The cost of solar panels is a major factor in the decision to go solar. Solar panel prices have dropped substantially in recent years, making solar energy more affordable for homeowners and businesses. But what exactly impacts the pricing and overall costs of solar panels? Here’s an overview of the key factors.

Average Solar Panel Costs

Solar panel pricing is typically measured in dollars per watt of generating capacity. Current approximate costs:

• Residential solar panels – $2.50-4.00 per watt
• Commercial solar panels – $1.75-2.25 per watt
• Utility-scale solar – Under $1.00 per watt

So a standard 400 watt residential solar panel might cost $1000-$1600 installed. Actual residential system costs average $2.50-$3.50 per watt including equipment and installation.

What Impacts Solar Panel Pricing?

Key factors that influence solar panel costs include:

• Efficiency – Higher efficiency panels cost more per watt, but require fewer panels.
• Technology – Advanced technologies like PERC cost more.
• Size – Bulk orders for large projects decrease costs.
• Brand – Premium brands charge a price premium.
• Supply chain – Solar costs increase if supply is constrained.
• Hardware – Additional racking, wiring, etc. add expenses.
• Soft costs – Permits, labor, financing costs contribute too.

Main Components of Total Costs

A residential solar system’s total installed price consists of:

• Equipment – Solar panels and inverters make up ~30% of costs.
• Soft costs – Permits, labor, etc. add ~20% to costs.
• Installation – Physical solar system installation costs ~15%.
• Balance of system – Wiring, racking and more make up ~10%.
• Overhead & margin – Company overhead and profits add ~25%.

Ways to Reduce Your Solar Costs

Strategies to decrease your solar panel and system costs include:

• Seek quotes from multiple installers to compare pricing
• Opt for lower efficiency, but more cost-effective panels
• Buy in bulk for a large commercial or municipal project
• Shop sales and seasonal promotions when available
• Take advantage of federal or state tax credits and rebates
• Finance over time with a loan to minimize upfront costs

Real-World Solar Panel Prices

• As of November 2022, SunPower prices premium panels at $2.97 per watt.
• Home Depot sells Peimar panels for as low as $1.49 per watt.
• At utility scale, First Solar reports panel costs as low as $0.80 per watt recently.

Key Takeaways on Solar Panel Costs

As technology improves and solar scales, solar panel pricing continues to decrease over time. While costs are still a consideration, keep focus on lifetime system value and energy savings. With national averages now at $3 per watt, solar delivers strong returns for most homeowners.