Are Solar Panels a One-Time Cost?

A solar electrical energy system is a big investment.  You can save a great deal of money on your energy bills and improve the global climate, so solar power will be a smart investment for many families.  But a savvy homeowner will want to know all the financial ramifications.  You want to know both what the costs will be and when they will come due so you can plan ahead.

Installing solar panels is essentially a one-time cost, as most of the cost comes with the initial installation ($11,000 – $15,000). Other expenses include maintenance costs – or repair expenses if you neglect maintenance – fixing wiring issues, and replacing the inverter every 10 to 15 years.  

In this article, I’ll tell you all about the economics of installing solar panels.  You’ll get a range for what you’ll need to buy the panels and have them installed, including all the major parts and labor.  You’ll get an overview of maintenance needs.  Finally you will learn about tax rules that can help make that installation cost a lot more manageable.

The Cost of Solar Panel Installation

The price tag for installing solar panels can vary, but most will fall in the $11,000 to $15,000 range.  If you are especially handy, you might be able to make this a do-it-yourself project and put up a small set of panels for around $5,000.  But to do that you’ll need to handle not just the structural work of mounting the panels but also the complicated wiring of the inverter.

At the other end, a large and sophisticated residential system can cost up to $40,000.  Most homeowners opt to have a specialist contractor put in the panels.  The contractor will offer recommendations about what make and model of panels to install and how they can be mounted.  The more you know before you meet with contractors, the more likely you will pick the best setup.

Thorough Breakdown Of Solar Panel Installation Costs

The following is a cost breakdown for a typical solar panel setup capable of generating 6 kilowatt/hours per day.  This would be for a simple system with few special features:

  • The solar panels themselves are about half of the overall cost.  An average solar panel will cost $200 to $250 uninstalled.  For a typical solar energy system generating 6 kWh of electricity, you will need 20 to 25 panels.  The panels themselves, uninstalled, will cost $4,000 to $6,250.
  • The inverter is indispensable.  You will need it to convert the direct current that comes from the solar panels into alternating current that all your home’s appliances run on.  A reliable inverter will cost $1,000 to $2,000, depending on how large and complicated your solar panel setup is.  This is not the place to cut corners.  Without a working inverter your solar panels are useless.
  • Wiring to connect the panels to the inverter and the inverter to your home electrical system and the electrical grid will cost around $1300.
  • There will need to be some structural work done to mount the panels.  Brackets for the panels to rest in and anchors to keep the entire rig securely fastened will likely cost around $600.  This amount could be higher if your roof has dormers or bay windows that complicate the installation, and much higher if you install a system that allows your panels to track the sun.
  • Labor to install the mounts, panels, wiring, inverter, and any miscellaneous parts will vary, but $1,600 is a reasonable estimate.
  • Finally, there are government-related costs.  The cost for pulling the necessary permits will vary from community to community, but $1,500 is about average.

The total cost of the assembly, not including taxes and the contractor’s profits, will be in the $10,000 to $12,000 range.

Solar Panel Maintenance Costs

Once the installation is completed, the bulk of the costs are taken care of.  You should clean the panels occasionally, but this is not a particularly demanding task and does not necessarily require any outside help.  Wiping the panels down with soapy water is all that is needed, and in a pinch simply hosing the panels with fresh water will often suffice.

You might want to have a professional perform an annual inspection, which will cost around $150.  Overall annual maintenance should cost you no more than $350 per year.  If you’re willing to get your hands dirty, you should be able to do most of this yourself, thereby eliminating most of this expense. 

Solar Panel Repair Costs

The most common panel repair costs include replacing the inverter every 10-15 years ($1,000 – $2,000), fixing damage from hail (up to $600), and fixing wiring issues (up to $150).

As was mentioned earlier, the one part that is likely to wear out is the inverter.  The inverter has tiny solid-state switches inside it that it uses to turn direct current into alternating current, and those switches flip thousands of times a second.  This all happens without any moving parts, but the switches have to handle high voltages and current loads, so they generate a lot of heat and tend to wear out after 10-15 years.  You should expect to spend another $1,000 to $2,000 at that time.

Otherwise, solar panels are pretty durable.  They are designed to hold up under heat, rain, wind, and golf-ball-sized hail.   In the rare situation where a panel is heavily damaged, repair or replacement could cost as much as $600.  Aside from the inverter, most wiring issues should be fixable for less than $150.

You won’t necessarily have to pay for these out of your own pocket.  Once they are installed your solar panels are considered part of your residence, and your home insurance policy will cover many unexpected repair bills.  You may want to talk with your insurance agent and discuss deductibles and other coverage details.

Your Savings Compared to Typical Power Generation

All of this might seem a bit daunting, but once your solar power generation system is set up and plugged in you should start seeing lower power bills immediately.  

Whether solar power makes sense for you will depend on many factors, including weather, your family’s electrical usage, and the availability of sunlight around your home.  And you will want to be sure you have quality equipment installed right.  But a well-designed solar panel system can pay for itself within 6 to 12 years.

Tax Incentives for Solar Panels

Federal law provides a substantial tax incentive for solar power.  You can get around a quarter of installation costs written off your federal income taxes.  This is a refundable tax credit, meaning you can use it directly to reduce your taxes owed or increase your refund.

In addition, many states have their own tax incentives for solar power.  So if the installation costs look a little steep, don’t give up until you have talked with your tax preparer.  Federal and state incentives might bring the cost down substantially.

Final Thoughts

Installing solar panels on your home isn’t cheap, and most of the costs are paid up-front.  But once the panels are in place the bulk of the expenses are done, and the power can start flowing immediately.  Tax subsidies and smart planning can make the cost bearable, and the savings can make it very worthwhile.

Stephen Rajeckas

Hi! I'm Steve. I'm the owner of Pro Energy Advice. I — along with everyone on the Pro Energy Advice team — love researching and writing about everything related to the science of energy. Thanks for visiting the site; I hope you learned something new.

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