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Solar panels are becoming more popular in residential areas, and you may have even seen a few pop up in your neighborhood. The fact is, about 8% of American households already have a solar panel system installed, and the number grows every day. And while solar energy is a good way to save money (we’re talking thousands of dollars over time), getting started can be costly.
As with most investments, you have to put a good chunk of money in before you start seeing returns. If you’ve been thinking about going solar but aren’t sure where to start, look no further. We’ve done all the research for you. Here’s everything you need to know about solar panel costs, how to calculate cost per watt, plus how much money you can save by using solar.
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Before diving into solar panel costs, let’s get familiar with some terminology.
While there’s a whole glossary of terms revolving around solar energy, I’ll whittle it down to what you really need to know.
- Solar energy: Energy generated by the sun. This can be converted into thermal or electrical energy.
- Cost per watt: The price you’ll pay for every watt of solar being installed.
- kW (Kilowatt): A unit of measurement for power. A kW reflects the rate of electricity used: 1 kW = 1,000 watts.
- kWh (Kilowatt-Hour, or kilowatt per hour): A unit of measurement for energy. A kWh shows the total amount of electricity used.
Each month, your electricity supplier reads your meter to see how much electricity your home used in the past 30 days. They’ll use cost per watt or kWh as a unit of measurement to show you how much energy you used and what it’ll cost you.
Then they do their fancy calculations to come up with your electricity bill. This involves taking the solar panels’ wattage and multiplying that by the number of hours they generated energy. Divide that by 1,000 to get your kWh. Next they’ll take your area’s average electricity cost and divide that by your solar panels’ average daily kWh. Finally, multiply that by 30 to get the monthly average. Phew! Luckily, they do all the math for you.
Solar panel costs depend on the size of your home.
Keep in mind that the number of panels you need is totally subjective. It depends on the size of your home, the usable roof space you have, and the amount of sunlight you get each day. For consistency’s sake, let’s compare pricing for a 6kW solar panel system. Why? It’s one of the most popular system sizes since it tends to produce the right amount of electricity an average U.S. household needs per day.
A 6kW solar panel system would cover about 330 square feet of roof space and generate 400 to 900kWh a month, or about 8,000kWh a year.
Solar panel type also affects the overall cost each month.
Once you’ve determined how many panels you need, you’ll have to decide what kind to buy. There are three main types of solar panels: polycrystalline, monocrystalline, and thin film. While they all essentially do the same thing, they differ in efficiency, looks, and cost.
Polycrystalline solar panels are the cheapest solar panels on the market, according to Forbes. Then the average cost of monocrystalline and thin-film panels is about the same.
- Polycrystalline solar panels: Not the most energy-efficient option, but the cheapest to install.
- Monocrystalline solar panels: The most energy-efficient option and on average a few thousand dollars more than polycrystalline panels.
- Thin-Film solar panels: The actual panels are less expensive to produce, but they need to cover more area in order to be effective. They typically aren’t used on residential homes or buildings for that reason.
Solar panel installation costs more than the panels themselves.
The costs of the panels themselves don’t include installation. In fact, the installation costs are typically higher than the product alone because of the labor and skills needed to install them properly. You can expect to pay at least double the price of the panels for installation on an average-sized home.
According to The Home Depot, the total cost of panels and installation can be anywhere from $11,100 – $20,200, depending on home size and location.
Related: 21 Ways to Save on a Kitchen Remodel That Contractors Don’t Want You to Know
Calculate the cost per watt to determine if you’re getting the best deal.
The cost per watt is a metric to help you better understand the overall cost of installation. To calculate cost per watt, you’d take the total cost and divide that by the number of watts in the system. And remember, one kilowatt (kW) is equal to 1,000 watts.
For example, if a solar panel installation for a 6kW system cost you $24,000, then the cost per watt for this system would be $4 per watt. (Because 24,000 divided by 6,000 is 4).
Again, price varies by size and solar panel type, but you can more easily see your savings by calculating the cost per watt.
It’s interesting because if you were to opt for a $20,000 5kWh system, you’d still be paying $4 per watt since 20,000 divided by 5,000 is 4.
You can save thousands of dollars with solar.
Just like with the cost of the panels and installation, the amount of money you can save is totally unique to each situation. The amount you’ll save varies with the amount of sunlight your home receives, the kind of roofing material you have, and how much energy you use each month.
Project Sunroof is an AI tool from Google that uses location, sunlight data, and average costs to predict how much you’ll spend and save for a specific address. We plugged in the address of a 3-bedroom, 1550-square foot home in Denver, Colorado to get an estimate of savings.
Up-front cost: $16,000
Estimated savings over 20 years: $5,000
- Monthly bill without solar: $90
- Monthly bill with solar: $19
- Savings per month: $80
You can use the AI tool to predict the savings potential at your own home, but keep in mind it is just an estimate. Contact your local solar installer to get an accurate cost prediction.