If you’re wondering how much does the average residential solar panel installation cost in 2022, and you’d like to better understand why it costs what it does, then look no further! Exact Solar, a Philadelphia-region solar installer, believes strongly in price transparency and helping our customers be informed buyers. As a local installer, installing solar panels for customers in Southeastern PA and Southern NJ since 2005, we have a lot of experience estimating and installing projects, and we follow the price trends closely for many of the common products used on projects. We’re going to share what we know with you here today!
Researching how much the average residential solar panel installation costs is a hot topic on the blogosphere with many reputable platforms like SolarReviews.com publishing regular content on the subject. Here’s an article from SolarReviews.com from 2021 showing a typical cost of a residential solar installation of about $3 per watt nationwide. Note that any nationwide study will include a lot of local market price variations, and this post is meant for 2022 pricing and is focused on the Greater Philadelphia region and Central and South New Jersey markets, where Exact Solar focuses. This data is reflective of our recent and typical experience estimating and delivering projects.
What do typical solar PV modules cost in 2022 and which ones should we choose for our residential solar installation?
The average solar module itself costs about $.50 to $.55 per watt for a basic offering, or up to $.85 per watt for the highest efficiency and highest quality solar modules, such as LG or REC or Panasonic. At Exact Solar, we really like the modules produced by Axitec, QCells, and by Silfab which are high-quality, high-efficiency, reliable middle-range solar modules. All have a strong US market presence with high quality product with long warranties and high efficiencies.
Below is a data table summarizing some of the current leading solar modules for residential solar projects with typical 2022 pricing and comparing efficiency and cost per square foot of each. The table is sorted by cost per square foot, helping to highlight the modules with the best value on the market today. Note that this blog post isn’t intended to be a comprehensive comparison of the top solar modules on the market in 2022, such as this recent article by EnergySage. You’ll find that most modules on the market today fall within the general cost and efficiency range of the examples selected in the below summary table, and so this is suitable for the larger discussion here about what the typical residential solar installation costs, all-in.
What are the other typical material or component costs needed for my residential solar installation and how much do they cost?
For any solar panel installation, you need to have a panel-level monitoring system, which also provides DC optimizing and rapid fire shutdown capability for safety. At Exact Solar, we prefer SolarEdge and Enphase. For SolarEdge, it’s about $80 to $90 per solar module for panel-level devices and for Enphase it’s $140 to $170 per micro-inverter. Then you add another $2,000 to $4,000 depending on the system size and configuration for the central components (inverter for a SolarEdge system, IQ combiner, IQ System Controller, and Enjoy communications gateway for an Enphase system).
Any solar PV installation needs to have a racking system to hold the modules in place on the roof for the next 30 years. There are some terrific solutions out there, and you can expect to pay about $.30 per watt for the racking systems needed for a high-quality installation (be careful, there are some inexpensive options out there but this is not the place to cut costs on your installation if you want a leak-free, long-lasting, solar panel installation that resists hurricane force winds on your roof).
Once you add in the “balance of system” costs – wire, conduits, disconnects, meter socket, and any miscellaneous junction boxes and other electrical components, you should usually find yourself in the range of $1.50 to $1.60 per watt just for materials for your average installation – a bit higher if you choose more efficient panels and maybe a little less if you use a basic panel. SolarEdge systems usually cost about $.05 to $.10 per watt less when you add up all the various components needed for each system.
How much does project labor cost for the average residential solar installation?
Project installation labor hours and costs are probably the toughest to provide standard rates for, as they vary by project complexity, travel time, weather, and so many project-by-project variables. $160 per module is a fairly reasonable estimate for solar installation labor but the range on this can vary plus or minus $35 per module depending on project specifics.
How much do project “soft costs” like engineering, interconnection fees, inspections, permits, and project management add to the average residential solar installation cost?
Each project then has a number of “soft costs” that must be considered in order to deliver the project. These are called soft costs because they aren’t for parts and pieces but they are for human labor or tasks that must be included. Examples include engineering design, roof structural assessment, local permit, inspection, interconnection application fee to the local utility, and project management. You should anticipate about $1,500 to $2,000 per project for these items. Each of these costs vary slightly by local municipality, state, and project complexity.
There also must be some compensation included to pay for the sales and marketing efforts that is a real cost for any solar installer. We all employe professionally-trained salespeople, most of which are engineers, to work through the consultation process with a customer, consider various design options, and finalize the estimate and design. You can assume about $.25 per watt as a typical cost covering sales, marketing, and advertising expenses for any solar installer. Each solar installer might determine this cost differently, and some rely more on marketing than on sales, or vice versa, but in the end every company out there has some variation of these costs that must be factored into their pricing.
Finally, all contractors need to have an overhead allocation in each project, which are dollars used to cover office rents, warehouse space, vehicles, safety equipment and tools, any management/office staff wages, etc.
Ok, so can we now answer the question “How much does the average residential solar panel installation cost in 2022?” Yes, we can!
Once these are all factored in, Exact Solar is seeing projects delivered for anywhere between $2.45 and $2.75 per watt for a typical quoted system, but it’s possible to come in closer to $2.35 to $2.40 per watt if low cost is the primary focus of the project design and it’s a very simple and easy roof layout. Any installer will make sure to include reasonable added costs to account for project difficulty – 3 or 4 story homes, project with extra travel time, or projects with steep/complex roofs all have a small cost add. In general, larger projects with simpler roofs will come in closer to the $2.45 to $2.50 per watt end of the range, and smaller projects will end up on the higher end of the range closer to $2.75 to $3.00 per watt.
If you’d like to get a customized estimate for your own solar project, Exact Solar’s Sales Engineers can review your home and your project goals, work on a suitable design, discuss preferences for modules and other components, and help you determine a more accurate project budget. To start that process, you can submit your address here and generate your own quick project estimate, and then our Sales Engineers will contact you to further customize and finalize design and cost.
Ground-mounted systems also usually have some extra costs versus roof mounted systems. The racking for ground-mounted systems needs to be installed with special equipment to ensure the poles are driven deep enough into the ground, and the racking systems themselves are metal. Between the cost of the racking and its installation, and a typical amount of trenching that’s required to go between the ground mount system and the home, it’s commonly about $3,500 to $5,500 extra for a ground mounted system. Fortunately, these systems can be angled more than roof systems and optimally oriented to the sun angle, so they often produce more over time. Because the payback on solar today is so good for most people, homeowners that don’t have roof space but can incorporate a ground-mounted system should not hesitate to consider it.
So, what does all this mean, and does solar make economic sense for me and my home?
At $2.45 to $2.75 per watt total cost for the typical residential solar installation in Pennsylvania or New Jersey in 2022, and a typical electricity cost in the area of $.14 per kilowatt hour (kWh), let’s take a quick and simple look at whether solar makes sense for the typical homeowner in the area. PECO’s electric rate is currently $.135 per kilowatt hour (kWh). A 1000 watt solar installation (1 kW) would provide about 1,200 kWh in annual production (depending on shade and other factors). So that would cost $2,600 to install using $2.60 per watt installed cost, before the 26% federal tax credit. The net cost to the homeowner after the tax credit is $1.924 per watt, or $1,924 total installed cost per kW of solar.
The utility savings would equal $168 per year and this system would generate slightly more than 1 SREC per year, or about $40 in today’s Pennsylvania SREC market. That’s $208 per year in cost savings, or about a 9-year payback period before factoring in inflation in utility rates. With inflation, it’s a good expectation that you’d fully recoup your investment in 7.5 years to 8 years. While the exact payback period will vary by project, we’re seeing most projects fall somewhere near this range.
Options for Financing a Typical Solar Installation in Pennsylvania
Keep in mind there are a plethora of solar financing companies out there to fund your solar installation, both for-profit banks and investment companies and not-for-profit credit unions. At Exact Solar, we prefer using the not-for-profit credit union, Clean Energy Credit Union. They are in this game for the right reasons and have our customers priorities in mind, not their own profit motive. They are fantastic to work with, don’t require us to absorb any dealer fees (so we don’t have to have a higher price for the installation), and have low fees to the homeowner. You can get a 15 or 20 year loan with CECU, so for a solar installation that might have an 8-10 year payback, if you finance that project over 15 to 20 years, you should be saving money every year right from the start.
You can also use a home equity line of credit to fund a solar project for your home. This is probably the most advantageous option for those who can do this. It will yield the lowest rates overall and produce the best annual cost savings from solar.