Here is a quick breakdown of all the costs that go into an installation: Contact online >>
Here is a quick breakdown of all the costs that go into an installation:
Breakdown of solar costs
Here''s an exciting number: The cost of residential solar panel systems dropped a remarkable 64 percent from 2010-2020, according to the National Renewable Energy Laboratory (NREL).
A solar panel system is comprised of many pieces. You might already know the cost of a solar panel system before and after tax credits, in broad strokes.
Here''s an example of how we can break down solar panel costs and what it typically costs to install a system.
But let''s get a little more granular. In the chart below, you can see that while the overall costs have gone down, the reduction comes mostly from hard costs such as solar panels themselves (the gray and red bars in the graph below).
Meanwhile, soft costs like permitting, interconnection, and overhead have been more stubborn.
Let''s take a closer look at the breakdown of hard costs vs. soft costs associated with installing residential solar panels.
Think of hard costs in terms of hardware: the physical products installed to get your new solar panel system up and running. This is what you''ll pay for the solar panels themselves, inverters, solar mounting racks, a battery for storage, etc.
Heading into 2024, solar panels can account for about 13% of the total project cost, while inverters and balance of system (BOS) equipment account for 33% of the total cost of an average project.
The majority of the project cost goes toward soft costs, including labor, permitting, overhead, and profit, which we’ll explore below.
Soft costs include administration costs for the company, customer acquisition and marketing, system design, permits and fees for connecting to the grid, and labor for installation.
Here''s the NREL’s latest soft costs breakdown of a solar and battery project:
You''ll notice 21 individual items fall into the broad category of soft costs, ranging from shipping costs to inspection labor to customer acquisition.
Fieldwork labor (i.e., installing, configuring, and inspecting a solar and battery system) makes up just 7% of the overall system cost, while office work makes up 26% of the total project cost — the biggest chunk by a substantial margin.
Related reading: How Do I Estimate Solar Installation Costs?
The “other” category of soft costs is made up of sales tax, management salaries, distribution costs, and the dirty word: Profit.
According to the NREL, the average gross profit margin for residential solar projects is just over 20%. As a customer, that can be tough to swallow… until you compare it to other industries.
Most notably, regulated electric utilities — where most people currently buy electricity — have an average gross profit margin just north of 36%.
Profit is just part of participating in a capitalist society. In terms of buying electricity, you’ll spend a lower share of your money on profit by owning a solar system than by buying individual kilowatt-hours from a utility.
A vast majority of that officework cost — around $1,000 per kW of capacity installed — comes from customer acquisition, which encompasses all the sales and marketing efforts it takes to attract customers.
As the biggest chunk of the project, this is also the biggest opportunity to reduce the cost of going solar — and that’s exactly what we’re doing on solar .
On the solar marketplace, installers and homeowners to bypass the marketing and sales game and focus solely on creating the ideal home energy system. This allows our installation partners to lower their prices and focus on what they do best and allows homeowners like you to confidently compare solar quotes with the expertise of an Energy Advisor — not the pressure of a salesperson.
At Solar , we''re connecting solar customers with valuable information and vetted solar companies.
Connect with an Energy Advisor to design a custom system and find out exactly how much you can lower your essential electricity costs.
Most solar quotes feature three numbers: The contract price of the system, the value of incentives, and the net cost of the system after incentives.
What solar quotes don’t typically feature is an itemized cost breakdown of the equipment, labor, and other soft costs. So, it’s only natural to wonder how much of your money is spent on installing solar panels versus buying the actual panels.
In this article, we’ll break down how much solar panels cost verus the cost to install them, and give you the tools to estimate how much labor costs for an average solar installation.
Based on 2022 average labor rates, solar panel installation cost accounts for roughly 5.5% of the total cost of a solar project, according to the National Renewable Energy Lab (NREL).
To put that in perspective, using the a modeled market price (MMP) of $2.95 per Watt for residential solar, labor costs contributed just 16 cents per Watt of solar capacity installed. That’s tied with structural balance of system (racking) for the second smallest piece of the solar cost pie, as shown below. However, it’s important to note — as the NREL does in its report — that these cost benchmarks vary from market to market.
Using the NREL’s modeled market price, a 7.9 kW solar system would cost $23,305 and solar panel installation labor cost would account for just $1,264.
About Solar panel cost breakdown
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