Solar Power Systems

Solar Panel Pros and Cons – Are Solar Panels Worth the Cost?

If you are one of the many homeowners considering the installation of solar panels on your home’s rooftop, then undoubtedly one of the burning questions on your mind is whether the pros of solar energy outweigh the cons when it comes to residential solar power systems for homes.

A new asphalt shingle roof with PV solar panels

Let’s examine the main benefits and drawbacks of solar energy systems to help you make a well-informed decision.

Advantages:

  1. Dramatic Reduction in the Price per Watt Installed: One of the strongest benefits of solar energy today is that the solar price per watt (PPV) installed has come down from almost $9.00 per watt installed in 2008, to the current average cost ranging from $2.78 to $3.22 per watt installed, before the 26% federal solar investment tax credits (ITC) that apply to the full amount paid for a new solar system.
    — Did you know? Homeowners going solar today are paying almost 66% less than they used to pay for solar energy just a little over a decade ago! That’s a very significant reduction in the upfront cost of investment in solar, especially if you take into account the rate of inflation since 2008.

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Are Solar Panels Worth It in 2021? The Answer Might Surprise You

When evaluating whether residential PV solar panels are worth the cost, there are 10 main factors you should consider as part of your cost-benefit analysis. Let’s dive right into it.

  1. Rapidly rising electricity costs
  2. Federal tax credits and local incentives
  3. Solar resource – global solar irradiance
  4. Ample solar exposure
  5. Net Metering rules
  6. You will need a new roof soon or you have a metal roof
  7. Home value appreciation
  8. High-efficiency solar panels vs. polycrystalline
  9. Energy storage for power access during blackouts
  10. Solar payback period

When Solar Panels May Not Be Worth the Cost:

  1. Limited sun exposure
  2. Middle-aged roof
  3. You might be moving soon
  4. Cannot afford a battery pack and no backup power generator in an area with frequent blackouts
  5. Stagnating or declining local real estate values

1. Rapidly rising electricity costs

Let’s face it, domestic electricity costs are rising rapidly across the nation, especially in Los Angeles, California where residential electricity rates have increased by over 10% from June 2020 to June 2021. Across California, prices have risen by 7% in the same time period.

There is no reason to expect that the rapid increase in electricity and home energy costs will be curtailed any time soon. In fact, with the rapid adoption of sustainability and ESG policies such as moving away from coal and fossil fuels, domestic energy costs are likely to continue to rise over the next decade, especially in states with limited natural resources.

A growing adoption of electric (BEV) and plug-in hybrid electric (PHEV) vehicles also puts an increasing demand on the electric grid and existing infrastructure. Expanding and upgrading the existing infrastructure to support rapidly rising number of BEVs and PHEVs on the road will likely continue driving up electricity rates over the next 5-10 years. – These dynamics are projected to accelerate as states like Washington, Oregon, California, and others incentivize or mandate policies that foster adoption of electric vehicles by 2030 and/or beyond.

If you are concerned about the rising electricity rates in your home state, then investing in a PV solar power system will help offset the effects of rising energy rates while also reducing or even eliminating your current electric utility bills.

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Rooftop Solar Panel System Cost per Watt in 2021: 5kW-7kW, 6kW-8kW

This is a good time to install a photovoltaic solar power system on your property. Residential rooftop PV solar panels cost per watt installed has been dropping and newer technology is enabling a far greater efficiency – that’s more solar energy converted into electricity for home usage – for less money.

A new asphalt shingle roof outfitted with PV solar panels

Your options for buying, leasing, Purchasing Power Agreements (PPA, see below) are expanding, and many homeowners are getting solar panels installed on their rooftops for zero down.

In this guide:

  1. Cost per Watt
  2. Total System Cost
  3. Cost Factors
  4. Rooftop Installation Considerations
  5. PV Solar Panels
  6. Buying, Leasing, and PPA Options
  7. BiPV Solar Tiles
  8. Thin-Film Solar Laminates
  9. PACE Solar Finance Program
  10. Solar System Payback Period

Cost per Watt

The national average residential solar cost per watt installed is $2.96 for a typical 5kW (approximately $14,800) to 7kW (approximately $20,720) PV solar panels system when installed by local installers, before the 26% solar investment tax credits from the federal government.

Did you know? The 26% solar tax credits have recently been extended by congress through the end of 2022. Notably, solar ITC apply to the full amount paid for the installation of a new solar panels system.

Depending on the state you live in, your quoted cost per watt can range from $2.78 to $3.22, on average, when installed by a (small) local solar panel installer, before the 26% federal tax rebate.

Note that solar investment tax credits (ITC) are being phased out, gradually, with the amount of tax credits decreasing from 26% to 22% in 2023 (the final year for solar ITC).

How Solar Pricing Has Decreased Over Time In 2008, the cost of a solar power installation was $8.82 per watt.

Average System Cost for residential PV Solar Panels installed by Local Installers:

Small Home Average Home Large Home
Home Size 1 – 2 bedrooms 3 – 4 bedrooms 5 bedrooms
System Size 5 – 7kW 7 – 8.5kW 9 – 10kW
System Cost $14,800 to $20,720 $20,800 to $25,160 $26,640 to $29,600
After Tax Credits $10,952 to $15,333 $15,350 to $18,618 $19,714 to $21,904

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