As consumers, it is our responsibility to be informed about what we are buying and how much is should cost. However, very few of us work in the renewable energy industry. I attended my son’s basketball season wrap party this past weekend and was surprised when none of the parents really understood solar power. This is not an indictment on them, I think it highlights that the industry is 1) relatively new to consumers, and 2) more complex than anything they’ve purchased besides possibly a computer.
Referrals, referrals, referrals. We live and die by referrals from neighbors and trusted friends. However, just because your neighbor was sold on a solar system by company A doesn’t mean that he a) did any research, b) got a good deal, or c) bought great product from a great company.
The whole reason Evaluate Solar went into business is to make consumers aware!! Use this website to check on technology, manufacturers, installers and pricing.
Solar Power Panel (Module) Pricing
There are two things you should know when looking at any proposal. First, solar panel prices have fallen to less than half of what they were 2 years ago, and second, solar panels are only 35% of you total costs. Don’t over pay for panels, but be wary of anyone that charges higher prices for inverters, rack systems and installation labor. Sometimes installers play the shell game; they lower the panel price because that the only component that you can easily compare prices.
A good resource is Solarbuzz, a solar market research and analysis group. Monthly they release average pricing for Modules, Inverters and Solar Electricity. The trend in solar module pricing has been downward and sometimes at a significant pace. In February 2012, U.S. Module Pricing averaged $2.30 per Watt peak, down 5% from the previous month. That’s a 5% decrease in a single month. Wow! But, be careful with averages. Solarbuzz does a good job of detailing how they arrive at their averages. It’s important to note that with an average of $2.30, there were 302 solar module prices BELOW $2.0 per Watt! My own proposal, which I review here, has solar modules priced at $1.67 per Watt.
Inverter pricing continues to decrease due to manufacturing economies of scale and competition. However, inverter technology is not changing anywhere near the pace of solar cell manufacturing. Your solar power system will either have one or two inverters OR utilize micro-inverters pairing one to each solar panel.
Single inverters are more cost-effective, however they are not as efficient as micro-inverters. General Electric is working on promising new technology and packaging that would embed a micro-inverter in each panel. Integrated technology is usually always less costly than separate systems AND micro-inverter installation costs will drop to zero. Watch for exciting developments in micro-inverter systems.
Solarbuzz tracks pricing for power inverters which are currently at $.711 per Continuous Watt in the U.S. Once again, this is an average and in my proposal here, the 6 kW inverter priced at $2,673 or $.44 per Continuous Watt (38% less than Solarbuzz’s average)!
This is the big, black hole. If a firm is making 30% – 50% reselling panels and inverters, they are making a whopping 100-400% profit on installation labor. How much should installation cost?
Solar power installation IS more complicated than composite shingle roof installation. However, don’t be oversold. It’s not that much more complicated. Let’s break it down.
Solar installation requires:
- Climbing on steep pitched roofs
- Strategic layout of the solar panels and critical placement of the rafter mounting points. Envision chalk lines on your roof and realized that this system MUST be lag screwed into your rafters which are hidden below the roof shingle. Screwing into the plywood sheeting will not be enough.
- Mechanical assembly of a nut-and-bolt rack system
- Rack mounts requiring flashing and lag screws
- Electrical connections which snap and plug together (non-electrician work)
- Installation of the Inverter
- Electrical work requiring a licensed electrician includes connecting the inverter to your electrical sub-panel.
How long does it take to install a typical residential solar power system? Typically a few days.
Here’s how I break down the labor (consumer prices):
- Lead installer – 3 days @ $50/hr = $1,200
- Electrician – 1 day @ $75/hr = $600
- Mechanical Installation – 2 installers for 3 days @ $35/hr = $1,680
- Total Labor $3,480
For my system, labor was over $10,000 which leaves a lot of profit to cover nothing more than sales commission.