The True Cost of Solar Power: Understanding Home Solar Expenses

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Harnessing the sun’s power for your energy needs can be an excellent investment. It can significantly lower your utility bills, reduce your carbon footprint, and even increase the value of your home.

However, solar should be seen as a long-term investment. Transitioning to solar energy comes with various costs beyond simply buying and installing the panels. 

From initial purchase and installation to potential repairs, upgrades, insurance, and more, you need a comprehensive overview of what to expect when switching to solar energy.

Knowing these costs helps you make an informed decision and fully understand the financial commitment involved down the road. Whether you’re considering the type of panels, the size of the system, inverter replacement costs, maintenance, and repair, or the myriad of other factors that come into play, we’ve got you covered.

Initial purchase and installation cost of solar power

The first and most significant cost associated with going solar is the price of the solar panel system and its installation. The cost can vary greatly depending on the size and complexity of the system and your location. Key factors influencing these costs include:

• Type of panels: Monocrystalline panels are the most expensive, while polycrystalline and thin-film panels are cheaper. Because of efficiency, it’s rare to find a solar installer offering anything other than monocrystalline panels. 
• Size of the system: Larger systems with more equipment are going to come at a premium cost. Many solar installers have price thresholds, meaning if the system is above a certain size they give a discount, and if it is below a certain size there is a small price increase. 
• Installation complexity: Difficult installations that require more labor hours tend to cost more. Some common difficulties include: steep roof pitch, panels on multiple roof planes, ground-mounted panels,  or panels mounted on a detached structure.
• Labor cost: Labor costs vary depending on your region and the solar company. For commercial installations, prevailing wage adjustments must be made, increasing costs.
• Permitting and Inspection: These costs can also vary by region. Installers often set a flat rate for permitting costs in a region, unless special circumstances are required by the local jurisdiction. 

Post-installation costs

String Inverter Replacement Costs 

The inverter, essential for converting your panels’ direct current (DC) into the alternating current (AC) your home uses, typically comes with a 10-12-year warranty. Solar energy systems have a useful life of over 30+ years, so it’s reasonable to assume the inverter(s) will need to be replaced at least once. If it fails during the warranty period, the manufacturer warranty may replace it free of charge, excluding installation labor. 

String inverters can typically run from $500-$2,000 depending on the unit. Microinverters on their own are less expensive, coming in around $150-$400 per.

Manufacturer warranties don’t normally include labor to replace defective units. Our research has found that inverters typically cost roughly $480 in labor to replace. If your solar purchase does not include a Solar Insure warranty, labor costs will likely fall to the homeowner.  

Maintenance and Repair Costs 

While solar panels are generally low-maintenance, occasional repair or replacement expenses may arise for damaged panels or inverters. Regular cleaning may also be required in some regions to ensure the system operates efficiently. 

Be sure to check your installer’s workmanship warranty to stay up to date on what is covered. If your project includes a Solar Insure warranty, labor costs are covered for covered claims. 

Homeowner’s Insurance 

Homeowners should add solar systems to their home insurance policies. While the systems come with warranties from the manufacturer and installer, those aren’t designed to protect against events outside anyone’s control; for example, weather. 

The cost will depend on the size of the system and the insurance company’s policies. A special note: contact your homeowner’s insurance company and ask about solar installation in general.

There have been cases where the insurance company has dropped their customers after not being informed that they had solar installed. These cases have mostly been reported in Florida, but it’s good to check with your insurance company when engaging in solar. Various costs could emerge from situations like this. 

Battery Storage ($5,000 to $15,000)

This is an additional cost if you plan to install a battery storage system. While batteries can be a significant investment, the need for batteries is becoming great. With more and more states moving away from full rate net metering, batteries are becoming essential to fully utilizing your power. 

Solar Insure provides a 30-year battery warranty that includes parts & labor for a $0 deductible on covered claims and hassle-free ownership transfer.

Battery replacement is available if capacity falls below a certain level. The monitoring software empowers installers to manage service calls and process claims efficiently. You can see battery manufacturers covered on the Solar Insure AVL list, found here. 

Financing Costs 

If you’re planning to finance your solar installation, remember to factor in the interest cost on your loan. Financing options include personal loans, solar loans, or a home equity line of credit.

On top of interest, many financiers charge “dealer fees” with their financing. These are costs added onto the total project price when financing. Depending on the financier, dealer fees may be a flat fee or may change depending on the interest rate of the loan. 

Grid Connection Costs 

If you plan to remain connected to the grid (for backup purposes or to sell excess power), there may be grid connection or usage fees. These are normally accounted for as part of permitting and are built into your project cost. 

Potential Roof Repairs or Upgrades

If your roof needs repairs or isn’t suitable for solar panels, you may need to factor in the cost of getting it ready for solar. 

Roofs typically have a lifespan of 15-30 years depending on the material used. Solar has a useful life of 30-plus years. If you’re going solar and your roof is older than 10 years old, it may be a good idea to replace the roof before solar is installed to avoid costly remove-and-replace fees down the road. 

The average cost to remove and replace solar panels for a reroof is between $200-$500 per panel. 

Decreased Efficiency Over Time 

Solar panels slowly lose efficiency over time. Many manufacturers guarantee around 80% performance after 25 years. This degradation can influence the overall return on investment. As energy needs increase over time, homeowners may want/need to add more panels or replace lower-producing ones. 

End-of-Life Disposal Costs (free to several hundred dollars)

Solar panels are typically warranted for 25-30 years but can last longer. When they finally reach the end of their life, there will be some disposal costs. Some manufacturers have take-back programs, but others don’t, and regulations vary widely.

New businesses are popping up aimed at recycling solar panels, and the market is growing as the solar market is aging. A recycling company is a great option for end-of-life disposal of solar equipment. 

Possible Upgrade Costs 

As technology advances, there may be costs associated with upgrading to more efficient systems or components. With the loss of full rate net metering in many areas, many homeowners are looking to add battery storage to their existing system. With the rise of electric vehicles, adding panels to accommodate increased demand is also popular.

Government and Utility Incentive Expiration 

While not a cost, the expiration of government incentives or net metering agreements can affect the overall return on your solar investment. It’s important to understand and factor in the terms and timelines of any incentives you receive.

Monitoring System 

Most modern solar panel systems come with monitoring software that allows you to track the system’s performance. Usually this comes in the form of a smartphone app from the inverter manufacturer or installer. 

Some monitoring systems allow for consumption monitoring, where homeowners can track how much power their home is using. This isn’t standard on all installations, and may cost extra depending on the installer.

Planning for The Future

While many costs are all baked into the front end of solar purchases, make sure to ask your installer about all the additional costs discussed above so you can plan for your solar lifetime. By planning and choosing an installer who gives you the best peace of mind and value for your system, you protect your investment and wallet.