How Much Will Solar Panels Cost in 2022 and How Much Will It Save You?
The move towards greener energy production is advancing at a rapid pace.
As the need to protect our climate becomes increasingly pressing, renewable energy sources have a key role to play in the transition to a zero-emissions future.
According to the International Energy Agency (IEA), global renewable electricity generation is set to have expanded by more than 8% in 2021, reaching an incredible 8,300 -hours (TWh). For a full sense of that scale, that’s approaching 5% of our entire global energy consumption.
More than one in seven US homes are projected to have rooftop solar panels installed by 2030, and solar comprised an incredible 56% of all generating capacity nationwide throughout the first half of 2021.
As more and more businesses and homeowners take advantage of solar energy this year, how has the price been affected by growing demand? And just how much money do you save in the long run by installing your own solar panels?
HOW MUCH DOES IT COST TO INSTALL SOLAR PANELS?
The cost of installing solar panels has changed dramatically over the last few decades, as the technology has developed far greater efficiency and the growing market has led to increased production and competition.
A report by the International Renewable Energy Agency (IRENA) found that between 2010-2019 the cost of solar photovoltaic power dropped by 82% globally, and similar patterns can be found in the costs of installing the panels themselves.
When you consider the sheer number of businesses in operation, it’s no surprise to find that costs have dropped. According to the Solar Energy Industries Association’s National Solar Database, there are more than 10,000 solar businesses in the US alone.
So what will your average residential and commercial solar panel installations cost in 2022?
There are a few factors to consider, but today any solar power system installed professionally in the US should cost you somewhere between $2.60 and $3.20 per watt. Paying in that range should also ensure you receive high-quality customer service throughout the 25-year lifespan of your solar panels, as well as a quality installation that will withstand the changing seasons.
Up-front, the average residential solar panel installation costs between $18,000 and $20,000 in 2022, but once you apply your federal solar tax credit that cost will plummet to somewhere between $13,320 and $14,800.
For commercial solar panel installation, you’re likely to spend $50,000 – $100,000 for small to medium businesses, and $200,000 – $500,000 for medium to large enterprises, again with the 26% federal tax credit included.
FACTORS THAT INFLUENCE SOLAR PANEL INSTALLATION COSTS
It won’t come as a surprise to learn that every solar panel installation comes with a different price tag. There are many different factors at play, and the reality is that no one can expect to pay the average price, with costs dependent on your particular setup, location, and manufacturer, amongst other factors.
The biggest influencing factor on the cost of your solar panel installation is the size of the system. This will likely be dictated by the potential power output you require to run your home or business premises, as well as the budget you have available for the project.
It’s important to consider that your average cost per watt drops as the size of your installation increases, as your overhead costs are spread over a larger system and your individual panel cost benefits from bulk pricing. These savings will particularly stack up in even larger commercial installations with 50kW, 100kW, or even 200kW power outputs.
Here are what your costs should look like based on the size of your solar array:
2) Federal tax credit
If you’re based in the US, now is the ideal time to take advantage of the federal Investment Tax Credit (ITC), which gives you a 26% dollar-for-dollar reduction in your income tax when you invest in solar power generation. This has a significant impact on your installation costs, and the credit was extended by the Biden Administration, staying at 26% until the end of 2022. After that, it’s likely a further extension will be legislated as part of the government’s renewable energy strategy.
As long as you have a tax liability in the year of installation and are the owner of the solar power system (for leased systems the company receives the credit instead), you can claim your credit and save on your solar costs.
3) Energy storage
If you also wish to add batteries for solar energy storage, you’ll need to add around $10,000 to the installation cost. Batteries help provide a more consistent electricity supply, storing power in the brightest parts of the day for release in the evenings and early mornings, during darker months, or when your array can’t otherwise keep up with your energy consumption.
As well as the federal tax credit, ten US states offer additional incentives to encourage people to install solar power. Here are the maximum credits you can receive if you live in those states.
If you’re lucky enough to live in one of these areas, there’s an even stronger reason to invest in solar power today.
It’s also worth keeping in mind that average installation costs tend to vary state by state, with a standard 6kW setup ranging from around $10,345 in Georgia to as much as $12,743 in Maine and Massachusetts, with the federal tax credit taken into account.
5) Your climate and energy use
It stands to reason that different parts of the world have different potential when it comes to solar energy generation. Both the number of hours and the intensity of the sunshine that your home or business receives over the course of a year directly correlate to the potential of your photovoltaic panels.
Unsurprisingly, that makes for cheaper solar generation in areas with long, hot days compared with those with typically fewer hours of sunlight.
Additionally, your specific energy use may well vary from the average, and that has a direct effect on the number of solar panels you require and therefore your installation cost. Taking a look through your current energy bills can be a great way of measuring consumption, and being able to calculate the size of the solar array you’re likely to need, along with the cost per watt rate you’ll receive.
6) Equipment type and manufacturer
Just like with any product, there are many solar panel manufacturers out there with different approaches to quality, customer service, and price. While this makes for increasing competition in the marketplace and cost-savings for you the consumer, it also makes carefully picking your vendor important. Panels from premium brands may well be more expensive, but that doesn’t necessarily mean they’ll deliver higher performance or longevity.
On top of the panels themselves, the equipment used as part of your setup also has an impact. Microinverters for example might increase your set-up costs, but greatly increase your electricity production compared with traditional string inverters. That means you require less equipment and solar panels overall to deliver the same amount of power year-round.
Whether you choose monocrystalline solar panels or the cheaper polycrystalline panels will also impact your spending, as will the type of racking system used. If you live somewhere that’s likely to face particularly violent weather, you’ll need heavier – and more expensive – racking.
HOW MUCH DO SOLAR PANELS SAVE?
Solar panels are an important part of a renewable energy strategy as we work to address the climate crisis. But with a 25-year expected lifespan, they’re also an effective way of slashing your bills and saving money in the long run. For some, you might even find you can save an incredible $35,000 a year on your electricity.
By investing in a solar array for your home or business today, you are making an investment that will deliver free power for years to come, counteracting your previous expenditure on costly – and environmentally damaging – energy sources.
The exact amount you’ll save depends on the amount of energy you use now and in the future, the price you’re paying for that energy, and the final installation cost of your solar panels.
On average, a residential property might expect to save between $1,000 and $1,600 per year on energy bills after installing solar panels, which means you’ll have paid off your costs within 8 to 11 years of installation.
For commercial property, your annual saving can be even higher, depending on the amount of energy you consume annually and the size of your solar installation. Thanks to cost efficiencies at a larger scale, you can expect to pay off your investment in a slightly shorter time frame than for residential customers.
In some cases, companies find their solar capacity is far greater than their own need, and in areas where it’s possible to sell your power back to the main grid, going solar can provide a significant regular income with an impressive return on investment (ROI).
Either way, solar panels can save the majority or even all of your annual energy expense, especially when combined with a battery array that dramatically reduces your reliance on grid power. Provided you use a reputable installer, they should require little to no maintenance, so your ongoing costs are next to nothing, leaving you to sit back and soak up the profits of your own localized power source.
ARE SOLAR PANELS WORTH IT?
As prices continue to fall and the climate crisis becomes ever more pressing, the benefits of installing solar panels on your residential or commercial property are only becoming more convincing. Are they worth it and should you invest in solar panels?
First and foremost, generating electricity from renewable sources like solar is an important part of reducing our carbon footprint and helping protect our planet from climate change. Reducing our emissions and turning to clean energy generation boosts our self-reliance and helps the global decarbonization mission. In the US alone, the solar industry is aiming to provide 30% of the nation’s total electricity generation by 2030. You can be a part of that effort.
Secondly, the economic benefits are also clear. With a 25-year lifespan, your installation can deliver tens of thousands of dollars in total profit, thanks to the significant cost-savings when compared with buying grid-based power. As panel prices drop and more installers enter the market consumer choice will only get easier, so the moment has never been better to take advantage of federal and state tax credits to truly maximize your savings.
It’s of course important to run the figures for your specific circumstances, taking into account all of the factors that influence solar installation costs, but in most instances, the financial benefits of turning solar are clear to see.
Installing solar panels can also:
- Increase the value of your property, thanks to the fully-owned power generation potential that comes with it.
- Help with free-to-run transportation, as you can charge an electric vehicle from your very own power source.
- Give you energy independence, away from the power grid where you’ll be unaffected by any shutdowns or power supply issues.
- Provide a year-round electricity store if you include batteries in your installation, or even a source of income if you’re able to sell excess power back to the main grid.
The time to go solar is now, and with so many benefits and financial incentives on offer, it’s not surprising to see global installation rates going through the roof.