Photovoltaic (PV) solar systems collect sunlight and convert it into electricity. While they serve as a more environmentally friendly energy generation solution, their historically low energy efficiency rates and high installation costs (compared to coal and gas systems) discouraged many people from investing in them. Regarding the second point, however, recent improvements to solar energy technology have led to a drastic decrease in the overall cost of a PV solar system.
The following article discusses how to determine the installation cost of a PV solar system, as well as how to determine what size is appropriate and how to determine whether or not it is right for your unique needs.
Installation Cost for Solar Panels
The total cost of a photovoltaic solar system ranges from hundreds to millions of dollars, depending on its size, complexity, and quality. While the solar panels themselves average between $0.60–$0.70 per watt for standard units and up to and exceed $1.00 for premium units, the cost of installing them can be between 100–200% the equipment cost. For example, a 9.9 kW system may cost $15K, but an installation service provider may charge $20K to install it. As a result, the total cost of the system would be $35K.
The above pricing method is characteristic of turnkey solutions providers (i.e., companies that design, manufacture, and install the PV system). Buying the equipment directly from a wholesale supplier and installing it yourself or paying a third-party contractor to install it for you can significantly decrease the total cost (including equipment and installation cost) of the system. While a turnkey partner would charge $35K to design, manufacture, and install the system, a distributor would charge $15K for the material and manufacturing cost of the equipment. The cost of installing the system yourself can be as low as $1000, while the cost of hiring a contractor to install the system may range from $7.4K–$12.3K ($0.75–$1.25 per watt). In either case, these alternative installation methods are much more cost-effective.
Other factors that affect the installation cost of a PV system include the cost of inspection and obtaining the proper permits. Before installing a new system, it is essential to acquire the relevant building and electrical permits from the appropriate agencies. Additionally, some neighborhoods have a Homeowner’s Association (HOA), from which approval for the installation must be secured. The HOA may charge a flat fee for the installation or require the installation to be performed by a company from an approved list.
Key Considerations for Determining Solar System Size
When determining the size of the photovoltaic solar system required, the main factor to keep in mind is energy usage patterns. This information helps estimate the maximum amount of energy that needs to be generated and, consequently, the size of the system required to generate it. The higher the energy demands of the facility, the greater the number of panels required to meet them. For example, an average-size home utilizes approximately 905 kWh per month (10,850 kWh per year). Given adequate levels of sunlight year-round, a 5–6 kW PV solar system would be sufficient.
This estimate can be further revised by considering the factors that influence the efficiency of the system, such as:
- Mounting angle: Solar panels must be mounted at specific angles (depending on the geographic location and time of year) to optimize sunlight collection and electricity generation.
- Roof material: The design and construction of the roof influence the maximum system size that can be safely supported. Fragile materials can limit the number and/or the placement of the installed system’s panels.
- Shade: Tall trees and neighboring structures can obstruct the path of sunlight to the solar panels, reducing their energy generation efficiency. As a result, more panels will be needed to meet the energy demand.
- Temperature: Higher temperatures can decrease the efficiency of the panels, meaning more will be required to accommodate the facility’s energy needs.
It is important to keep in mind cost when determining the size of a PV solar system. Obviously, larger systems will be more expensive than smaller systems. However, larger systems also come with a lower cost per watt and, over time, can result in significant savings regarding utility costs.
Is Solar Energy a Sound Investment?
Before deciding on the size or installation procedure for a photovoltaic solar system, it is necessary to consider whether it is a sound investment. Below we outline a method of approximating the return on investment (ROI) for a system.
- Determine the price of the system
- Divide the price by the cost of electricity (in dollars/watt)
- Divide the result by the annual electricity usage (in kilowatt-hours)
The final number indicates the amount of time (in years) it will take to break even on the investment in the system. Dividing this number into the warranty life of the system (typically 25 years) gives an approximation of how many times over the system will pay for itself throughout its expected service life.
Some of the other considerations to keep in mind regarding the soundness of the investment include:
- Tax incentives: Some local, state, and national agencies offer financial incentives that encourage the utilization of solar systems. These rebates, tax credits, and grants vary depending on the geographic location of the system.
- Energy costs: The cost of energy varies from region to region. For example, rates in the Northeast are higher than the rates in the Northwest. Installing solar systems in areas with high energy costs and sunshine levels would result in greater savings than installing them in areas with low energy costs and sunshine levels.
Why Choose Nine Fasteners for Your PV Solar System Hardware Needs?
A photovoltaic solar system is a huge investment. As such, it is vital to partner with a reputable supplier for all parts of the system. At Nine Fasteners, Inc., we design and manufacture high-quality wire management clips for solar panel systems. In addition to our standard products, we offer capabilities for custom hardware for highly specific or unique applications.