundled together.

Uh huh. You can see why we’re such strong advocates for DIY solar.

If you’re holding a quote from a turnkey installer, we strongly recommend you explore DIY as an option. Installing a solar system can seem scary, but it’s a lot easier than it looks.

We’ve helped thousands of people through the DIY installation process – take a look at the customer galleries in our Install of the Month feature for inspiration.

Don’t feel comfortable installing your own solar system? There’s a nice middle ground between DIY and turnkey: buy the system direct, then hire an independent contractor to install it.

Independent contractors tend to charge way less for installation. They should charge you 75 cents to a dollar per watt, which means you’d pay $5-6k to install the same system we used as an example above. You can see the value comparison of all three options in the chart below.

This is not to say that we fault turnkey installers for what they do. If you have a family or a demanding job, time is likely your most valuable resource. A turnkey solution is absolutely worth it if you can afford it and don’t have time to design your system yourself.

Just know you’re paying a premium for them to install the system, and that premium is awfully steep.

30% Federal Tax Credit Makes Solar More Affordable

If you live in the United States and choose to go solar, your system is eligible for a federal tax credit.

Today, that credit is 30% of your cost to go solar (which includes the cost of installation and equipment). However, it will shrink over time to 26% in 2020 and 22% in 2021, disappearing completely by 2022.

The tax credit is a reduction of the income tax you owe. For example, if you owe $3,000 in taxes but received a $3,000 tax credit on a $10,000 system, your tax liability would be $0.

If solar seems too expensive, keep in mind that 30% of your system cost will be refunded when tax season comes. However, that benefit will be phased out over the next few years. So if you want to claim the extra kickback on your taxes, you’ll have to do so sooner rather than later.

Read more: The Federal Solar Tax Credit, Explained in Plain English

Understanding Payback Period

Even if you skip the installer, you’ll still spend a good amount of money on the system itself. That number can be a little bit scary without any context.

It’s important to think of solar as an investment with a payback period.

Solar saves you money in the long run by reducing or eliminating electric bills. Over time, the money you save on electricity adds up.

Your payback period is the amount of time it takes for your energy savings to pay off the up-front cost of the system. (Other factors, like tax incentives, also speed up your payback period.)

The formula for payback period is:

System Price ÷ Value of Electricity ÷ Annual Usage = Payback period (years)

(This is a simplified formula. It doesn’t take into account certain factors like energy cost inflation, which increases costs by about 3% per year, or the scheduled replacement of smaller parts, like the inverter.)

The system may be pricey up front, but it will provide more than enough energy to pay for itself. For example, panels are warrantied for 25 years, but our sample 6.6kW system may pay for itself after about 8 years of typical use. The final 17 years of ownership yields profit off your investment.

Learn more about how to calculate payback period and return on investment for your solar system.

Start Small To Trim The Cost Of Solar

You don’t have to offset 100% of your energy costs if your budget doesn’t allow for it. It’s always possible to start with a modest system and then expand later.

You can start as small as one solar panel and a single micro-inverter. Solar panels and micro-inverters are a 1-to-1 system, meaning each panel is connected to its own micro-inverter.

See it: Enphase IQ7+ micro-inverters

This configuration can be expanded indefinitely. We build modest systems like this all the time for people who want to offset a small portion of their energy, then add to it over time as budget allows.

If you want to take this approach, be sure to mention your expansion plans to your system designer / sales tech. Not all inverters and panels are compatible. Start with a long-term plan in mind and plan appropriately.


Solar can be expensive in the short term, but the incentives will save you plenty of money over the life of the warranty. And the return on investment improves dramatically if you skip the turnkey provider and install it yourself – or at least hire an independent contractor to do it for you.

Trying to figure out whether solar is right for you? Take a look at our guide to getting started with solar. It’s tailored for people who are just starting to research the solar energy landscape.

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