There has been an increased deployment of solar energy technology across the United States—mainly because it is the cleanest domestic energy source, supports broader national priorities, including national security, economic growth, climate change mitigation, and job creation. Solar energy’s continued strong growth potential is supported by positive policy backed by available federal and state level rebates and incentives.

Homeowners realize the benefits of installing a solar energy system. Not only because of the independence it provides by reducing reliance on the utility grid with cost reduction, shelters them from fluctuating and unreliable electricity prices, but it could also increase the property value of their homes.

You’ve probably asked this question before, and we’ve been asked the question many times over. “How much do solar panels cost?” The answer to this question depends on a few factors—many of which are specific to your home and energy needs. But we will try to explain and provide as much information as possible to guide and narrow down a best possible answer prior to a detailed conversation and site assessment by one of our solar advisors.

To get started, we must first understand that the cost to install a solar energy system is also directly affected by your energy requirements—and the long-term savings you get from your solar panels is directly correlated to the electricity rates from your local electrical utility.

Considering trends from past and future utility rates, along with the Federal tax credits and local state incentives you may qualify for, can significantly reduce the cost of your solar system installation. Utility rates are the most important factor pushing many to go solar, and these changes frequently and tend to increase over time.

As utility rates go, the average residential consumer in the U.S. pays 13 cents per kWh. On a utility basis, wholesale spot prices for electricity are currently ranging from 2 cents to 3.5 cents per kWh. And much of the electricity being bid into those markets are generate from plants that are decades old and sometimes located at distant regions from the residential communities, making maintenance and supply rates even higher.

The supply rate is the portion of the electric bill that covers the cost of generating electricity. It’s important to understand the role played in this equation by supply rates— most utilities in the United States do not physically generate their customers’ power, they make money only when they deliver this power; which accounts for the delivery portion of your bill.

So, how do you avoid getting hit year after year with the ever-increasing utility rate hikes? The answer is simple, by going solar. We have established that the cost of electricity in most U.S states are so high that the solution becomes glaringly clear—generate your own reliable, clean, low-cost, and environmentally safe localized energy which incurs no distribution overhead costs.

The fact that installing a solar energy system is a major contribution to ensuring your children and their children’s children have a safe and clean environment in the future is also important. The fact that a solar energy system saves thousands of dollars on utility bills over its lifetime, and the components covered with very lengthy warranties—also means no worries.

There are two types of cost schemes when discussing solar energy system installation. There are soft costs and balance of system (BOS) Costs.

Soft Costs:

Soft costs are the non-hardware costs associated with going solar. These costs include permitting, financing, and installing solar.

Balance of System Costs:

The balance of system encompasses all components of a photovoltaic system other than the photovoltaic panels. It makes up roughly 10%-50% of solar purchasing and installation costs, and helps control overhead costs, increase efficiency, and modernize solar energy systems.

To sum it up, considering the soft and balance of system costs—the total cost of your solar energy system will depend on the system size, the type of installation, the brand of equipment options such as panels and inverters, the permitting costs, and of course the labor costs. Other important factors such as the state of the roof and available sunlight exposure will determine how much solar panels that can be installed. This will affect the amount of electricity that your roof can produce, which will influence the total cost of the installation.

To paint a clear picture and calculate the cost of a solar install, we must know the national average of cost per watt to pay for solar in the U.S. Recent data indicates that U.S homeowners have been paying $3 to $4 per watt for solar energy system installations.