One of the biggest questions homeowners have when weighing the decision to switch over to clean solar energy is how much they’ll need to spend. Determining the cost of solar panels is easy, though, if you know the cost per watt of each panel.
Cost-per-watt calculations allow you to quickly and easily compare two panels that have different prices and different wattages. All you have to do is divide the wattage by the price. For instance, suppose you’re trying to compare the levelized price of a 200-watt panel that costs $150 and a 175-watt panel that costs $140. The 200-watt panel costs $0.75 per watt ($150 divided by 200 watts) and the 175-watt panel costs $0.80 per watt ($140 divided by 175 watts). In other words, while the 200-watt panel costs more in an absolute sense, it’s also a better value.
But going solar requires more than just solar panels. You’ll also need racking, inverters, and other equipment. The cost of these system elements can also be calculated using a cost-per-watt measurement.
On an average solar system, the solar panels themselves comprise only about 15 percent of the total cost per watt. Since the Trump administration passed tariffs on imported solar panels, that means they cost about $0.45 per watt. Remember, that’s $0.45 out of the cost of the entire installed system; calculating the cost per watt of a solar panel on its own is likely to yield a figure closer to those listed above.
The cost of your inverter depends on its type. There are two main types of inverters. Though both convert DC electricity to usable AC electricity, they do it somewhat differently. String inverters are standard and cost about $0.13 per watt. The other type of inverter, the microinverter, is substantially more expensive; they typically cost $0.34 per watt.
But for many homeowners, the microinverter’s higher cost is well worth it. Unlike standard inverters, which link multiple panels in a sequence (or “string”), microinverters are installed individually beneath each panel. This allows for individual panel monitoring and means that if an individual panel fails or experiences problems, neighboring panels won’t be affected. A 2011 study found that in unshaded conditions, microinverters outperformed central inverters by about 20 percent, and in shaded conditions, they outperformed central inverters by 27 percent. Moreover, microinverters are safer than standard inverters and can be upgraded more easily.
String inverters with power optimizers can also prevent performance issues by managing the energy output of individual solar panels and adjusting the system as necessary. A power-optimized string inverter will cost about $0.15 per watt.
Once you have your solar panels, you’ll need to mount them. Solar panel racks will keep your panels safe and secure, and should be tilted toward the sun to maximize energy production. Options for racking (or “mounting”) are much more limited than those for inverters, and will typically add $0.11 per watt to your overall system costs.
A variety of electrical components also raise the cost of your solar system. These components －including conductors, combiners, transition boxes, switches, monitoring systems, fuses, conduits, and so on － are all priced somewhat differently, and the amount you’ll need to spend depends upon the inverter you’re installing. You can safely expect to pay $0.20 to $0.33 per watt for these.
In addition to the necessary hardware, a solar system’s price also includes a number of non-equipment “soft costs.” Installers, for instance, charge anywhere from $12 to $25 per hour. They’re the ones who actually affix your panels to the roof and adjust their orientation to ensure your home receives optimal energy production. Once everything is installed, you’ll need to have an electrician connect the system to the grid. They’ll charge even more; prices in the $19 to $38 per hour range are common.
To ensure your solar system is in compliance with local regulations, permits are often required by local fire, building, and energy departments. According to the National Renewable Energy Laboratory, permitting, inspection, and interconnection (or “PII”) adds an additional $0.10 per watt to the system’s cost. But some analysts estimate that tariffs, code compliance, and permits account for half the cost of a residential solar system in the U.S.
Sales and marketing add $0.29 to $0.42 per watt. Solar installers put this money toward advertising, sales calls, and door-to-door sales pitches, which are crucial for acquiring new customers and helping people understand the many environmental and financial benefits of clean, abundant solar energy.
Overhead, general expenses, and other soft costs typically will add $0.28 to $0.35 per watt (depending on the location of your home and the state of the economy) to your system’s installed cost. These funds are used to rent office space, pay workers, and conduct other administrative business.
The cost of a solar system, of course, shouldn’t be the only variable you consider when making your decision. Equally important are the panel’s efficiency and brand, as well as the warranty and service agreements that accompany it. And since the amount of sun your home receives affects its solar energy production capabilities, you’ll also want to consult with a solar installer to determine if you’re situated in a solar-friendly location.
So what’s the bottom line? Cost-per-watt calculations aside, how much will the entire solar energy system cost? For an average three-bedroom home in the U.S., a solar system of around 6,000 Watts should be adequate. According to California-based PowerScout, a solar startup, you can expect to pay around $20,000 (or about $3 to $3.50 per watt) for your overall system cost before deducting financial incentives.