Once a prohibitively expensive, high-tech novelty, solar energy has undergone a revolution in recent years. Thanks to technological developments and falling hardware prices, solar is now the fastest-growing of all energy sources according to the International Energy Agency. Unfortunately, the highly variable cost of solar from state to state means it’s often difficult to pin down the true cost of an installed system. To get a better handle on the issue, let’s take a look at what you can expect to pay for a solar system and how your location, your choice of installer and many other factors may influence your bottom line.
The Trend Is Your Friend
It’s no secret that solar energy has become markedly more affordable in recent years, but the extent of the price drop has been striking. According to a recent comprehensive study by the Lawrence Berkeley National Laboratory, the cost of solar for residential use has fallen an average of seven percent per year between 1998 and 2016. Over the first half of 2017, preliminary data indicates that costs again fell sharply, declining by about 20 cents per watt. This long-term cost reduction has been driven by both falling hardware prices and reduced soft, or non-hardware, costs.
Establishing a Baseline
As of 2016, the median installed solar energy system cost across the United States was $4.00 per watt. This, however, presents an incomplete picture that fails to capture the tremendous variations in pricing. Location is a major driver in these fluctuations, both from state to state and within each state, because of differences in state and local incentive programs. Economies of scale also play a role, as residential costs are about 19 percent lower on average for 10-12 kW systems than for smaller 2-4 kW systems. Prices vary depending on the installer as well, with some installers charging as much as $1.40 per watt more than lower-cost competitors.
Solar Costs in California and New York
To dig a bit deeper, let’s take a look at two of the states most responsible for driving America’s solar boom: California and New York. By virtually any measure, no other state comes close to the extraordinary adoption of solar power in California. Thanks to detailed studies done by Solar to the People, we know that residential solar costs in the Golden State averaged $18,680 through the first half of 2017, or $3.09 per watt. Average costs across the state ranged from a high of $20,854 in the Shasta Cascade region to $15,939 in the Central Coast. California has seen a particularly steep decline in solar costs in recent years, but prices have begun to stabilize as demand has cooled and installers have had to work harder to find new solar adopters.
New York ranks just inside the top 10 in the total solar electric capacity installed, and solar remains a popular choice among homeowners due to the high cost of electricity. The Empire State enjoys lower overall prices than California, with Solar to the People reporting a statewide average of $16,426 for a fully installed residential system. Regional differences are again significant, however, with typical costs ranging from a low of $12,361 for homeowners in the Ithaca area to a high of $21,104 on Long Island. These variations are largely caused by regional differences in the incentives offered by New York’s NY-Sun rebate program. Long Island residents no longer receive incentives, while homeowners in the Upstate region receive $0.35 per watt and those in areas served by Con Edison receive $0.40 per watt.
Tariff Trouble Ahead?
In addition to the many other factors that traditionally influence solar costs, a new issue has appeared on the scene. President Donald Trump recently imposed import tariffs on foreign-manufactured solar panels, which some fear may lead to price spikes and other problems for solar energy. Fortunately, it’s unlikely that these tariffs will have a significant effect on residential solar energy. Analysts estimate a modest average price increase of approximately three to five percent, as solar panels themselves represent only a small portion of the overall price of residential solar systems.
The cost of solar remains a complex and multifaceted topic, and you can expect your individual solar costs to vary greatly depending on a whole host of factors. Nonetheless, with prices that continue to fall for residential system installations – and a federal incentive program that will remain at a generous 30 percent credit through 2019 – it’s as good a time as ever to invest in renewable solar energy for your home.