This is an exciting number. The cost of residential solar panel systems has fallen significantly by 61% since 2010. This is based on the 2017 solar energy cost benchmark report of the National Renewable Energy Laboratory (NREL).
The solar panel system consists of many components. You may have a rough idea of the cost of solar panel systems before and after tax credits.
Here is an example where we can break down the cost of solar panels and the typical cost of installing a system.
The current industry average cost is $3 to $4 per watt.
The average size of a solar panel system = is 5-6 kilowatts (1 kilowatt equals 1000 watts).
$3.26 (per watt) x $5000 (per watt) = $16300 per system (before the 30 percent ITC tax credit).
But let's be more detailed. In the chart below, you can see that although the overall cost has decreased, it is mainly hard costs that have been reduced, such as the solar panels themselves.
Soft costs have not changed much and now usually account for about 64% of the new solar system.
Let's take a closer look at a breakdown of the hard and soft costs associated with installing residential solar panels.
Hard solar panel installation costs
Consider hardware hard costs: install physical products to get your new solar panel system up and running.
This is where you will pay for solar panels themselves, inverters, solar installation racks, storage batteries, etc.
Solar panels account for about 25% to 30% of the total cost of solar panel systems.
Other hard costs include:
Solar inverters can account for about 10% of the hard cost.
Solar energy installation and electrical equipment can be increased by another 10%.
Solar panel installation cost -soft cost.
Soft costs include the company's management costs, customer acquisition and marketing costs, system design costs, licenses and fees to connect to the power grid, and installation labor costs.
This is the soft cost breakdown of the Department of Energy.
You will notice that the percentage of each soft cost is small, but as they say, they add up.
In fact, the Solar Energy Industry Information Association (SEIA) has just released a report that puts the number of soft costs at 68 percent!
To some extent, the soft cost is only part of running a business. To stay in business, solar companies must pay their employees, attract new customers and make a profit.
Soft cost reduction solution.
In 2011, the Office of Solar Technology (SETO) of the U.S. Department of Energy launched a program called Sunshot. The goal is to make solar energy financially on par with other energy sources by 2020.
Various licenses, entities, and laws in different jurisdictions may slow down the process of solar installation and increase costs. By systematizing and unifying solar energy, SETO is working to reduce red tape and prices.
They also funded research on new ways to simplify the operation of solar companies. Better software and processes can help solar companies get new customers and run more smoothly, which helps control soft costs. Through these efforts, the money saved can be passed on to solar users.