Why Are Solar Panels So Expensive? Solar Panels for Home (Cost vs Install)

Georgette Kilgore headshot, wearing 8 Billion Trees shirt with forest in the background.Written by Georgette Kilgore

Solar Panels | April 1, 2024

Man with empty pockets standing next to a woman and a solar panel wonders why are solar panels so expensive and needs residential solar panels cost explained including solar panel installation and the average cost for solar panels for home.

Have you ever wondered, why are solar panels so expensive?

This easy and effective way to remove yourself from dependence on fossil fuel based energy grids should be much more affordable, right?

But, like all products, every aspect of a solar panel’s life cycle, from manufacturing to recycling, plays a factor in the solar panel’s monetary and ecological cost.

When choosing to install solar panels for home, don’t be fooled by ads that claim to show you how to get solar panels for free, they are expensive for a reason.

But, the good news is that there are many solar panel tax credits that you can take advantage of, to reduce the cost of solar panels and get your return on your investment much faster.

This guide explains why are solar panels so expensive and the cost of solar panels for your home, vs if you buy the panels and install them yourself.

Solar Panel Cost: Average Cost of Solar Panels for Home

Two prime factors determine the solar panel cost. How a solar panel is produced and the materials used significantly influences its cost.

Production costs generally refer to the solar panel’s materials, the skilled labor necessary to create the solar panel, and the manufacturing infrastructure needed to create the solar panels.

Manufacturing a solar panel is typically 35% of its price.

The remaining 65% of a solar panel’s costs are “soft costs,” which include services, labor and installation, and other non-physical activities that dictate the solar panel system’s price.

According to the Office of Energy Efficiency and Renewable Solar Energy,14 the soft costs associated with a solar panel cost include installation, supply chain fees, overhead, sales tax, permit fees, inspection costs, sales, and marketing.1

Related Reading: How Much Do Solar Panels Cost

There is no easy answer to the average cost of solar panels because location and system requirements play significant roles in dictating the price tag for your home installation.

Solar panel averages often apply to subsets such as states and cities, and averages tend to be numerical ranges instead of a singular number.

Complicating matters further are the sheer volume of factors that can change the cost of a photovoltaic system, with one of the prime factors being how much energy the photovoltaic system is meant to capture.

An engineer and worker checking and discussing solar panel installation plans.

(Image: Gustavo Fring16)

As an alternative to seeking an average cost of solar panels, solar panel operators should determine their needs and restrictions, then seek a consultation from a solar professional. An average value or range derived from analyzing the solar panel operator’s individual factors will be more beneficial than a number or range that might not even apply to them; the average cost of solar panels in California is a useless metric for a homeowner in Ohio.10

Are Solar Panels Expensive?

People looking for a quick solution may see solar panels expensive. The up-front costs associated with photovoltaic systems can be alarming for those seeking immediate results.

To realize financial and environmental gains from solar panels requires treating them as a long-term expense instead of a quick fix.

Reasonable estimates for a return on investment are between 10 and 20 years for a financial breakeven point and 4 years for an energy breakeven point,2,3 according to Arizona’s Coconino County and the National Renewable Energy Laboratory.11,12

Solar Panel Installation Costs

There are more costs associated with solar panel installation than placing it on the property and attaching wires.

Often-unnoticed costs associated with installations include building weatherization, permits, and inspection fees.

A solar panel technician installing solar panels on the roof of a house.

(Image: MariaGodfrida17)

A crucial component of solar panel installation is the type of mount on which the solar panel will reside.

  • Fixed mounts hold the solar panel in a static location.
  • Adjustable mounts which permit the solar panel operator to perform minor recalibration to the solar panel’s position; frequently cost double-digit dollar amounts.
  • Tracking mounts which automatically adjust the solar panel’s position to absorb the maximum amount of sunlight; can cost hundreds or even thousands of dollars for each individual mount.

Why Are Solar Panels So Expensive To Install? Solar Panel Cost Surprises

Permit prices and inspection fees should be considered when estimating install solar panel costs.

Federal, state, and local laws are constantly changing, so solar panel operators should research before they invest.

Both professional solar installers and lawyers well-versed in civic laws can be of great help in identifying and planning for the legal aspects of solar panel installation.

Solar Panels for Home

The first step in purchasing solar panels for home electricity generation is to determine whether it’s a viable option.13 Homes with little access to unobstructed direct sunlight are poor candidates for solar panels.

Homeowners should also familiarize themselves with the federal, state, and local laws that dictate if and how residential solar panels can be installed. When a home and its residents are energy-inefficient, switching to any renewable resource is like pulling a weed and ignoring its roots.

Actions to improve the building’s efficiency include weatherization and applying energy-efficient lighting.

Residents can improve their home’s energy efficiency, reduce their carbon footprint and save power by taking actions such as unplugging unused appliances and turning off lights that are not being used.

The combination of carbon-friendly behaviors and optimized buildings can make solar panels for home electricity usage beneficial in the long term. In addition to the financial ROI, clean energy and less wasteful behavior will reduce the home’s environmental impact.

Another long-term benefit of solar panels for home is that they can increase the value of the home. Studies from Berkeley Lab have shown that a photovoltaic system that generates 4.3 kilowatts raises the value of a home by approximately $15,000.4,9

Residential Solar Panels

The most important decision to make regarding the installation of residential solar panels is whether solar power is a feasible, effective solution for the home. Homeowners should consider the following factors:

  • The location of the home and its climate
  • How long the residents plan on living in their home
  • The home’s electrical costs
  • The specifications and projected upkeep of the photovoltaic system they intend to install
  • The projected installation costs
  • The availability of tax credits, grants, rebates, and other financial incentives
  • Whether the home will buy the photovoltaic system with cash or lease it

Residential solar panels would be a poor fit for residents intending on moving soon, residents living in a home with little access to direct sunlight, and residents that cannot afford the upfront costs without making catastrophic budget cuts.

Related Reading: How Many Solar Panels Do I Need Use the calculator here:

Charging Tesla With Solar Panels

Charging Tesla with solar panels at home is possible.

Charging Tesla vehicles from home will require buying additional solar panels. Due to the increased energy consumption from charging an electric vehicle, additional power generation is a must for homeowners, especially when reducing energy consumption in other areas is not possible.

Close-up of an electric car charging station with an eectric vehicle in a blurry background.

(Image: Ivan Radic18)

In addition to solar panels, homeowners will need to buy equipment to transfer the energy from their solar panels to their Tesla vehicles. The homeowner will require a dedicated Tesla solar charging station to transfer energy from their photovoltaic system to their vehicles.

Homeowners that wish to charge their vehicles at night will have to acquire and install battery packs and solar charge controllers for energy storage and regulation.

Solar Farm Income per Acre

Multiple factors determine the solar farm income per acre. However, a sensible estimate is that a well-maintained and optimally-placed solar farm can earn between $21,250 and $42,500 per acre each year.

Improper usage, premature replacements, and wasteful practices can make the carbon footprint solar panels large. And photovoltaic systems that are shut down before they’ve achieved their energy and environmental breakeven points will increase the amount of carbon dioxide in the system.

From environmental, energy, and financial standpoints, solar panels are not a short-term investment, nor are they a quick fix. Those who are unable to cover the up-front costs of a photovoltaic system and commit to decades of routine monitoring and maintenance should consider other means of reducing their carbon footprint such as forestry carbon offsets.

Is Solar Worth It?

Proper solar power implementation will be a key component in the global decarbonization effort. Solar power is not a silver bullet that completely solves the problem.

But the answer to “Is solar worth it?” is “Yes, when combined with other renewable energy sources and decarbonization measures.”

When asking “Why are solar panels so expensive?”, an alternative and often-overlooked question would be “Why is damage from climate change and pollution so expensive?” Transitioning from dirty fuels to renewable energy by 2050 has an estimated cost of $562 billion.

However, the costs associated with inaction and accepting damage from climate change are estimated to be $1.7 trillion dollars greater.5

Another often-neglected aspect of solar energy is viewing solar energy as a long-term effort. It’s easy to succumb to sticker shock when looking at five-digit sums to set up and maintain a photovoltaic system.

However, well-maintained photovoltaic systems recoup their costs within 4 years, providing both individual savings and ecological benefits for the remainder of their operation.

Is Solar Energy Expensive?

The short answer to “Is solar energy expensive?” is “Initially, but the cost is dropping, and the long-term savings are worth it.” The sticker shock associated with up-front costs can prevent people from viewing historical trends and the cost of alternatives.

Despite the high installation costs, costs associated with solar have been declining for several years. The cost of manufacturing solar panels dropped from $0.57 per watt generated (2015) to $0.28 per watt generated (2019).

Estimates for 2025 indicate that the cost of manufacturing solar panels in 2025 could fall to $0.15 per watt generated.6

The cost of installing residential photovoltaic systems fell from $7.53 per watt generated (2010) to $2.71 per watt generated (2020)7. Installation costs for commercial and utility-scale photovoltaic systems have declined as well.

How Much Do Solar Panels Cost?

The best answer to “how much do solar panels cost?” is “It depends.” There is no simple answer, and even acceptable cost ranges have wide variances.

The cost of a solar panel for an RV owner in Des Moines, Iowa will be vastly different from the cost of a solar panel for the owner of an office building in Nashville, Tennessee.

An RV with solar panels installed and its owner in the middle of a field.

(Image: Jackery Power Station19)

It’s also worth noting that buying the wrong type of solar panel can dramatically increase the upfront costs associated with photovoltaic farms. Solar panels whose specifications do not match those of the batteries or the solar charge controllers connected to them are useless at best and hazardous at worst.

And solar panels that are not strong enough to significantly contribute to the facility’s energy cost might never achieve their financial, energy, and environmental ROI.

How Much Do Solar Panels Cost for a 1500 Square Foot House?

The answer to “How much do solar panels cost for a 1,500 square-foot house?” is “It depends.” Factors that influence the cost include:

  • What types of solar cells does the solar panel use? Solar cells with high efficiency or high flexibility mean more expensive solar panels.
  • What is the size of the solar panel? Bigger panels mean more solar cells which equates to higher costs.
  • Who is the manufacturer, and how did they manufacture the solar panel? High-quality solar panels warrant higher prices, as do eco-friendly manufacturing practices and fair treatment of the laborers.
  • What financial incentives are available at the federal, state, and local levels? Tax rebates, grants, and tax credits can drive down the cost of solar panels.

How Much Does It Cost To Install Solar Panels?

The answer to “How much does it cost to install solar panels?” is “It depends.”

General guidelines for installation costs include, but are not limited to:

  • Where will the panel be installed?
    The more difficult the installation location is to reach, the more expensive – and dangerous – the installation will be. Solar panels installed at ground level will have cheaper installations than solar panels installed on roofs or other high places.
  • What type of mounts will be used?
    Fixed and adjustable mounts will be cheap to acquire and install. Tracking mounts will have far higher upfront costs due to the complexity of their installations and setups.
  • Will the installation be performed by a professional, or will it be a do-it-yourself project?
    The former option has higher upfront costs, but the latter could lead to higher long-term costs if installation errors lead to damage or injuries.
  • What federal, state, and local laws and restrictions govern the usage and installation of solar panels?
    Fewer regulations and cheaper inspection fees lead to lower installation costs.
  • What photovoltaic system infrastructure will be connected to the solar panels?
    MPPT solar charge controllers are more expensive but more efficient than PWM solar charge modules. And the choice between serial wiring and parallel wiring will affect how much wire and how many solar charge modules will be necessary, altering the installation cost further.

How Long Do Solar Panels Last?

Two prime factors in determining how long do solar panels last are the quality of manufacturing that created them and the maintenance and monitoring during their operations.

A well-maintained solar panel can operate for 25 to 30 years before it needs to be replaced.

Why Are Solar Panels So Expensive?

“Why are solar panels so expensive?” has no single, concise answer.

This is because multiple factors influence the cost of purchasing and installing solar panels:

Manufacturing

The process of creating solar panels requires trained professionals and complex tools as well as energy intensive processes.

Materials

The components in a solar panel can be difficult and expensive to acquire, not to mention the energy requirements for obtaining them.

Labor

Hiring dedicated professionals to install solar panels will be more expensive than do-it-yourself installations.

Manufacturer

Some brands will charge higher prices for their solar panels than other brands.

The reasons can be apparent, such as higher-quality solar panels or fairer treatment of workers, or they can be largely hidden from consumers.

Size

The more cells a solar panel has, the higher its price. Large panels are more expensive than smaller ones.

Location

Where a consumer buys the solar panel and where the consumer intends to install the solar panel can alter the price of a solar panel’s cost and installation.

Climate and local laws are two examples of location-based price factors.

Electricity Needs

Customers that consume more electricity will need more solar panels and larger solar panels.

Cutting down electricity usage will lower the size and number of solar panels a photovoltaic system requires, but not by much. Measure your current energy use and don’t try to skimp on this when planning your needs.

Maintenance

Solar panels require constant monitoring, routine inspections, and occasional cleaning to operate efficiently and maximize their lifespan.

Professional treatments cost more than do-it-yourself efforts, though a faulty repair or cleaning could lead to higher costs in the long run.

Is Solar Energy More Expensive Than Fossil Fuels?

Solar energy has higher upfront costs than fossil fuels and can be damaging to the ecosystem when large solar farms are used.

However, solar energy has lower long-term costs than fossil fuels.

Wide shot of a fossil fuel power plant emitting massive amount of smoke in the environment.

(Image: Stevepb20)

In addition, fossil fuels will never reach a breakeven point for their carbon footprint.

Solar power can become a completely clean fuel when offsets are used.

Are Solar Panels More Expensive Than Wind Turbines?

There is no firm, easy answer to the question, are solar panels more expensive than wind turbines?

Huge wind turbines situated on a plain with the sky on the background.

(Image: Sarangib21)

The best answer for people seeking renewable energy solutions is to analyze their energy needs, their budgets, and their property’s physical constraints:

  • Wind turbines have lower upfront costs than comparable photovoltaic systems.

However, the operative word is “comparable.” Someone who needs to buy only a few solar panels to achieve their energy goals will spend far less than a group that wants to build a wind turbine.

Moreover, wind turbine manufacturing and impact on wildlife and the environment can be considerable.

  • Wind turbines have lower upfront costs associated with their purchase and installation than solar panels do.

Again, “comparable” is the key word; a solar power operator who buys a few solar panels to charge an RV battery will pay less than a wind power operator who buys a large wind turbine.

  • Wind turbines have far higher maintenance and upkeep costs than photovoltaic systems.

This is because wind turbines have several parts and are constantly in motion, leading to a large number of potential problems.

In contrast, photovoltaic systems are largely immobile, and their maintenance costs are primarily cleaning, monitoring, and upkeep.

  • Wind turbines will not recoup their costs if they’re installed in areas with little wind.

And photovoltaic systems will not recoup their costs if they’re installed in areas with little direct light.

Choosing between wind turbines and photovoltaic systems requires thorough analysis and thought to determine which option is best for the property owner.

Why Are Tesla Solar Panels So Cheap?

The prime reason why are Tesla solar panels so cheap is their focus on reducing the soft costs associated with solar panels by simplifying the design and the ordering process.

Tesla also offers a price match guarantee that fortifies its cost-competitiveness.

Why Are Chinese Solar Panels Cheaper?

“Why are Chinese solar panels cheaper?” is a trick question. It is true that the upfront costs associated with Chinese solar panels are lower, which is largely due to China’s unparalleled supply chain and the enormous scale of their manufacturing, both of which drive down manufacturing costs.

However, Chinese solar panels have lower quality and higher failure rates, which can dramatically increase maintenance costs or even prevent a photovoltaic system from reaching its ROI.

Moreover, China is the world’s largest emissions producer because the majority of the electricity is generated by fossil fuels, unlike other industrialized nations.

How Many Solar Panels Are Made Each Year?

Agencies that track the growth of solar power focus on how many gigawatts photovoltaic systems generate, not on how many solar panels are made each year.

This is a more meaningful metric since one large, efficient solar panel can capture more energy than several smaller, lower-quality solar panels.

In 2022, solar power generated 1,185 gigawatts of power. This was a 24% increase from 2021 when solar power generated 957 gigawatts.8

Do Solar Panels Work on Cloudy Days?

When wondering, do solar panels work on cloudy days, know that indirect sunlight shines through common sky obstructions such as rain clouds, and MPPT controllers can help manage the fluctuations. And solar panels are capable of collecting indirect sunlight and converting it to energy.

However, indirect light yields less energy than direct sunlight. There is more to a solar panel than its sticker price.15

There is no doubt that the initial costs of solar panel installation can be formidable and prohibitive.

However, by understanding the answer to the question, why are solar panels so expensive, you can move forward with a green energy solution for your home knowing that the cost is worth it. 


References

1US Department of Energy. (2023). Solar Soft Costs Basics. Office of Energy and Renewable Energy Retrieved March 10, 2023, from <https://www.energy.gov/eere/solar/solar-soft-costs-basics>

2Coconino County. (2023). Renewable Energy Information Sheet – Solar Photovoltaic. Coconino County Sustainable Building Program. Coconino County Arizona. Retrieved March 10, 2023, from <https://www.coconino.az.gov/DocumentCenter/View/5571/RenewableEnergyInformationSheet?bidId=>

3The National Renewable Energy Laboratory. (2023). PV FAQs. U.S. Department of Energy. Retrieved March 10, 2023, from <https://www.nrel.gov/docs/fy04osti/35489.pdf>

4Weiner, J. (2015, November 12). Team of Appraisers Across Six States Find Home Buyers Will Pay Premium for Solar Homes. Berkeley Lab. Retrieved March 10, 2023, from <https://newscenter.lbl.gov/2015/11/12/premium-for-solar-homes/>

5Solar Energy Technologies Office. (2023). Solar Futures Study. Office of Energy Efficiency and Renewable Energy. Retrieved March 10, 2023, from <https://www.energy.gov/eere/solar/solar-futures-study>

6Laboratory, N. R. (n.d., n.d. n.d.). Solar Manufacturing Cost Analysis. National Renewable Energy Laboratory. Retrieved March 10, 2023, from <https://www.nrel.gov/solar/market-research-analysis/solar-manufacturing-cost.html>

7National Renewable Energy Laboratory. (2023). Solar Installed System Cost. NREL Transforming Energy. Retrieved March 10, 2023, from <https://www.nrel.gov/solar/market-research-analysis/solar-installed-system-cost.html>

8Wikipedia. (2023, March 6). Growth of photovoltaics. Wikipedia. Retrieved March 11, 2023, from <https://en.wikipedia.org/wiki/Growth_of_photovoltaics>

9Berkeley Lab. (2023). Berkeley Lab News Center Homepage. News from Berkeley Lab. Retrieved March 15, 2023, from <https://newscenter.lbl.gov/>

10California Energy Commission. (2023). Solar Energy. California Energy Commission. Retrieved March 15, 2023, from <https://www.energy.ca.gov/programs-and-topics/topics/renewable-energy/solar-energy>

11Coconino County Arizona. (2023). Coconino County Arizona Homepage. Coconino County Arizona. Retrieved March 15, 2023, from <https://www.coconino.az.gov/>

12National Renewable Energy Laboratory. (2023). National Renewable Energy Laboratory Homepage. NREL Transforming Energy. Retrieved March 15, 2023, from <https://www.nrel.gov/>

13US Department of Energy. (2023). Planning a Home Solar Electric System. Energy Saver. Retrieved March 15, 2023, from <https://www.energy.gov/energysaver/planning-home-solar-electric-system>

14US Department of Energy. (2023). US Department of Energy Homepage. ENERGY.GOV. Retrieved March 15, 2023, from <https://www.energy.gov/>

15Wikipedia. (2023, March 9). Solar Panel. Wikipedia. Retrieved March 15, 2023, from <https://en.wikipedia.org/wiki/Solar_panel>

16Gustavo Fring. Pexels. Retrieved from <https://www.pexels.com/photo/two-electricians-standing-near-the-solar-panels-4254157/>

17MariaGodfrida. Pixabay. Retrieved from <https://pixabay.com/tr/photos/solar-paneller-yerle%c5%9ftirme-945801/>

18Electric car charging station Photo by Ivan Radic / Attribution 2.0 Generic (CC BY 2.0) . Cropped, Resized and Changed Format. From Flickr <https://www.flickr.com/photos/26344495@N05/50924905168>

19Jackery Power Station. Unsplash. Retrieved from <https://unsplash.com/photos/7-0yqqHbyhw>

20Stevepb. Pixabay. Retrieved from <https://pixabay.com/photos/power-station-energy-electricity-374097/>

21Sarangib. Pixabay. Retrieved from <https://pixabay.com/photos/wind-mill-energy-alternative-2251810/>