Solar panels cost
How much do Solar Panels cost?
Solar Panel Costs: What You Need to Know
Of course, one of the main things people want to know is the cost of their new solar panel system. The average installation will set you back between $17,000 and $22,000 depending on the size of your roof, the efficiency of your system and the core components used. You need to add into this that your solar panels system is actually an investment which can save you money on energy bills as well as any incentives that are due to you, either at a federal or state level.
The Cost of Solar Panels Has Come Down
Like most new technologies, the more development and investment there is, the more the price starts to come down. A 4kWh system that would have cost you around $30,000 a few years ago will more likely set you back just $15,000 today. How much the price is set to decrease in the future will depend on a number of factors, of course, including:
- The supply and demand of solar panels.
- Improved installation processes.
- Greater innovations and more cost effective manufacturing processes.
- The availability of state and federal incentives
As with most building and construction work, having a shop round is the best advice for the getting the right price and, more importantly, the right solar panel system for your home or business.
Solar Panel Cost Case Studies
There are a lot of factors that go into calculating the cost and savings, including the size of the roof, the particular photovoltaic cells used and the number of panels needed to create a credible return on investment as well as the potential of incentives to reduce the initial installation price.
Prices also vary according to location and for a typical 5 kW array you can expect to have to invest anywhere between $17,500 to $24,000. While that’s a large initial amount, you can benefit straight away from the federal tax credit that knocks 30% of the price. Many states also offer their own incentives which bring the cost down more, and some also give performance based incentives for the amount of energy you produce.
How much a solar panel installation costs depends where you live in the US. Some states are better than others and you will want to look at what incentives are available. Despite that, the return on investment for many solar installations across all states is quite good with net profits of between $10,000 and $28,000 over 25 years depending where you live.
Here's an example for Arizona for a 4 kW system:
Total cost: $22,000
Rebate from utility company: $2,400
Federal tax credit (30%): $6,000
Tax credit from Arizona: $1,000
Final cost: $12,600
Savings on average electricity bill: $1,920
Payback period: About 7 years
This is at the top end of the solar rewards for states across the US and conditions vary according to what incentives are available and the starting price of electricity bills. There’s also the question of initial cost of an array which varies by several thousand dollars across states.
Ways to Buy Your Solar Panels
If you have the capital available for buying your solar panels and installing them, then you could see excellent returns over the 25 years of the system’s life in many states. A decent sized 3 kW array with a Feed in Tariff will provide a healthy return of approximately $10,000 to $15,000 over 25 years. That doesn’t take into account the energy savings of producing your own electricity.
Most of us don’t have the finances to fully fund a solar panel installation and there are other ways of getting the money together, depending on your financial situation. Again it depends on the state you live in but there are options to take out a loan or enter into a leasing agreement with and installation company.
Taking out a Loan
The next option is to take out a loan which will mean you will lose some of that final profit with interest payments. Having said that, with the right solar panels system, you should be able to break even within 14 years and then can start enjoying any profits from lower electricity bills and benefits from net metering.
State and federal loans for installing solar PV are available for residential, commercial, municipal and educational establishments across the US at a low interest rate. These are more often available at a state level so you need to check a site such as DSIRE to see what is currently available.
Enter a Leasing Arrangement
While you may want to buy your solar panels outright, it’s not always possible. You perhaps don’t have the finances available and don’t want the burden of a loan, and for those people a leasing arrangement might be better. If you want to benefit from lower electricity bills and cleaner energy, then it’s a good choice in the US. The problem is that not all states allow leasing and you’ll hear the phrase cash purchase only.
If your state does offer leasing, then you can contact an installer to basically put in your solar panels for free. The benefit of this is that you don’t have to put in the initial investment. The bad news is that you won’t profit from the installation except from lower utility bills. The other issue that leasers have to consider is what happens when they decide to sell their property and whether someone else will want to take on that lease (they generally run for 20-25 years).
Purchasing options for solar panels
Buy them outright with cash
- If you have the capital available and you wish to invest you can make a generous profit with the Feed-in Tariff. You can earn up to £13,000 over 20 years with a 3kW system. That is a healthy income of £450 per year and savings of £200 on your electricity bills.
Take out a loan to cover the cost
- If you don’t have the capital then the second option is to get a loan to pay for them. This method will allow for a longer term investment but will still offer significant financial reward and offer the comfort of protection from rising energy costs. The loan and cost of the system should break even around the 10 year mark, offering a further 10 years of income and savings.
Install free solar panels
- This option for free solar panels is available to those people who either cannot take out a loan or don’t want to pay the high upfront costs associated with the initial purchase of the system. The maintenance costs are taken care of, but you will not receive any of the FIT payments for the 20 year period. You will however benefit from all the electricity they generate and if your home uses a reasonable amount of electricity during the day, then you will realise these benefits with up to a 50% reduction in your electricity bill.
Try the Green Deal
- The Green Deal is a government run financing scheme that has been set up to help you make energy saving improvements to your home or work place. It enables you to make these energy saving improvements without having to pay for it all upfront.
Solar Panel Financial Information
Finance options for Solar Panels
There are a number of companies offering finance for solar technology in the United Kingdom. Finance, in the form of loans and leasing agreements, is available for domestic, commercial and industrial installations, in both the private and public sectors. Finance for renewable energy technologies allows customers to avoid large upfront costs and make payments out of the income from Feed-in tariffs, as well as energy bill savings.
Finance may be offered on a range of bases, each offering varying levels of financial risk and reward, as well as varying interest rates. Typically the finance company will provide the renewable energy technology and the cost of installation in return for payments spread over a period of time. Depending on the type of agreement, the client may either come to own the technology at the end of the period, it may be sold by the company with the proceeds being split between client and company, or the company could retain it.
The arrangements offered by finance companies will vary, however, and each company will offer different advice. It is therefore advisable to obtain quotes and agreement terms from a range of companies, based on clients' energy needs and financial situation. Caution should also be taken when calculating one's ability to make repayments, as the returns offered by some renewable technologies depend in large part on the weather.
In some cases installation companies also offer finance solutions. Some companies also offer the free solar or rent-a-roof schemes discussed here, whereby a company will pay for the installation of a solar PV system on the roof of a home or business. The company will usually receive the Feed-in Tariff income, while the property owner will benefit from reduced energy bills and carbon emissions.
Look Here for some UK companies offering finance for renewable technologies.