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As with any significant purchase, there is a vital distinction to be made, between headline ‘price’, and actual ‘cost’, once the broader considerations are taken into account. This article focuses on solar panel cost from a holistic perspective, as the significant investment that a solar energy system represents.
In examining the purchase and investment from this viewpoint, several key factors are essential to assess, in order to achieve the optimum return on investment and satisfaction with the eventual system, over its full operating life.
The Overall Cost of Going Solar
Starting with the most basic question: “What is the true cost of ‘going solar’, and is it worth it?”, the answer has more to it than many would realize at first glance. In a nutshell, it depends on location, not just because of the amount of available sunlight (see below), but also, the nature of any incentives, and also, the value of any available Feed-In Tariffs.
At surface level, this may sound almost obvious. The results, however, are anything but. It turns out that the true cost of ‘going solar’ can vary wildly from one location to the next, when the cost and crucially, the payback are both considered (which is the only recommended way of considering true solar panel cost).
For example, just a few years ago, the cost of ‘going solar’ in California was $10,000 for an average house, compared to $25,000 for an equivalent house in Florida! That was due to California having more positive solar policies in place. The cost of solar energy has dropped dramatically over the past several years, but the point still remains: there are several factors to consider, and the landscape keeps changing. What follows is an overview of the major considerations.
Sizing Your Planned Solar Panel System
To start off, when it comes to assessing solar panel cost, size matters: in this case, the size of the system under consideration. The size of the system is determined by an analysis of:
- The amount of electricity desired from the new system
- The amount and quality of sunlight available at the proposed site
- The proposed type of installation and
- The amount of space available for the installation
- The desired payback: how quickly the system is desired to pay back its initial costs and how much profit is desired over its life
Since resources like space and finances are never infinite, there is usually an element of trade-off required. (If money and space were infinite, in theory, every home and business could be completely solar powered, once all the systems were installed.)
The Solar System Components Cost
It is natural to focus primarily on the solar panel cost in isolation, as the solar panels are the most tangible elements of the entire undertaking, and the point of the whole exercise. However vital these are, consideration also needs to be given to the whole of the solar system components list, including solar panels, inverters, controllers, panel mounting etc. While this aspect of solar panel cost lies at the heart of the question for many, it is by no means the only key question. In fact, it is recommended to bear all of these factors in mind when searching for the best deals on the solar panels and the other elements of a solar system.
Installation Planning and Work
For the vast majority of solar energy system purchasers, solar system installation is outside their field of expertise and available time commitments. Therefore, solar panel cost as a whole needs to factor in the cost of installation, including the planning and actual work. There are several key questions to consider, such as:
- Does the planning require further specialist input, e.g. from architects, due to the nature of the house, the site or surrounding environment (including planning laws or restrictions)?
- Does the installation site require more than basic preparation, e.g. strengthening or other modifications to an existing roof?
- Are there any additional installation elements that need to be incorporated (whether by the solar installation firm or others) to secure the site, e.g. a fence around a ground-mounted solar panel site?
Although these questions may in most questions reveal no further costs, the true extent of solar panel costs, from a “whole of investment” perspective requires that these types of questions be considered and answered with confidence.
Type and Cost Of Financing
When a large office complex or a plot with new homes is being planned, one of the “deal breaker” planning elements is the type and cost of financing. In those environments, there is a whole mini industry of people whose expertise is in understanding the full spectrum of sources of finance, the costs of each, and how the financial returns from the project will more than cover the financing, with time projections for reaching break-even and profit projections after that, for the life of the project.
The solar industry has also grown to include its own mini industry of financial expertise with similar skillsets. However, as with any investment, the smart money does its own homework, and cross checks advice – not least because not all advice agrees (even assuming all advice is 100% honest). Therefore, when examining solar panel cost as a whole, it is essential to get enough of a working understanding of the financing options and their implications in order to make a well-informed, grounded decision.
Invariably, this will involve having several scenarios prepared and reviewed, to find the specific mix that matches the proposed project with the right financing package that will enable the project to go ahead and give it the best chance of meeting its financial objectives.
Solar Panel Cost Payback
Of course, the full consideration of solar panel cost should include an assessment of payback mechanisms and their value at specific points in time. This typically starts with determining if any incentives, grants or subsidies may be available. In addition, Feed-In Tariffs are a key consideration in ‘balancing the books’, i.e. offsetting the total investment in the proposed solar system installation.
And last but far from least are the projected electricity savings from the installation. After all, this is of course the very point of the project. Making best use of all the other considerations above enable this factor to be allowed to stand the best chance of proving itself viable in the long term, not to mention contributing to a greener planet.
Key references for this article:
- Solar Panels – Energy Saving Trust
- Solar Panels FAQ – CostOfSolar.com
- Photovoltaic Degradation Rates – An Analytical Review – NREL Jun 2012
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- Solar Power System Chart: ribz | Shutterstock.com
- Solar Panel Cost and Advantages: Sonpichit Salangsing | Shutterstock.com