September 6th, 2020 by Zachary Shahan
Last week, I published an article about solar panel prices being 9× more expensive in 2006 than in 2019. The 2019 data from the U.S. Energy Information Administration was already quite irrelevant, though, a few commenters pointed out.
Indeed, if you go to the website PVInsights right now, you can see that the average price for a polycrystalline solar PV module (a typical solar panel) had an average cost of $0.167/watt last week. That means the ~$2/watt price of solar in 2010 was approximately 12 times higher than it is today.
For a lot more fun, notice that the price of a solar module in 1977 was $76.67/watt. That’s approximately 459 times higher than the price of a solar module today.
One of my favorite articles I’ve ever written here on CleanTechnica was the 2014 article linked above concerning this topic, but also adding a consumer psychology component. Interestingly, I fell for the same mental trap I wrote about in that article until very recently! My point in that article, titled “Cost Of Solar 2 To 100 Times Lower Than You Think,” was that if you got a quote for a rooftop solar power system a few years prior, you probably had a price of solar in your head that was twice as high as the market was offering at the time. If you were thinking about a solar price quote from further back, it could be 100 times higher than the reality of 2014.
As I said, I wrote that article in 2014. Time flies and I’ve been much more focused on electric vehicles since then. Solar costs have continued to come down at a rather quick pace and I honestly didn’t realize how cheap it had gotten. Adding onto what I discovered for that article, when Paul Fosse was working on the article “My Plan To Save $170,000 In Energy Costs Over 35 Years Using Efficiency & Tesla Solar” and I asked him how much the solar PV system for his new townhouse would cost, I was shocked to find out it was just a bit more than $6,000!
But we’re mixing matters here, so let me step back for a moment.
Average Cost of Solar Panels vs. Average Cost of Rooftop Solar Power System
The $0.167/watt average solar panel price noted above is just for the solar panels. There are many other costs that go into a rooftop solar power system, including the installation cost and various operational and overhead costs that a solar installer works into the price.
According to Sunrun, which is currently the largest residential solar panel installer in the United States, just 47% of the cost of a system goes for all the hardware (solar panels, inverters, mounting hardware, and wiring).
Sunrun notes that, “A single solar panel costs between $2.67 and $3.43 to buy and install.” It references an EnergySage report for that. The whole report is interesting, but there are three great parts of it that I’ll pull out here.
The Long, Continued Rooftop Solar Power Cost Drop
First of all, it includes a chart showing the drop in rooftop solar power costs since 2015:
That reinforces the point I made in my previous article on this topic, and the point commenters added to that analysis — that the price of rooftop solar power just keeps dropping. The price of home solar power systems has dropped 21% since the second half of 2015.
Average Cost of Solar Power vs. Cost of Tesla Solar Panels
Secondly, looking at the average cost of residential solar in 2020 is interesting by itself. EnergySage notes that it is “about $12,920 after tax credits ($2.91/Watt).” Why is this so interesting? Well, it is dramatically higher than the price of a Tesla rooftop solar panel system.
A rooftop Tesla solar panel system costs just $1.49/watt after federal tax credits. That’s a dramatically lower price than the US average. One reason Tesla can offer a lower cost is that Tesla probably doesn’t include many of the “soft costs” that other companies include. Although it isn’t super clear in that chart above, solar acquisition costs (the cost of getting people to notice you and buy solar panels from you) are fairly high. They’ve also come down in recent years, but solar companies have to spend quite a bit of money attracting solar companies. If you haven’t noticed, Elon Musk could sneeze and it would create 100 headlines. Tesla is perhaps the hottest thing on the planet and millions of potential customers follow tweets and headlines about Tesla for pure entertainment, let alone purchasing considerations.
Also, interestingly, Tesla offers one price per watt across the country. I’ll get to this in the next section, but this is both shocking and a big deal. Also, Tesla has just a few solar system sizes you can choose from. Normally, solar installers come scope out your roof in detail and offer custom designs. If you’ve spent much time in the world, you know that customized products cost more. This is not the same as a mass-produced car versus a unique handmade one, but it makes a difference and must cut Tesla’s costs further.
I will try to explore these differences in coming weeks to try to better understand how Tesla can offer $1.49/watt while the national average is $2.91/watt.
Solar Price Variation by State
The other particularly interesting thing I noticed in the report, which I hinted at above, was the variation in average solar power cost across different states and regions. EnergySage includes a full list of the average cost per watt in 35 states and Washington, D.C. (It also included the solar panel range cost for a 6 kW solar PV system and the solar panel range cost for a 10 kW solar PV system.)
EnergySage reports these costs before the federal tax credit, which is 26% of the cost of the system, but I’ll include a few of them here after that 26% price cut, since that is what we focused on above. In California, the average cost per watt is a bit lower than the national average — $2.18/watt. In Colorado, it’s $2.31/watt. In Florida, it’s $1.99/watt. In North Carolina, one of the other top states for solar power (more because of large solar power plants than rooftop solar power systems), the average rooftop cost of the federal tax credit is $2.04/watt.
All of that said, I’m curious how these averages will change due to Tesla’s solar price changes. Solar power from Tesla (previously SolarCity) actually used to be fairly expensive — more expensive than the norm. Tesla has flipped the script now and is offering the “lowest cost in America,” which I still find to be a rather mind blowing $1.49/watt.
That’s not to say it’s for everyone, and I also still encourage anyone interested in going solar to get solar price quotes from several solar installers, but it is far lower than it used to be and should be accessible to many more homes. If you do go with Tesla, feel free to use my referral code for $100 off the system price — https://ts.la/zachary63404 — or be sure to get the code from a friend, family member, or someone else if you like them more than me. (I will only be slightly offended and heart broken.)
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