How Much Does Residential Solar Power Cost?

One of the most frequent questions that homeowners ask when considering going solar is: how much does residential solar power cost?  The problem with this question is that it is dependent upon so many factors, and giving an exact answer can often be misleading. While there are plenty of solar cost calculators out there, most will only take a few of the many factors into account when approximating what a system will cost, which in our view, is an irresponsible way to lead on homeowners. Although there are many benefits and ways to save money with solar power, the actual cost of having it is a little more in-depth. That’s why we want to lay out the twelve most important factors that dictate residential solar power cost, so that homeowners can be informed as to the complexity of estimating the actual cost of their system.  

No doubt the biggest factor at play when determining the cost of a solar energy system is how much power the home currently consumes, and how much the homeowner is hoping to offset.  Typically, systems are sized such that they will fully offset electric usage every month and that there will be nothing owed to the utility. When homeowners finance systems, they will pay a monthly payment that is less than what they were paying in utilities prior to the installation.  Typically, the amount of panels installed has to be enough that there is full offset, while maintaining a monthly payment less than the power bill. According to studies, the average household uses around 11,000 kilowatt hours a year, and will require around 28-34 solar panels to accomplish a 100% offset.

Another factor homeowners should consider when sizing their system is whether they anticipate any increases or decreases in their electric bill in the near future. If they are adding a heated pool, a hot tub, or even a home addition like a granny flat they plan to rent out, they should calculate future energy expenditure into their overall usage and plan around installing for that future amount to ensure 100% offset when that time comes. Likewise, if energy use is expected to go down, like with a child going off to college, or energy efficient appliances being installed, homeowners should plan their consumption around that as well, as to not install more panels than are required. This type of planning for the future can ensure that homeowners will be offsetting 100% of their power, while not acquiring more panels than they need.  

Speaking of anticipated future expenses, homeowners who think they may purchase an electric car in the future should plan their system capacity accordingly. Solar power and electric cars go great together, as powering a car with the Sun can greatly cut down or even eliminate gas expenses. There shouldn’t be too much additional solar needed to power an electric car, but the potential payoff of combining an electric car with solar is pretty substantial.

The Federal Solar Tax Credit, or the Solar Investment Tax Credit (ITC), is a federal solar incentive that allows homeowners to subtract 30% of the cost of their solar panel installation from their tax liability. So homeowners who are also business owners or independent contractors who owe the federal government a lot in taxes have the ability to subtract an average $5,000-$6,000 off the cost of their solar system in the form of a federal tax credit. The Solar ITC has been a huge propeller of the solar industry over the past ten years, as it has really sweetened the deal for homeowners by making solar more affordable. So for those homeowners with tax liability the Solar ITC can greatly reduce the cost of their system, making it a big factor in the determination of overall cost.

How the homeowner decides to pay for the installation will greatly affect the overall cost.  Homeowners who pay cash for the system will have an overall cost that is less than a loan as they will not be paying interest, and homeowners who opt for a lease will probably take on less costs overall but at the end of the lease period will not own the system. As stated earlier, most homeowners finance their systems, making a monthly payment that is less than their electric bill, all the while zeroing out their electric bill, so the payments they will be making will be going towards owning their solar instead of just throwing it away at the utility. For homeowners that are retired or do not have any tax liability, a lease might be the best option, as they can make a monthly payment that is less than their electricity bill, and will not experience any increases in price like they would with their utility bill.

Another factor homeowners should consider in estimating solar system cost is whether they want a rooftop or ground mounted solar system. While most homes in San Diego are better suited for rooftop solar panel installations, many homeowners who have the space on their property opt for ground mounts. This decision can come down to aesthetics, roof condition, roof space, etc., but it mostly comes down how to optimize space to install the greatest amount of solar panels as possible.

A big factor in how much labor and cost will go into your installation is what material your roof is made of. There are certain roof types that are more common and therefore easier to install on, the most common types being composite shingle, concrete s-tile, flat-tile, concrete flat tile, and clay s-tile. Some of the less common roof types are metal and rock roofs, but it is still possible to install on these types of roof material. Homeowners who plan on installing should make sure their roof is in good enough condition to support a solar system, and if it isn’t, they should make sure to replace it beforehand, else they may be facing a roof leak down the road.

Roof area is also a big factor in rooftop solar power cost. Many homes in San Diego have multi-surface roofs that all have limited surface space. In these cases, panels will have to be installed on the different roof areas to ensure there are enough panels to offset power demand.  For example, some homes may have a flat roof garage and tile roof house. In this case, the solar would be installed on both the flat roof and the tile roof, making for two seperate racking systems. These multi surface installations tend to be more expensive as the installers have to install racking for each surface. Homes that only have two surfaces are ideal, as all the panels can be installed on the same racking area.  

In San Diego, the optimal roof direction for solar is South. If the home does not have any direct southern exposure, more panels may have to be added to compensate for the lack of direct sunlight. There are many options to work around this optimal direction, but typically, a home with less southern exposure will have to compensate with more panels, making the solar panel installation cost more.

Shading is a huge factor when it comes to planning the number of panels, the position of the panels,  and the viability of the entire system. If there is too much shade, some installations may not be worth it because they simply won’t produce enough power. If there is too much shading on one side of the roof, alternative areas of the home or land may have to be utilized to accomplish a full offset. Some homeowners may opt to cut branches or entire trees down to make way for a solar installation, but typically, we are able to make a system work without having to go through such drastic measures.  

A big cost factor in the installation of ground mounts is how close the ground mount will be to the home. The further the ground mount is located from the home, the more trenching will have to be dug in order to connect the system, which requires more labor and raises installation costs. Other environmental factors, like boulders, brush, hills, etc. can require additional costs if they will impede connection between the system and the house. Optimally you want to put the system as close to your home as possible to keep costs down.

The amount of available land for a ground mount on a given property can also greatly affect installation cost. Obviously, if there isn’t much land, the system dimensions will be restricted and there will be less room for panels, which will keep system cost down. But, if there is plenty of land, the system size will be unrestricted and therefore cost will differ based on the other factors at play. There are some workarounds to limited land space, as systems can be mounted on boulders, steep hills, and more. Likely, if you have any workable space on your property, it can be utilized for a ground mount.

So as you can see, calculating the exact cost of a residential solar system is pretty complicated.  These are just a few of the many factors, so the best route for homeowners trying to accurately estimate how much they will spend on solar renewable energy is to talk with a solar energy consultant. Here at SunPower by Stellar Solar we can answer any questions you may have, and work up a solar quote for you that is accurate and customized to your needs.