Why Are Solar Panels So Expensive?

Why are solar panels so expensive?

Solar panels are becoming increasingly popular for their environmentally-friendly benefits, using only natural renewable energy from sunlight to generate electricity. 

This form of energy does not come from non-renewable sources, like coal or oil, which are damaging the planet at an alarming rate. It makes sense why people want solar systems in their homes.

There’s only one downside to solar panels – the price. Solar panels are notoriously expensive, costing anywhere from $10,000 to $30,000 depending on the size of the project. 

As much as you may want to reduce your fossil fuel usage and contribute towards the environment, the cost of solar panels just isn’t justifiable for some.

So, why are solar panels expensive?

If you’re wondering why solar panels are so expensive, then you’ve come to the right place. We have broken down the cost of solar panels to help you understand why they are so pricey.

How Expensive Are Solar Panels?

To understand why solar panels are so expensive, let’s break it down into how expensive this energy source actually is. The average cost of a solar panel system for an average home is around $15,000 to $20,000 before state and federal incentives.

This cost is calculated per watt of power-generating ability, with approximately $2.55 to $3.35 per watt. The price range is most due to the differences in solar equipment, the type of home you live in, and markets across the country. 

You’ve also got to consider the extent of labor, which varies in time and expense depending on the type and age of the roof.

The overall price will also depend on the needs of the homeowner. Small homes that need solar energy for a water heater or gas furnace won’t use much energy compared to a larger home with air conditioning and a heating system.

Likewise, the climate of the area will also determine how much energy you use.

Why Are Solar Panels So Expensive?

The main reason why solar panels are so expensive is mostly because of the labor costs. As expected, the larger the solar panel system, the more expensive it’s going to be. 

Likewise, the higher the wattage of power-generating ability, the more expensive the solar panels will be.

It’s not easy to give an exact figure for how expensive solar panels are, because it depends on a range of factors, including the size of the house, how much energy you intend to use, how your roof handles the system, and more.

However, the large cost of the installation of solar panels is somewhat worth it when you look at your bills. 

Solar panels are a large investment with great payoff, as you will end up with lower electricity bills, and they require little to no maintenance. In the long-term, solar panels work to save you a lot of money.

Let’s break down the costs of solar panels.

Cost Of Labor

Arguably, one of the main reasons why solar panels are so expensive is that you are paying for a large labor cost. 

You’re not just paying the person or people who are installing the solar system – you’re also paying for the permit and inspection fees, installer margins, and sales and marketing costs.

These costs are known as “soft costs”, and typically make up for 54% of the overall cost of solar panels.

The reason why soft costs are so high is because each home requires a customized fitting, design, and installation of solar panels. Each household has different needs, and come in various sizes with different roof types.

Solar panel companies must have staff that are qualified and skilled to account for such variety. Not only this, but the companies must also factor in overhead expenses, marketing costs, and profits.

This is why people will often opt to install their own solar panel system to cut down on costs. Of course, this comes with its own downsides if you aren’t skilled or qualified to install solar panels, but there are plenty of step-by-step tutorials online.

Costs Of Production

Solar panels are made up of various materials, meaning the production of this energy source is extensive and pricey. Silicon, for example, is the central element of a solar cell. 

While it is widely available, it requires a refinement stage that is complicated and requires precision technology, which inevitably increases the cost of the panels.

It’s not just about the panels, however. Solar systems also require inverters, which convert the generated energy into a usable form. 

Off-grid systems will need to use expensive batteries, which use rare minerals and elements.

These costs are known as “hardware costs”, and make up for 46% of the overall cost of solar panels. Hardware costs account for the panels, inverters, and how the system is balanced, such as with racking, mounting, and wiring.

Why Are Solar Panels So Expensive

Do Solar Panels Save You A Lot Of Money?

Fortunately, solar panels are only really expensive at the beginning. It’s best to consider them as an investment, because they work to save you a lot of money on energy bills in the long-term. 

On average, a household with a 6 kW solar panel system will save about $1,500 annually on electric bills.

The initial investment of solar panels might seem expensive, but it’s often reduced by federal and local tax incentives, which work to incentivize renewable energy. 

This, met with the fact that you will make back this initial investment by saving money on electricity bills, means that solar panels aren’t always as expensive as you think.

Also, solar panels don’t require much maintenance, unless there is a huge issue with the system. Most of the time, however, they are surprisingly low-maintenance and don’t need costly adjustments.


So, there you have it! Solar panels might be an expensive initial investment, but it’s for good reason. You’re paying for the quality of the solar system as well as the installation. 

Fortunately, the initial cost will seem minimal in the long-run, as the solar system will save you money on your electricity bill – and help the planet!

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