How Much Does Solar Panel Installation Cost?

If you’re considering installing solar panels for your home, you have probably asked yourself, “How much does a solar panel installation cost and what are the financing options available?” When researching solar, many homeowners want to try to estimate the cost of their system before getting a formal quote from an installer. While it is understandable that homeowners would want to have this estimation handy when they go into the bidding process with solar providers, the truth is that there are many factors that determine the cost of solar power panel installation and many of these can only be discovered through an actual site visit to the home or by gathering important information about the home.  To help shed some light on what these variables are and how they can impact the cost of solar installation, we’ll discuss quite a few of them in this article. 1. How much power is the home currently using? The primary factor determining solar installation cost is the size of the solar system itself -- the number of solar panels to be installed (usually expressed in kilowatts or kW). Solar panels are rated in watts, just like light bulbs. So, a 360W solar panels will produce more power than one rated for instance at  280W. A system using (10) 360-watt solar panels is rated at (10) X 360W = 3,600 watts or 3.6 kilowatts (kW). Similarly, the size of the solar energy system is driven by how much electricity the home uses in a year (expressed in kilowatt-hours or kWh). The more electricity that is used in a year, the larger the number of panels (or kW of energy) will be needed so that the system will produce more electricity each year (kilowatt-hours) and offset the power being purchased from the utility company. Most homeowners going solar want to offset 100% of their energy bills, so how much power they use will dictate how many panels are needed to produce that power. This can actually vary quite a lot, even within given neighborhoods in San Diego. In general, larger homes tend to use more electricity but square footage alone is not a very good guide. For example, all-electricity homes use much more power than homes with natural gas. Homes with swimming pools and/or air conditioners also use more power as do homes with electric vehicles. In the San Diego area, homes along the coast also tend to use less energy than homes further inland due to the more temperate environment. Homes in east county, by contrast, tend to use more power due to greater dependence on A/C for the hotter summers and greater use of heating in the colder winters (even gas furnaces have fan motors that use electricity). 2.  Is the homeowner adding any energy expenses in the future? When looking to install solar, the smart homeowner will take into account any anticipated home improvements that will increase future electricity usage. For example, this could include pools, hot tubs, adding a family member to the home, new appliances, or even an electric car. In order to recommend the right system size, your solar specialist will want to add this anticipated usage to your proposal and can offer expert help at translating each appliance into its annual energy usage. 3.   How will the homeowner finance the system? One factor in determining the overall cost of solar systems has to do with financing. In general, homeowners who pay cash for their solar systems will benefit from the lowest out-of-pocket cost, because they are only paying for the system. Those who finance their system, by contrast, are paying for the system and paying something for the financing. However, many homeowners don’t have sufficient capital upfront to take the cash option, so we also offer an attractive, low-cost solar loan. The good news is that the amount of the solar power loan payment (including interest) is usually quite a bit less than the monthly electric bill before solar. Some homeowners prefer to lease their system rather than owning it and financing it with a solar loan. With a solar panel lease program, homeowners make a monthly payment to lease the solar system producing the power for their home. The lease usually lasts for a fixed period, such as 20 years. There are several differences between solar power leases and solar loans. The one you end up choosing will depend on your current financial situation and your future goals. You might ask, doesn’t a system cost the same amount, regardless of how I pay for it? The answer is that, just as with car financing, the manufacturer sometimes provides extra incentives to lower or “buy down” the cost of financing the system so it’s important to have some idea upfront about how solar financing works and which form of payment would work best for you. Your solar specialist can also help provide you with some comparative numbers to help answer this question. 4.  Will the homeowner be utilizing the 30% Federal Tax Credit? If the homeowner chooses to own their solar system (not lease it), they are eligible for the 30% Federal Solar Tax Credit, which can greatly reduce the overall cost of their solar system. The Federal Solar Tax Credit, or the Solar Investment Tax Credit, was established by The Energy Policy Act of 2005, and was initially applied to solar panel installations, solar water heating systems and fuel cells. The 30% Tax Credit has been extended several times, but will be phased out, beginning after 2019. The 30% Federal Solar Tax Credit allows homeowners who purchase their solar to deduct 30% of the overall cost of their solar installation from their federal tax bill. (If this tax credit is larger than the total tax bill, homeowners can roll the remaining credit over and use it in successive years.) To illustrate how significant the savings can be from this tax credit, the average residential solar installation currently costs about $25,000; 30% of this amount is $7,500 which means that this much is subtracted from their tax bill, so their net out-of-pocket for the solar energy system is now just $17,500 instead of $25,000! For larger, more costly systems, the tax credit savings is incrementally greater, too. But 2019 is the last year that this full 30% tax credit will be offered, so it’s important to start thinking right now about how to take full advantage of this huge savings opportunity before the rate begins to decrease in 2020 and years that follow. It should be noted that homeowners who decide to lease (rather than own) their systems are not eligible to take the Federal Solar Tax Credit. With a solar lease, the leasing company owns the system, and therefore gets the benefits of the Federal Solar Tax Credit. The leasing company passes some of those savings down to the homeowner in the form of lower monthly payments but this does not change their tax liability as the purchase of a system does.  5. What make and model of solar panels will be installed? As with any product, solar panels vary in quality and efficiency based both on brand and model. In general, solar panels which are more efficient (that is, produce more solar power per square foot) are more expensive than solar panels which are less efficient (and take up more space to produce less power). Of a residential rooftop (compared to a commercial building), solar space is often at a premium due to obstructions (such as vent pipes and the chimney) or shading (from any nearby trees). For this reason, it is often well worth it to pay more for a more efficient panel in order to offset the greatest amount of power from the power company. In addition, the most dependable solar panels from a reputable manufacturer, protected by a longer warranty may also cost slightly more initially – but are well worth it, over the long lifetime of a home or solar energy system. For example, currently rated at 21% efficiency, SunPower solar panels are the most efficient in the industry. Their patented “back contact” copper connection technology is so dependable and so unique that it earned them a recent exemption from the U.S. solar panel tariff as a “breed apart.” And its 25-year warranty is more than twice as long as the industry standard of 10-years’ protection. No wonder this is the only solar panel offered by SunPower by Stellar Solar! 6. Will solar panels be installed on a rooftop or on a separate “ground mounted” rack? While most homes in San Diego have enough roof space to fit the necessary amount of solar, some homeowners with large properties may choose to go with a ground mounted system installation nearby on their property. This added space may also provide the freedom to have more panels compared to a roof-mounted solar panel installation system would offer. Ground mounts, especially if they are installed on a steep hill or rough terrain, do require more work to install and, depending on accessibility, installation costs may vary greatly compared to roof mounted-installations. Nothing is as expensive, as continuing to buy all your power from the power company, however; and your solar specialist can help you determine which type of installation will work best for you. 7. If it will be a rooftop installation, what is the current roofing material? Different roof types require different installation techniques, and this can affect the cost. That’s why the type of roof in a rooftop installation can affect the cost of the installation. In general, standard installation hardware is made for most standard roof types, such as composite shingle, concrete s-tile, flat-tile, concrete flat tile, and clay s-tile. That said, roof areas that require more preparation may cost a bit more due to the added labor and material costs. 8. How many separate areas will be supporting the overall solar array? In order to find space for all of the solar panels, it is sometimes necessary to install them in separated (non-contiguous) sections of the overall roof. This may be necessary due to the California fire code rules (which require certain areas of any roof to remain clear for emergency access). Or it may be necessary due to maximize solar exposure and minimize shade (ideally, solar panels are placed on a south-facing roof for all-day sunshine although east and west will work almost as well). In general, the more individual groupings of solar needed and the greater the distance apart, the more labor and materials will be needed to complete the array, and this does affect the final cost. 9. What is the direction and pitch of the main roof area? As mentioned above, the amount of energy produced by solar panels is affected by which direction they face and the amount of their pitch or tilt. South-facing roof areas with about a 20-degree pitch are best, in terms of overall solar power production. However, flatter roof areas or those facing east or west will also work, but may require slightly more panels to produce the same amount of power. As usual, this is a factor that our solar specialist can work out, based on your overall energy needs. 10. Is there any roof shading? Shading or shadows that fall on the solar panels throughout the day will also affect the power production of a system. Your solar specialist has tools that can actually take a 360-degree photo of the sky above your roof and precisely calculate the impact of shading during each solar day and through different seasons of the year (as the sun’s position in the sky changes). One way to minimize the power losses due to shading is to only use solar panels with micro inverter technology, which means that each solar panel has its own “microinverter” attached which changes its electricity from DC (direct current) into AC (alternating power) which is what the home needs. SunPower offers several models of “AC solar panel” with microinverters. Because each solar panel manages its power individually, shade falling on one panel does not reduce the power throughout the entire group or circuit as it does when panels are connected to a central or “string” inverter on the side of the house. The other way to compensate for any power loss due to shading is to add one or more panels to the array and make up the difference in power production, as is done for non-south-facing rooftop solar panels. As before, your solar specialist will take this into account when recommending the right size and optimum location of your system. So, the next time you ask the question, “How much does a solar panel installation cost?” – please understand if your solar specialist hesitates before answering. He or she is not trying to be uncooperative – just more accurate! We hope we have demonstrated here that there are many factors to be considered in calculating the exact cost of a solar installation. The good news is that solar can be installed in nearly any location, on nearly any building type and can harvest enough solar energy to equal the electricity needs of that home for an entire year! The better news is that your San Diego solar power specialist from SunPower by Stellar Solar is experienced and knowledgeable in all of these factors and can easily give you an easy, no-hassle estimate by asking you several simple questions and, if needed, visiting your home itself. And the best news is that, regardless of what your final installation may cost, it is guaranteed to cost less than what you are paying the power company for the same amount of electricity; in fact, most of our customers break even on their solar investment in just 5 or 6 years – which means the next 20 years or so, they’re enjoying free electricity! As San Diego’s oldest and most experiences solar installation company, the specialists at SunPower by Stellar Solar can answer any questions you may have, and will look forward to providing you with a solar quote that is accurate and customized to your specific situation.  

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