Data on the cost of solar installations are somewhat hard to come by. But, thanks to the Open PV Project, an initiative of the National Renewable Energy Lab (NREL), we’re continually getting a better sense of what homeowners are actually paying for their solar energy systems.
Here’s a quick look at the average installed cost of solar panels in the U.S., from 1998-2010:
First things first, this is a pretty ugly chart. (Apologies to the good people at NREL, we just had to say it…).
Secondly, solar panels are priced in terms of dollars per watt (W). Thirdly, when we talk about solar costs, we’re talking the total cost of a fully installed, functioning system — the $/W figure captures all parts, labor and general admin costs associated with solar installation (and any other general contracting job, for that matter).
Finally, as you can see, the cost of solar has steadily come down from around $11 per watt in 1998 to just over $7.00 per watt today. This trend of steadily falling cost is what makes solar power so interesting to so many people. It doesn’t take a rocket scientist to see that, eventually, solar panels could become so affordable that they spring up on every rooftop across the country.
The question most people ask when they look at a graph like this is, “Should I install a solar home energy system now? Or should I wait until solar panels become cheaper?” Honestly, it’s difficult to say. A number of considerations:
(1) Although solar panel prices have come down significantly, so too have solar rebates and other incentives available at the state- or utility-level. Some solar rebates in California, for example, started at $2.50 per watt. Now, they’re at a mere 35 cents per watt — a reduction of 86 percent. In many cases, the actual out-of-pocket cost of a solar home energy system doesn’t change much at all because both the rebates and gross costs have been continually shrinking.
(2) If you’re thinking about installing solar panels, it’s a good idea to identify your motivations — as well as a target return on investment (ROI) that you’re comfortable with. Get two or three solar quotes from reputable installers and compare bids. If the ROI outlined in their proposal(s) is within your target range, proceed with your solar project and don’t fret about whether you could have gotten a lower price if you’d waited longer. Remember: the longer you wait to install solar, the longer your utility meter is running in your utility company’s favor…
(3) If you live in a state where solar renewable energy credits (RECs) are traded, the longer you wait install solar, the longer you miss out on generating revenue with your solar energy system.
In sum, while solar prices have come down, there are still plenty of attractive offers out there. We encourage you to bone up on your solar power knowledge – the Open PV Project is a great resource — and take the plunge by having a free solar energy site analysis.
