Solar energy is how we harness the energy from the sun and convert it to a form of electricity we can use. While we have the technology to use solar power in a few ways, you may be put off by the steep capital layout required if you are thinking of installing solar panels in your home. But, if they are becoming so popular, why are solar panels so expensive?
Solar panels are made using silicon, glass, and solar cells. They require trained experts to install and require a solar inverter, solar racking, a monitoring system, and batteries for storage. The costs of silicone and lithium, combined with professional installation, add up.
Although the earth receives radiation from the sun in different intensities depending on where you are, sunshine is one of the most abundant forms of energy at our disposal. Did you know that by the end of the third quarter of 2020, the U.S had installed solar panels to provide electricity to 16.4 million U.S homes?
So, where does the cost come in, and is it worth it? I have the answers for you.
Why Are Solar Panels So Expensive?
When considering solar panels, two of the most significant cost factors are the modules themselves and the shipping. In the last few years, silicon, aluminum, glass, and copper prices have gone up substantially.
Silicon has more-or-less quadrupled in price, and the price of shipping has gone up by about sixfold since 2019. Sadly, because of inflation and issues arising from the global lockdowns, costs are not likely to come down within the next year.
Solar panels have always been expensive. However, even with the current pricing issues, costs have still gone down over the past eleven years. Back in 2010, a standard 6kW installation would have cost you around $52.800. In 2022, the same 6kW system cost about $15,800.
So, where do all the expenses come in? Let’s go a little deeper.
The Cost Of Solar Panel Installation: A Breakdown
The cost of solar panels comes down to a few factors, including the brand you choose, the location, and the size of your system. The price could also depend on the company’s markup you go with. Keep in mind that the main cost may not be the system itself rather the professionals who install it.
Of the total cost, the hardware accounts for about 45%.
Hardware includes:
- solar panels
- inverters
- racking
- mounting
- wiring
The remaining 55% of the cost is made up of labor costs. These include:
- installation
- sales
- marketing
- permits
- inspection fees
- installer margins
Of the labor costs, installation accounts for the most significant amount. This makes sense, considering that each house and installation has unique needs. This means that the work requires skilled and qualified professionals at not only designing but installing a unique system that is flawless for every client.
What Are Solar Panels Made Of?
Solar panels are made with five major components:
- High-grade silicon solar cells
- Glass
- Aluminum metal frames
- Bus wire
- Standard 12V wire
All these components work together to harness radiation from the sun and convert it to a form of electricity we can store and use.
We are able to harness and use solar energy in a few ways. Passive solar heating involves using the sun to heat a room or specific area. Solar thermal technology uses the sun’s direct rays to heat up water and make steam.
When it comes to solar panels, we use photovoltaic cell technology. This is what converts the electromagnetic radiation from the sun into electricity we can use.
Are Solar Panels Worth It?
If you wonder if solar panels are worth the investment, there are a few aspects to consider. Let’s look at two:
- Are solar panels worth it for the environment?
- Are solar panels worth it for saving electricity costs?
1. Are Solar Panels Worth It For The Environment?
Solar power is considered renewable energy. The sun is expected to provide us with radiation for the foreseeable future, so solar energy is not limited at this stage.
Non-renewable resources, including coal, oil, and gas, are limited. This means that they are not replenished in our lifetime.
Making use of the sun makes sense for the environment, as it does not require the use of non-renewable resources. On top of that, solar power does not emit anything harmful when in use. Did you know that in America, solar power offsets about 100 million tons of carbon dioxide (about 131 million acres of forest) per year? Those are some pretty hefty numbers that show the definite benefits of solar energy.
Even if we consider the manufacture and resources needed to produce solar panels, the good still outweighs the bad for the environment.
2. Are Solar Panels Worth It For Saving Electricity Costs?
We all know that solar panels require a pretty significant initial investment, but will you save enough on electricity costs to make it worth your while?
The answer is yes. While designing your unique installation, your chosen solar panel company will help you decide on the size required, based on the size of your house and your specific needs. By using solar power, not only will you save on your electricity costs, but you could get a pretty penny back too.
The first way is to make use of the federal tax credit for new installations. If you are a taxpayer, you could get up to 26% of your outlay back. Next up, check out state and utility incentives. These are available at a local, utility, and state level and can be worth up to a few thousand dollars.
Another way you can make money back from your solar panels is to sell power back to the utility company. Once you have followed the guidelines, you could just receive payment for the electricity you didn’t use each month. The amount will vary according to the going rate, but this is a great way to earn as well as save.
When all is said and done, with the monthly savings you make on your power bill, combined with tax and utility incentives, going solar is well worth the initial investment for the savings over time.
How Long Do Solar Panels Last?
Depending on the company you go with, solar panels can have a warranty of anywhere between six and twenty-five years. However, the industry-standard lifespan of solar panels is between twenty-five and thirty years. The reason solar panels last so long is that they don’t have moveable parts. They are made to be durable and so need very little maintenance.
As solar panels age, they don’t simply stop producing power; they begin to produce less. The degradation rate should be communicated with you by the company used for installation to help you plan ahead.
However, the general rule is a 0.8% decline in output per year. Still, with technology improving all the time, some companies have even noted a degradation rate of as little as 0.3% per year!
The good news is that the lower the degradation rate, the longer your panels will last. Suppose you want to ensure the longest possible use of your solar panels. In that case, your best bet is to use a reputable company that does quality installations.
Keeping Your Solar Panels in Good Condition
Since solar panels do not require much maintenance, there is not much for you to do, but we have selected a few ways you can keep them running at their optimum year after year.
- Get your inverters checked and replaced if necessary
- Ask your installation company to assess your panels for any damage
- Keep your solar panels free from objects that could damage them. E.g., branches
- Check for squirrels, birds, and other animals that could be nesting under your panels. If necessary, purchase guards explicitly made for this purpose
By keeping your solar panels in good condition as far as possible, you will give your system the best opportunity to keep running, and producing electricity, for their intended lifespan.
Conclusion
Solar panels are a significant investment and are pretty expensive. If you look at the possible return on investment, however, you will find that the cost is worth it over the lifespan of your system. What makes solar panels so expensive is a combination of the hardware and labor resources needed to make your system work well.
The main expense is the installation; however, resources including silicon, glass, aluminum, wiring, inverters, and racking also contribute to the cost. Nowadays, solar panel costs increased tremendously because of inflation and the shipping cost required for the panels.
Even though solar panels are expensive, the costs have gone down since 2010. With recent price hikes not expected to ease within the next twelve months, companies will have to decide whether to postpone installations or take a knock to their profit margin.
If you consider installing solar panels in your house, take the time to research a reputable company with a good track record. Be sure to find out about incentives to get the most out of your system, both in terms of power and cashback.