People always mention that solar panels save you money in the long run, but what exactly does that look like? How long do you have to wait until you start to make money, and how much do you have to spend initially?
While there are no “one size fits all” answers out there, there are guidelines and ideas so you can get a feel for what you need to consider when first paying for solar panels.
The first thing you need to consider when thinking about costs is the size of your system. What exactly is your goal? Do you want a system to just give you extra power when needed? Something more of a backup because power in your area cuts out a lot, or do you want to be completely off-grid?
Answering this question first is important because it determines the amount of solar power you will need, and the kinds of equipment that you will have to consider buying to make sure your system works as you need it to.
For example, when you are just looking for supplement power, you won’t need much besides wiring and the panels themselves. However, if you want a battery backup in case of a blackout, then you will need some additional equipment like an inverter and batteries.
If you are considering going fully off-grid, you will need enough solar panels to cover all of your electronics and power needs. You will also need a battery bank that will have enough storage in case of cloudy days or damage to your panels so you aren’t left in the dark.
You will also need additional equipment, like charge controllers, extra wiring, and a stronger inverter. (1) All of these have a cost, and some of them are quite steep.
Now that you know what your goals are, you have to consider the equipment you need. If you are looking at cost as a general estimate, the first thing to look at is batteries. If you have a limited amount of money you can spend, batteries will often be your limiting factor.
To get a decent battery, which is usually a lithium-ion battery, you will likely look at around $8,000 or $9,000 just for one, but they can easily be more expensive. (2) For example, the Tesla Powerwall is around $8,500, and offers 13.5 kWh of storage. (3) For some, that one battery may be enough, but depending on your home, you may even need more than one.
You also need to think about the long term. Sticking with the Tesla example, it tends to have a warranty of about 10 years. In general, this means you have about 10 to 24 years before you have to replace it. (4) That means that at some point, you will have to spend another several thousand dollars to replace the battery.
That’s just one component of a solar system. Depending on where you live and the kind of solar panels you buy, you can expect to spend between $0.80 and $2 per watt. This means, for a 5kW system, which is about average, you can expect to pay around $7,500 just for solar panels.
You also have other parts like the wiring, brackets, MPPT charge controller, and inverter. While the brackets and mounts will likely cost a couple of hundred dollars, a charge controller is often close to $500 or $1,000 while an inverter starts at $1,000 and only goes up the larger of a size you get. (5,6)
Solar systems aren’t one-and-done purchases, and all components of the system will have to be replaced around 25 years. Solar panels are the exception and often give out after about 10 years. (7)
After figuring out all the parts, you often have to consider installation. While you can install the system yourself and save some money, you have to have a basic understanding of electrical systems and solar panels first.
You also need to understand the permits you may need and make sure you are doing everything legally.
Most people will simply choose to hire someone to install the system. Unfortunately, having a professional do all the work does come with a price. Having a professional team do the work will often cost you around the same as all the parts you bought.
So, for example, if you spent about $20,000 on parts, you can guess that the new price you will be quoted will be close to $40,000. Some of this has to do with their expertise and labor, and some of it has to do with the products that the company you hire works with.
Most professionals have contracts to only work with certain equipment. This often means that you can’t buy the products yourself, but must go through the company and have them hire it for you. They may use more expensive products than you were looking at, which can also increase the price.
After you pay for all of your solar system and the installation, you may be entitled to get some money back. Depending on where you live, you may be able to receive tax incentives and rebates. Often, you will get these during the next tax season.
For the tax incentives, it is important to note that you won’t actually get any money back. Most of the time, they will only cover a portion of the taxes you owe. So if you don’t owe any money in taxes, you won’t get the benefit.
However, if you look locally, you can also often find state and county discounts or rebates. Some utility companies will even offer to pay you for your unused solar power if you send it to the grid. This can further reduce your utility bill and have you saving more money in the long run.
- What are the components of a solar system? | LG USA. (n.d.). LG USA. https://www.lg.com/us/solar/blog/what-are-the-components-of-a-solar-system
- What are the components of a solar system? | LG USA. (n.d.). LG USA. https://www.energysage.com/energy-storage/should-you-get-storage/how-much-do-batteries-cost/
- Powerwall | Tesla. (n.d.). Tesla. https://www.tesla.com/powerwall
- Powerwall | Tesla. (n.d.). Tesla. https://regenpower.com/articles/how-long-does-the-tesla-powerwall-last/
- RV Solar Charge Controllers. (n.d.). https://thesolarstore.com/rv-solar-charge-controllers-c-40_190.html
- Harmonics, S. (2020, March 22). Solar Inverters – How Much Do Solar Inverters Cost? Solar Energy Company | Brentwood CA | Solar Harmonics. https://www.solarharmonics.com/solar-inverters-how-much-do-solar-inverters-cost/