One of the first considerations when thinking about going solar is the cost. This leads to many other issues such as monthly savings and your return on investment.
It all depends on the type of system you need for your home. Residential solar systems can range in output from 3kW to 8kW and the price tag on such a system can range from $15,000 to $40,000. With that being said, the cost per watt, which includes labor, parts, overhead, and permitting fees, has decreased considerably, and nowadays you can expect it to be $6-8/W. In most cases, the bigger the system, the lower the cost per watt.
While there are multiple variables that determine the actual cost, including your geographical location, we will take a look at the typical costs of solar panels. In this article, we’re going to take a look at how much a photovoltaic system will cost, how long it will take to get your money back, and how much you can expect to generate in savings on your electricity bill.
Let’s start with the initial investment, more specifically, the solar panels themselves. Solar panels account for almost 30% of the costs, and for a combined capacity of 3 to 8kW, you can expect to pay anywhere from $4,000 to $16,000. For a more in-depth look, check out our guide to buying solar panels here.
You then have the investment required for the Balance of System, which refers to all of the system components that do not include the solar panels themselves. These parts make up to 20% of the investment, or anywhere from $3,000 to $10,000, and they usually include inverters, wiring, mounts and other electrical components.
Inverters alone account for 10% of the investment at $1,000-$4000. They are responsible for converting the direct current (DC) generated by the solar panels into alternating current (AC) that can be used in your home. Most inverters will not last for the full warranty of the solar panels (which is usually 20-25 years) and will most likely need to be replaced within that time frame.
In this category, we’ve included both labor costs, which amount to about 15% of the costs, and permits and inspection fees, which account for 15% themselves. Each of these investments can be anywhere from $2,000 to $5,000, for a total of $4,000-$10,000. The state you live in will be a large determining factor for these costs.
Maintenance, monitoring, repair, overhead costs and insurance are all ongoing costs. Once installed, you can expect a full 20% of your investment to go to these costs over the lifetime of your system. Typically this amounts to $4,000-$8,000, but there is a big potential to cut costs here. Monitoring is not always necessary, repairs might not be needed, and sometimes you can get by with very little maintenance.
Now here’s the fun part: incentives and rebates can cut at least 30% of the costs for a solar system. You could possibly get an even bigger rebate, depending on where you live. For more information, visit the Department of Energy website, or view our article about incentives and rebates in the state of Texas.
A solar system has a warranty of 25 years, but it can last longer than that. The typical payback period for a solar system can vary from as little as 5 years to 15 years. The variance is due to many factors such as geography, available rebates, number and type of panels, etc.
The net savings themselves can be considerable, ranging anywhere from $30,000 to $64,000 over 20 years. Electricity can also be sold back to the grid, to further offset costs and increase savings. The savings can also include an increase in property value.
Is a Solar System Worth the Investment?
What do you think? Besides the initial financial investment, you also have to take into account the time and energy it takes for installation. Once everything is up and running, you can expect to save up to tens of thousands of dollars over the lifetime of your system.