How much does solar cost?
What are the upfront costs of solar?
It’s possible if you’re reading this that you’ve gotten a quote from a solar installer in the past or that you did some research online and were surprised by the cost. The true cost of a residential solar/PV system depends on a lot of factors. The biggest factor that goes into the price of your system is the size of your home and the amount of energy you use. If you use an above average amount of electricity, the cost of your PV system will likely be above average as well. You’ll need more panels and more batteries than someone who uses less energy.
Another factor is where you live. In Hawaii, solar energy costs more than it does in many other states, just due to its place in the ocean and the costs of sourcing materials. (This is true of all energy sources in Hawaii, though—Hawaii residents spend more than double on electricity per capita than any other state.)
The price you pay for your PV system pays for the design (how it fits on your home), the panels, batteries, and materials themselves (including mounting hardware and necessary wiring), the labor cost of assembly, and other administrative costs. The average PV system is 8kw, and includes 22 panels and 2 batteries.
Okay, but what’s the ballpark? How much will solar cost?
On average, a PV system can cost around $40,000-$50,000 total BEFORE tax credits are applied. That’s an important distinction, because the tax credits are substantial, cutting the price you pay. President Biden just signed the ,Inflation Reduction Act, which included provisions for extending the federal tax credit for another decade. The federal tax credit will refund you 30% of the price of installation. ,Hawaii’s tax credit covers 26%, and those two credits can combine (with some conditions), reducing your total out-of-pocket by close to half. When you get your custom quote, our consultants will make sure to go over the costs and the tax credits you can take advantage of. (Remember, we’re solar experts but we’re not tax experts, so be sure to check with your accountant about any questions you might have.)
Of course, the biggest problem is that the upfront investment of paying for a brand new PV system looks huge compared to a monthly utility bill. That’s not all there is to the story, though, so be sure to read our ,full blog post expanding on the financials of solar to see why going solar is worth it—and why your monthly costs will actually go down.
The fact is that most people finance their solar installation and immediately save money, because your monthly payment is a fixed payment of under $200, rather than a variable monthly utility bill of $400, the local average.
Is solar getting cheaper?
The short answer is yes, with some important context. The great news is that the actual hard cost of solar panels has gone down substantially in the last 10 or so years, and the efficiency of those panels has gone up. In just a few short years, solar energy has gone from a luxury to becoming very economically viable for everyday Americans just due to technological advances and increased demand.
This data from the ,National Renewable Energy Laboratory (NREL) shows just how much cheaper solar has gotten. Since 2010, there has been a 64% reduction in cost for residential solar systems.
The complications to this are the pandemic and the economic effects that have followed; this data goes up to 2020 and doesn’t account for inflation, manufacturing difficulties, and shipping disruptions that have shaken markets worldwide. Still, solar is on average much cheaper than it was a decade ago and will only get more accessible over time as markets stabilize. And of course tax benefits add onto all those reduced costs, so there’s never been a better time to go solar.
Is solar cheaper than fossil fuels?
Yes! Experts don’t agree on when exactly it happened, but some time between 3-5 years ago, solar energy became more economically viable than fossil fuels. A report in ,Consumer Affairs states, “Electricity from fossil fuels costs between 5 and 17 cents per kilowatt-hour. Solar energy costs average between 3 cents and 6 cents per kilowatt-hour and are trending down, according to the National Renewable Energy Laboratory.” Solar systems are now cheaper than ever before to manufacture and install, they’re cheap to maintain, and technological advances make them more efficient every year.
That’s a big deal, because it means that the grip that fossil fuels have on the world economy will start to loosen just on pure economic terms. There’s a long road ahead, though, mostly because the physical reality is that there are so many enormous fossil fuel companies and infrastructure that revolve around oil products, it’ll be a while before the worldwide energy production becomes carbon neutral. And just like with residential solar, the upfront investment for large scale solar plants is large. But the financial incentive is there, so it’s just a matter of time. It’s not just solar, either—many other renewables like hydroelectric and geothermal energy are outpacing fossil fuels and becoming much cheaper to produce. That’s good news for energy consumers and for our planet.