Typical Cost of Solar Installation

Typical costs for Photovoltaic solar systems

While every homeowner has a unique set of energy requirements, we thought it would be useful to try to paint a picture of what the costs of a typical residential photovoltaic solar energy system might be. In order to understand costs a good place to begin is with the  Federal Tax Credits for solar systems which were signed into law on February 17th, 2009.  The Residential Energy Efficient Property Credit is a nonrefundable energy tax credit to help individual taxpayers pay for qualified residential alternative energy equipment, such as solar electric (PV) systems, solar hot water heaters, geothermal heat pumps and wind turbines. The new law removes some of the previously imposed maximum amounts and allows for a credit equal to 30 percent of the cost of a qualified system. These federal tax credits combined with state-level credits can dramatically reduce the cost of a solar PV system, sometimes by as much as 40-50% depending upon what state you live in. Furthermore, thanks to a glut in solar panel market, base system prices are rapidly declining to as much as half the price from a year ago.  Prices per watt for solar panels as of 2010 are running in the $2 – $3 per watt range which is a big change from just two years ago where they were running around $5 per watt.  In addition, the solar panels themselves are becoming more and more efficient have moved from about 12% efficiency to as high as 18% efficiency.  Put all of this together and there has never been a time when solar energy systems were more affordable.

The following tables show typical system costs of 3 systems in 2010.  We took the prices for the system from one of the more popular discount solar retailers, Affordable-Solar.com.  In this case we used their 4K Kit price with the assumption that an installer would be contracted separately.  In many cases, when you pick a solar contractor they will have a particular brand of solar systems or solar panels they like to use. Nonetheless, we suggest that you always ask to see the equipment prices by product before signing any contract.  This way you can be sure that they are not overcharging for equipment and you can distinguish labor cost versus equipment cost.  In particular, find out what the price per watt is for their system prior to installation.  Price per watt is the best way to compare solar panels since they are so many different shapes and sizes. 

Prices will vary from area to area and over time, but in each example we will assume that a careful analysis of the home has been conducted and that the homeowner and installer have agreed that a system of approximately 4 kilowatts will be sufficient. There is a big difference in cost between grid-tie and off-the-grid systems so we will look at both types. We will also look at the difference between a grid-tied system with state incentives and without.  In order, our examples will be as follows:

  1. a grid-tied photovoltaic system with just the Federal Tax incentives
  2. a grid-tied photovoltaic system with both Federal and State incentives
  3. an off-the-grid photovoltaic system which has no incentives

All prices are current retail so would the total would probably be lower if you buy any of your components on sale or at a discount. Please keep in mind these system designs will not be appropriate for every home.  In order to get a specific estimate for your home you should contact a NABCEP certified solar installer.

Costs for a Grid-Tied System with No State Incentives

In this example we are presuming that a homeowner is purchasing a grid-tied system that will be mounted on the roof of their home. We are also assuming that the homeowner lives in a state which provides no incentives for solar energy.  Instead the homeowners will take just the 30% Federal Tax credit.  The table below shows the components that will make up the system and their cost:

Component Quantity Cost per Unit Total
Schott 220 watt solar panel 18 $638 $11,484
Tyco Cable assembly and cable gland 1 $65 $65
Midnite Solar combiner box and fuse 1 $88 $88
Midnite Solar fuse holder and fuse 1 $19 $19
PVPowered 3500 watt inverter
1 $2,279 $2,279
Square D AC disconnect 1 $46 $46
Delta DC lightning arrestor 1 $40 $40
Delta AC lightning arrestor 1 $42 $42
UniRac Standard Rail Flush Mount Kit 2 $300 $600
Equipment     $14,063
Sales Tax (estimated 6%)     $843.78
SubTotal for Equipment     $14,907
Combined labor plus margin 35 $120 $4,200
SubTotal     $19,107
Federal 30% Tax Incentive     -$5,732.03
Total Cost After Federal Tax Credit     $13,375

In this example we are using a pre-packaged kit from Affordable Solar which comes with Schott 220 watt solar panels.  Schott is a well established international solar panel manufacturer with some panel production based in the US.  If you multiply the number of panels (18) times the rated watts (220) you will see that this should generate a total theoretical output of 3,960 watts ( 3.96 kW).  However actual performance under real sun conditions is almost always less than the rated output so to be realistic it is probably better to adjust this down by 20% to about 3,168 watts.

The second most critical component of a solar system is the inverter. An inverter is needed to convert the DC electricity coming from the solar panels to the AC electricity that is used by the house and which is coming off of the grid.  The kit comes with a PVPowered 3500 watt inverter. Like most modern inverters this particular inverter has a built-in DC disconnect.  The DC disconnect is a switch which allows the user to shut off the DC power coming in from the solar panels.  This is required by code and will be necessary should we ever have to replace a panel or work on the inverter. 

We will also need wiring, both for wiring the panels together and for connecting the panels to the inverter. The solar panels will come with MC connectors which are used to connect the panels to each other. But once the panels are connected you then need to run the wire from the strings to the junction box, and from there to the inverter.  We will also need copper wire for grounding the panels.  The National Electric Code requires that all panels be completely grounded.  Finally, a junction box from Midnite Solar has been added to facilitate combining the wires coming from our two strings of 9 solar panels.

Another feature we have added is strong protection against damage from lightning strikes.  Panels are electrical components sitting on a roof so lightning strikes, though uncommon, are a potential risk.  Normally the lightning rod in your house should catch any strikes but the AC and DC lightning arrestors provide an additional layer of safety.

In our example a UniRac solar panel rail kit is used to mount the panels on the roof.   In some pre-packaged kits mounting racks are included but they were not on this particular kit from Affordable Solar so we added them in separately.  UniRac is one of the largest providers of solar panel mounting systems. We have sized the rail kit based on the assumption that the Schott solar panels will be mounted on the roof with two racks each holding 9 panels.   Each rail kit will contain the aluminum rails that the panels rest upon as well as the various clamps for mounting the panel and the feet for attaching the rails to the roof.  The panels will be mounted in a fixed position based upon the latitude to optimize the energy output for a fixed array.

In this example we will assume that the labor will be done by an experienced solar installers and an experienced electrician.  We have estimated that the labor to put up the system to be about 35 hours from start to finish, including inspections.  Thanks to improved racking and inverters solar systems take much less time to put up then they used to so we think this should be a sufficient amount of time for a simple 4K system.  Labor rates vary from location to location, plus the installer is going to want to make a profit on each job.  To keep things simple we have combined the margin and labor into a combined hourly rate of $120 per hour.  This is one of those areas where there is a great deal of variance.  In some cases you may be able to get the installation done for less than this.  On the other hand, if your roof structure is complex or you have some unique electrical requirements then the price could go higher.

Finally, we have estimated a federal tax credit of 30%.  The federal tax credit is now 30%. This comes off the top of your tax return so it should be significant for most homeowners. 

The total for our grid-tied system without incentives is $13,375 or about $3.37 per watt installed.  Generally most grid-tied systems will cost between $3 to $6 per watt before state incentives.  This particular example may be a bit on the low end in that we used a kit a pre-configured kit as the base of the system.   

Costs for a Grid Tied System in New York with State Incentives

Now let’s look at the same system, but this time assuming that our homeowner lives in the state of New York where there is a state solar system rebate.  One of the goals in offering the incentive is to build up a base in the state of certified installers.  Therefore in order to get the incentive the photovoltaic system must be installed by a state certified (NYSERDA) provider . This is typical of many state incentives.

Component Quantity Cost per Unit Total
Schott 220 watt solar panel 18 $638 $11,484
Tyco Cable assembly and cable gland 1 $65 $65
Midnite Solar combiner box and fuse 1 $88 $88
Midnite Solar fuse holder and fuse 1 $19 $19
PVPowered 3500 watt inverter
1 $2,279 $2,279
Square D AC disconnect 1 $46 $46
Delta DC lightning arrestor 1 $40 $40
Delta AC lightning arrestor 1 $42 $42
UniRac Standard Rail Flush Mount Kit 2 $300 $600
SubTotal for Equipment     $14,063
Sales Tax (estimated 6%)     $843.78
SubTotal for Equipment     $14,907
Combined labor plus margin 35 $140 $4,900
SubTotal     $19,807
Federal 30% Tax Incentive     -$5,942.03
Total After Federal Tax Incentive     $13,865
New York State Solar Rebate 3960 $1.75 -$6,930.00
Grand Total after All Incentives     $6,934.75


In this example we have raised the labor rate and margin to $140 per hour in order to account for the fact that we will have a state approved installer putting in the system and for the additional paperwork required by the NYSERDA incentive program.  There is considerable paper work that the installers have to go through when using a state incentive program and most charge a little additional cost to cover this paperwork process.  So the labor rate has been increased from a combined rate of $120per hour to a combined rate of $140 per hour. We still assume that the job will take 35 hours total.

New York has taken the approach of providing a solar energy incentive based upon the size of the system, not its output.  The rebate from the state energy agency, NYSERDA, is $1.75 per watt of installed power.  Since our system has an officially rated power of 3,960 watts the rebate is $1.75 x 3,960 which equals $6,930. As you can see in this example the combination of the Federal Tax Credit and the state rebate makes a huge difference in the overall cost of the system.  It has brought the total cost down to $6,934.

You can see from this example what a dramatic difference state incentives can make when buying a solar PV system.  The federal and state incentives have reduced the cost by 66%.  If you live in a state that has no incentives then this example from New York gives you plenty of incentive to lobby for renewable energy incentives in your state!

Costs for an Off-the-Grid System with No State Incentive

Component Quantity Cost per Unit Total
Kyocera 210 Watt solar panels 21 $582.00 $12,222
Xantrex XW charge controller 2 $557.00 $1,114
Xantrex XW Inverter 1 $770.00 $770
Xantrex Remote Control Panel 1 $263.00 $263
Xantrex XW breakers 7 $13.00 $91
Water Miser Safety Caps 72 $4.50 $324
Outback combiner box 1 $120.00 $120
Delta DC lightning arrestor 1 $40.00 $40
Delta AC lightning arrestor 1 $42.00 $42
Battery Interconnect 2 $35.00 $70
MC 4 Cable 30 inch 7 $7.50 $53
Battery Cable set 1 $201.00 $201
Deka 6 volt 270 AH battery 24 $287.00 $6,888
UniRac Standard Rail Flush Mount Kit 2 $300.00 $600
SubTotal for Equipment     $22,798
Sales Tax (estimated 6%)     $1,367.85
SubTotal for Equipment     $24,165
Combined labor plus margin 35 $120.00 $4,200
SubTotal     $28,365
Federal 30% Tax Incentive     -$8,509.61
Total After Federal Tax Incentive     $19,856

Now lets take a look at an example of a 4 kilowatt photovoltaic system which is designed to be used standalone off-the-grid.  This kit is also priced based on a packaged kit price from Affordable Solar.  When designing a solar system for an off-the-grid system we  have to take into account two critical factors.  First, since the solar panels are our primary source of electricity (no grid is available) we have to account for those times when the sun doesn’t shine.  During those periods of time the home will have to run off of battery power only.  If the homeowner is familiar with the area they should be able to roughly estimate what the longest stretch of cloudy days are likely. For most areas in the U.S. it is probably safe to estimate that cloudless days could stretch to 4 or 5 days in a row.  For our estimates here we will assume a worse case of 5 days.

The second factor that would need to be looked at is the maximum power consumption on a daily basis.  Most off-the-grid homes will be designed to use less electric power than grid-tied homes.  Most use less demanding appliances and few use electric resistance heating.  The solar installer should work with the homeowner to estimate the peak electric demand during the day. We will need to know this in order to determine what size battery bank to put in.  For the purposes of this example we will assume this is a fairly large home and that the system calls for a 48 volt battery bank.  Most battery banks are in either a 12 volt, 24 volt or 48 volt configuration. 

The Affordable Solar off-grid kit uses 21 Evergreen 210 watt solar panels as the source for the electricity. Evergreen is a well established American solar panel manufacturer.

An off-the-grid system will need deep-cycle batteries to store the electricity which has been generated by either the solar panels or the generator.  In this example we have chosen 24 of the Deka 6 volt deep cycle batteries. These are reasonably priced lead-acid batteries and will last 3-6 years if heavily cycled.  Each battery is capable of storing 270 amp-hours of energy at 6 volts.  By combining these batteries in series we get the 48 volts needed for the system.

Batteries can be permanently damaged if they are allowed to overcharge.  Therefore with any battery bank we will need a charge controller, a device which monitors batteries and prevents them from being overcharged. In this example we are going to go with two Xantrex XW charge controllers.  Xantrex is a major manufacturer of charge controllers and the XW controller is one of their most popular controllers. 

The kit comes with one Xantrex XW off-the-grid Inverter.  This inverter is specifically designed for off-the-grid systems which take as input 12, 24 or 48 volts coming from the batteries.  This is much less voltage than a grid-tied inverter which may be designed for up to 500 volts coming directly from the solar panels. Also, off-grid inverters are designed to support generators.  Most off-the-grid systems use generators as backup and to deal with those occasions where the homeowner may wish to run a demanding appliance such as an electric dryer or air conditioner.  Such appliances could drain the battery bank too quickly if a generator was not used. 

One unique component that comes with this kit is the Water Miser Safety Caps.  These are neat little devices that solve two problems at once.  One problem that any battery system will have is that it releases a small amount of hydrogen gas during the process of charging the batteries.  This gas is potentially explosive and dangerous if not properly vented.  Another challenge that batteries have is that the water in them can be depleted during charging if they are not sealed batteries.  If the batteries go dry they will not charge.  The Water Miser caps are a special type of cap that is mounted on the fill openings in the battery.  What they do is take the hydrogen gas that the batteries give off, combine the hydrogen with oxygen from the air and create water which refills the water which was lost.  Its a brilliant solution for keeping your batteries from drying out and can reduce a lot of maintenance on your battery system.

When you add everything up you will see that the total bill for this system is $28,365 before we take the federal tax incentive.  Most off-the-grid systems are not eligible for state incentives and we have not presumed any state incentives in this example.  It is worth noting that the final cost for the off-grid system is much more than that for the grid-tied examples we looked at before.  The reason for this is the cost of the batteries and the charge controller which are not needed on a grid-tied system.


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