There are many benefits to installing a home solar panel system. It can save you money, increase your property’s value, and help to protect the environment. However, the cost of a solar panel installation can be a bit high leaving many homeowners hesitant. The good news is, multiple financing options exist that can make it more affordable.
Let’s take a closer look at how much it costs to go solar and how to finance it.
How much does it cost to go solar?
“Solar cost varies tremendously based on many factors including geography, the aesthetics of panels, the efficiency of panels, the type of inverters used, and, quite frankly, the solar company you are working with,” says Julio Daniel Hernandez, CEO of EnLight.Energy.
What is the solar panel cost per watt?
Solar cost varies tremendously based on many factors including geography, the aesthetics of panels, the efficiency of panels, the type of inverters used, and, quite frankly, the solar company you are working with”
“I’ve personally seen a purchase price range of $2.80/watt on the lower end and $5/watt on the high end,” says Hernandez.
Elaine Thompson, Energy Specialist at Amigo Energy, says,”The average cost per watt in the US is about $3.17.”
She adds, “The average US home solar panel system produces about 5 kW, and the cost can range from $10,000 to $13,500. This is the cost after deducting federal tax credits, which should reduce the cost of your solar system by about 30%.
Some states also offer extra tax incentives that can drive your costs down further, so it’s important to do some research into your local government standards before investing.”
The average cost before tax credits, according to EnergySage, is $16,800. The good news is that the prices are falling. They are 9% lower than in 2016.
Here’s a list of average costs as the size of the system increases:
What is the cost of solar panels per square foot?
Hernandez says, “Cost per square foot is not typically calculated. The main cost determinant when buying solar panels is average yearly energy usage, not roof size. With that said, some rough math would show you that, with an average efficiency, you can expect to pay around $60 per square foot of panel today.”
Thompson adds, “The square footage of a panel doesn’t necessarily matter.”
How much does one solar panel cost?
Thompson says, “(With the average cost per kW in mind) if a panel produces 250W, then the cost of that panel would be about $792.”
“If wanting the actual panel price, you will need to consider many things. The higher the efficiency and the more aesthetically pleasing, the more expensive the panel. The average price is around $875 per panel with installation included,” Hernandez explains.
Other costs of a solar panel installation
In addition to the system, you should prepare for other costs. One is the labor to install the system. It takes human resources to set up the panels, so you’ll have to pay for the labor.
Additionally, Thompson explains, “After purchasing a solar panel system, there are usually fees that will be incurred to get you connected to the grid. Depending on which company you go through, these fees will include considerations such as the type of hardware your system uses, site visits and filing permits, and the effort it takes to install the panels on your roof (i.e., how complicated your roof is). ”
Typically, when you get a quote from a solar company, it will include all of the costs.
“You can use online cost comparison tools to get the best deal on solar panels and installation, so be sure to do some research before going all in on the first try,” Thompson adds.
EnergySage is in line with that advice as it reports that consumers who shop around save 10% more on solar panel installations than those who don’t.
How much do solar panels save?
So, is going solar worth the cost?
Thompson says, “While purchasing solar panels and installing them can seem more than daunting, the long-term cost benefit is the real reward that homeowner is reaping.
This can be heavily dependent on where you live (i.e., how much sun you get), but the rewards over 20 years can save you anywhere from $40,000 (Pacific Northwest) to more than $90,000 (California).”
Best solar panels for home use
Which solar panels are best? According to the experts, “Best is relative. Today, most solar companies use very similar, good quality panels and will guarantee their installation work and performance.
A couple of manufacturing brands that position themselves as the high-end, high-efficiency panels are SunPower and Panasonic. They are also the highest in price,” says Hernandez.
Thompson says, “Just Energy Solar has really good reviews and offers great incentives. I’m also a fan of SmartFlower Solar. They’re portable solar panels that are super efficient, so someone who isn’t totally sold on the idea of a full solar panel rooftop array could give solar energy a test drive with very low risk.”
Be sure to shop around to find the best value.
How do you install a solar panel?
In most cases, you don’t. It is a complicated process that requires the knowledge and expertise of a professional. Hernandez explains that the systems are made up of the panels, an inverter, and the mounting system.
They are typically mounted on to the roof for residential and commercial customers with the use of mounting hardware and flashings. In cases where the roof isn’t a desirable destination or isn’t available, the system may be installed on the ground or a shade awning.
How do you know how many solar panels you need?
“There are a lot of helpful calculators for this, but here are the basics. First, you need to know how much energy you’re consuming on a monthly basis (you can usually see that number on your energy bill — it should be calculated in kW).
Then, divide that number by 30 to get your daily average energy usage. Say you use 37 kW per day. Assuming one 250W solar panel produces 1kW per day, to offset your energy usage by 100%, you would need 37 solar panels,” advises Thompson.
She adds, “Now, this, of course, depends on how much energy the solar panel would actually produce after considering factors discussed above (where you live, sunlight hours, etc) and how much of your energy consumption you want to offset.
Most people only offset a portion of their consumption (maybe 50%), so consider that when you calculate for your solar panels.”
How to pay for solar panels
Do you see the long-term value of solar panels and want to invest? Great! However, coming up with the cash up-front can be a challenge. Not to worry, though. You can get a solar loan to help cover the costs.
Here are the four main solar loan options to consider:
- Unsecured personal loans
- Borrowing against your home equity
- FHA, Title 1 Home Improvement loans
- Fannie Mae HomeStyle Energy Mortgage and various other programs backed by the Federal Government
Using personal loans to finance your solar installation
One of the increasingly popular options is the unsecured personal loan.
Companies like SoFi, LightStream, Prosper, Rise, and many more are extending installment loans to customers online. Amounts range from $2,000 up to $100,000, and annual percentage rates start as low as 2.29% for those with excellent credit.
You can easily apply from the comfort of home and, if approved, can have the funds quickly transferred to your bank account.
For those with good-to-excellent credit, this option is one of the easiest and most convenient ways to finance a solar energy installation. Even those with not-so-great credit will find a few lenders willing to work with them.
Get started by letting the lenders compete for your business. Find out what rates you qualify for (and from which lenders) without hurting your credit score. That way, you’ll have a better idea which route will lead you to the best result.Click here to get pre-approved for a loan. Then, compare each lender side by side to find the right fit for you.
Once you find the best financing solution for you, combine it with the cost of the solar panel installation to get your total. After that, it’s time to install your solar system and start calculating your savings!
Jessica Walrack is a personal finance writer at SuperMoney, The Simple Dollar, Interest.com, Commonbond, Bankrate, NextAdvisor, Guardian, Personalloans.org and many others. She specializes in taking personal finance topics like loans, credit cards, and budgeting, and making them accessible and fun.