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Why are solar panels so expensive?

Why are solar panels so expensive

Solar energy is the most cost-effective option to power your home in the long run. However, it needs a hefty upfront investment that only pays off over time.

Saving money on electricity bills appeals to everyone. When someone delivers you a quotation for a system that costs an arm and a leg, though, it's a lot easier to change your mind.

To help you decide whether or not to make the big leap, this article article will provides a detailed answer as to why solar panels are so expensive and show you why getting solar panels for home use is possibly one of the best investments you’ll ever make. 

why are solar panels so expensive

Why do solar panels cost so much?

Production Costs


A solar panel is made up of many different rare and expensive materials, as well as a number of intricate and costly manufacturing methods. 

Silicon, for example, is used to make the primary component of a solar cell. Silicon is a commonly available substance, but refining it to the point where it can be used in a solar cell is not only a is a time-consuming process, but it also requires sophisticated equipment. 

With that said, modern thin-film solar panels use the compound cadmium telluride and this has resulted in a significant reduction in the cost of solar energy.


For solar installations, there are three types of solar inverters: string inverters, centralized inverters, and power optimizers. 

Unlike centralized inverters, which you can connect to the entire system, power optimizers and string inverters are individually tied to each panel in the system, making them more costly than centralized inverters.


While this isn’t a necessary component of a solar project, it is good to have if you want an uninterrupted power supply. Because solar panels rely on sunshine to generate electricity, a battery can store energy for later use when the sun is not shining. It does, however, raise the overall cost.


A mounting structure is unavoidable, whether for a small-scale solar installation on a rooftop, yard, or a large-scale solar installation, and it raises the cost of the setup. 

Tracking systems are built into the mounting framework to optimize efficiency and maximize energy production. However, the more complicated the mounting method, the higher the cost. 


A roof with numerous levels and odd angles and shapes adds to the labor cost of a household solar installation. Clearing vegetation to allow for maximum sun exposure might also raise the total cost of installation.

Sometimes the home electrical system is simply not suitable. To fix this, it may need to be modified or upgraded. This is also an expensive task to perform.


One of the most important things to look for in solar panels is durability.

If you want your solar system to last, you have to regularly maintain and inspect it to preserve the power sources as components wear out, get damaged, or become obsolete.

While the solar business will handle any warranty claims, the homeowner is responsible for all other maintenance.

A local solar installation provider will inspect your system once a year for about $150. A professional cleaning to remove dirt and debris from panels costs between $10 and $20 per panel. The cost of repairs and equipment replacement varies.

To save money on energy, frugal consumers can clean their own panels. Professional cleanings are nevertheless necessary on occasion to ensure optimal system functioning. 

Will You Save Money?

When comparing the initial costs of solar panels and conventional diesel generators, solar panels may appear to be more expensive. But we have to remember that solar panels run on sunshine, which is a free energy source. 

They also require far less maintenance than conventional forms of generators as they have no moving parts so they tend to break down less frequently.

Your Yearly Electric Bill

The first step in determining how much money a solar power system can save you is to figure out how much electricity you now spend each year.

Then, given the fluctuating nature of electricity costs, you must project what utility rates will be in the future. When comparing the cost of utility electricity to home solar, keep in mind that electricity costs are expected to rise annually.

National electricity costs have risen at a rate of roughly 2.2 percent per year over the last decade. Utility rate inflation is another reason to go solar: when you generate your own electricity with a rooftop photovoltaic system, you lock in your energy bills at a fixed rate, eliminating the need to factor in volatile utility companies prices.

why are solar panels expensive

The only costs involved with a solar system will be the installation charges and any additional electricity costs if your panels do not entirely offset 100 percent of your electricity demand. 

The accuracy with which you size your PV system determines whether or not your system will completely offset your electricity consumption.

You must do your profit-loss calculation on a long-term basis, just like any other long-term investment. It is possible to save money on electricity bills over time because the money saved will eventually cover the cost of the system. The payback period is the time it takes to return your initial investment.

Savings Money During Installation

DIY Installation

When people ask why solar panels are so expensive, they usually have a quote from a business that provides an all-in-one solution. These companies handle everything from sourcing the equipment to performing the installation.

The trick is that the cost of equipment is essentially the same no matter where you go. The markup is included in the setup.

Large installation companies have overhead costs to pay. They must pay for employees, office rent, maintain a fleet of service vehicles, supply equipment, and obtain insurance, among other things. All of those operational costs are wrapped into the installation fee, and the markup is outrageous.

So if you've received a quote from an installation company that you can’t afford, you can reduce your solar panel cost by looking into DIY.

Installing a solar system may be daunting, but it is far less difficult than it appears. If you can't, there's a great middle-ground where you may buy the system directly and have it installed by an independent contractor.

Installation companies are worth every penny if you can afford them but it’s not a train smash if you can’t. 

Start Small

If your budget doesn't allow it, you don't have to start off with the aim of offsetting 100% of your energy bills. Finding the solar panels with the best price per watt is the first step in setting up affordable renewable energy. 

Starting with a small system and expanding later is always an option. You can begin with just one solar panel and a micro-inverter. Solar panels and micro-inverters are connected in a 1-to-1 system, which means that each panel has its own micro-inverter.

If you choose to go this route, make sure to tell your system designer about your expansion intentions. Some inverters and panels aren't compatible with one other. Begin with a long-term strategy in mind and plan accordingly

Let It Pay For Itself

It may be possible to switch to solar with no net cost for homes who have access to low-interest loans. You can have them installed and paid for with bank funds, and then the loan can be paid off with power bill savings. Your solar power system can pay for itself if the yearly savings exceed the loan payments.

Federal Tax Credit 

Consider that solar power systems in the United States are eligible for a 26% federal tax credit. This implies you can pay for a portion of the project using money you would have paid in federal taxes otherwise. 

Additional incentives, such as state tax credits, solar power rebates, or renewable energy credits, may be available depending on where you live.

why do solar panels cost so much

Making use of tax benefits like these makes solar panels worth every penny you spend on them.

Final Thoughts

By now you know that the most significant costs are those associated with production and installation. However, this hefty installation expense isn’t always so bad if you shop around, do some research, or install the system yourself.

Then, thanks to federal and local tax refunds and incentives, the initial solar expenditure can be substantially lowered.

After that, any remaining system setup costs can be spread out throughout the life of the solar system by calculating the payback period. According to the data, most solar systems only pay for themselves around a third of the way through their useful life.

Solar systems are, therefore, not expensive in the long run. They are relatively inexpensive, and installing one is a terrific idea, especially when the government is providing you with such attractive incentives. 

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