The Price of a Solar Panel System over the Years

By Isaac Ost
May 23, 2018
The price of a solar panel system over the years

The high cost of a fully functioning solar panel system is one of the biggest barriers in the mass adoption of solar. Although the price has dropped significantly over the past decade, it still can cost over $10,000 for a full solar panel system even after taking advantage of the 30% federal tax incentive.

Fear not! The cost of solar panels for house may be relatively high, but with the proper analysis it is easy to see how even a solar panel system at this cost will give you significant returns over the long term.

As the cost continues to drop, solar panel systems are becoming much more viable for the average household. In this post we are going to look at how the prices of solar panels have changed over the past few years.

We featured this topic on Pick My Solar LIVE! Check out Kyle and Patrick's deep dive into the pricing of home solar arrays:

Solar Panel Cost Breakdown

The cost of solar panels can be expressed effectively by looking at the price per watt, or PPW.

In 2017, the average cost in USD per watt was $2.80. This was down an incredible 61.3% since 2010. Most residential solar panel systems are anywhere between 5 and 10 kW in size and range from around $14,000-$28,000 or more. Just a few years earlier, these same systems would cost almost a third more.

You can see this downward trend in cost in the below image, from the Department of Energy's National Renewable Energy Laboratory.

Residential Solar Cost Over TimeGraph Source (p. 23)

From this graph, we can see that the overall cost per watt for solar panels is broken down into 5 categories. Going from the bottom (yellow) up, these categories are:

  1. Module - This is the physical hardware of the solar panel.
  2. Inverter - Solar inverters are used to convert direct current (DC) electricity into alternating current (AC). The electricity that is produced by solar panels is in the form of DC, so it is necessary to couple your solar panels with some sort of inverter to maximize your use of your solar energy.
  3. Hardware BOS (Balance of System) - The BOS hardware includes the structural and electrical components of a solar panel system. These are things like wires, mounting systems, switches, batteries, etc.
  4. Soft Costs - These soft costs include just the cost of labor for the installation process.
  5. Other Soft Costs - Includes interconnection, land acquisition, sales tax, overhead, and net profit.

It is interesting to note that the cost of the solar panel module itself is what has seen the most drastic decreases over recent years.

Similarly, the cost of labor for the installation has gone down considerably, but it still is not a significant cost out of the overall dollar amount. The solar inverters are another factor in the overall decrease.

What hasn’t seen much change in pricing however, is the soft costs for things other than installation. This is also just data up through 2017 and represents just the average.

The cost per watt can be much less or even much greater at closer to 3 or 4 dollars per watt depending on where you are.


Solar panel prices vary greatly depending on which state you are purchasing and installing the solar panels in. Some of the reasons behind this is that certain states have their own state-based incentives, and even some utility companies offer incentives based on the state.

California is an especially attractive state for solar due to the numerous incentives available (and above average electricity costs). Some of these include the PACE solar financing, and California’s residential solar rebates.

The Price of One Solar Panel

So far, we have looked at the average price per watt for an entire solar panel system, but what about the cost for just one solar panel? Sometimes it is good to know how the cost for individual panels compare when thinking of what hardware you are looking to install.

There are many factors that influence the average cost of a solar panels, like the type of material, size, efficiency, etc., but a typical solar panel usually is around $0.85 to $1 per watt. Remember, the $3/watt price is when looking at the entire solar panel system. Therefore, a common solar panel of 250 watts would cost around $200.

A Brief History of Solar Panel Prices

In 1839, French physicist Edmond Becquerel uncovered the photovoltaic effect while experimenting with a cell made of metal electrodes in a conducting solution. He noticed that the cell produced electricity when it was exposed to light. Solar cell discoveries and improvements stemming from this brought solar panels into fruition at about 1 percent efficiency. 

In 1954, Bell Labs created a more practical solar cell with silicon at about 6 percent efficiency. Solar panels were used in the space program through the 1960s, and slowly the price reduced to around $100 per watt.

Exxon funded Dr. Elliot Berman’s research in the 1970s, which produced a less expensive solar cell, and brought solar panel cost down to about $20 per watt.

Three Reasons Why the Right Time for Solar is Now

Installing a solar panel system at your home has never been cheaper than it is now. Here's a few reasons why you should consider going solar today:

  1. Although solar prices will continue to fall, the economics of going solar already far outweighs the costs to purchase electricity from your utility.
  2. Federal and local incentives like the 30% federal tax credit are only in effect for a limited time, to reward early adopters of solar energy.
  3. Quote comparing marketplaces like Pick My Solar are available online to help you easily gather free solar designs and prices from different companies. Use our solar calculator to get a simple snapshot of your home's solar viability.

Check this video to know more about federal solar tax credit.

Isaac Ost

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Isaac Ost

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