The cost of building a solar system in 2022

November 22, 2022

Photovoltaic systems are becoming increasingly popular in households. And with good reason: households with solar generators contribute to environmental protection, are less dependent on large electricity providers and lower their electricity bills. But how much does a good solar system cost? We have put together an overview for you here.

As you can see, the prices depend on the unit Kilowatt-Peak. In short, Kilowatt-Peak is the maximum energy output the plant can produce. The larger the system and the higher the efficiency of the individual solar cells, the higher their performance.

How much does a solar system cost?‍ 

Experts working on solar repairs in Brisbane or your locality can provide recommendations on the cost of a solar system based on various factors, which include the following:  

  • System Size: Larger systems with more solar panels will cost more than smaller ones.  
  • Energy Consumption: Higher energy consumption may require a larger system, affecting the overall cost.  
  • Quality Of Components: Higher-quality components often come with longer warranties and better performance but may also have a higher upfront cost. 

Installation Complexity: Factors such as roof type, orientation, shading, and wiring requirements can influence the installation process and, consequently, the overall cost.

Assumptions:

  • Average detached house with 100 m2 roof area
  • An 8 kW solar system, including solar power storage, covers the annual power requirements of four people and feeds the excess power into the grid for a fee.
  • Average sun exposure and an orientation angle of 30 degrees

In this situation, a solar system would cost around $20,000 (plus 19% VAT), although the price range can be very wide. In addition to this initial investment, there would be over $270 a year (net) for maintenance, repairs, insurance, etc. There are also additional costs for monitoring. The replacement of the battery after approx. 10-15 years of service life is not included here and would cost another approx. 8,000 $ at today's prices, although it can be assumed that prices will fall in the future.

If you take out a loan, you also have to pay interest. With financing costs of 3%, this results in costs of over $7,000 over 20 years. At 2% it would still be almost $4,500.

4 factors that influence the price of a solar system

It's important to consider the factors that influence the price of a solar system, so you can make well-informed decisions, maximize your investment, and ensure the system meets your specific needs. 

1. Origin & competitive pressure

The first important factor is the origin of solar cells. The solar cell was invented in the USA in 1954. However, the first cells at that time only had an efficiency of 6% and were extremely expensive to produce. Over the years, solar cells have become cheaper and more effective in energy conversion.

With the German Renewable Energy Sources Act in 2000 and China entering the market around 2008, the cost of small solar panels fell rapidly thanks to technological advances and mass production. Today, a solar system costs only a fraction of what you had to pay 20 years ago.

While the prices of solar systems have fallen sharply, technology has become much more efficient. Standard solar cells currently have an efficiency of 20-22%. This means they can convert up to 22% of the sun's energy into electricity. That doesn't sound like much, but: The sun's rays are free, clean, and infinite!

Anyone waiting for more efficient solar cells will have to be patient. Scientists in Germany, the USA and worldwide are currently researching new solar technology that would increase the efficiency of solar cells by up to 40%. Although it will probably take a few more years before this technology is also ready for the market, it will certainly dominate the competition because twice the efficiency means only half as many solar cells to achieve the same performance.

2. The feed-in tariff

For many homeowners, having their solar system is a financial investment. Why? Although solar systems are expensive, they can be used for over 30 to 40 years because solar operators reduce their electricity bills and receive feed-in tariffs for excess electricity. Hence, a solar system pays for itself after just 10 to 15 years. After that, households make pure profits for years.

‍But here comes the crux:

‍The government sets the feed-in tariff in the EEG (Renewable Energy Sources Act) variable. In 2004, the remuneration was still 57 cents per kWh. Currently, it is 8.20 cents/kWh (as of August 2022).

To maintain yields of around 6%, solar suppliers have had to lower their prices. Because with a low feed-in tariff, the high acquisition costs would no longer have been worthwhile.

It is interesting that the falling solar prices, in turn, reduce the feed-in tariffs again. The reason given by the state is that the cheaper the PV systems are available, the less financial incentive is needed to convince households to buy photovoltaics.

The consistent price reduction over the years has to do with the competitive situation and the government's decisions.

3. The type of solar cells

The third factor that significantly determines the price of the solar cell is the type of solar panel. The cost of the solar system is directly related to its performance. So when you buy a system, you must decide what type of solar cell you want. While the cheap ones cost less per solar panel, the expensive ones have the advantage of being more efficient. It would help if you had fewer cells to achieve your desired performance with self-generated electricity.

On the one hand, the dark, monocrystalline solar panels ensure high absorption of the sun's rays and consequently an efficiency of approx. 20-22%.

Polycrystalline cells, on the other hand, are easier to manufacture but do not absorb sunlight optimally. The efficiency of these cells is 15-20%.

‍Thin-film cells are very easy to produce but also extremely inefficient. With an efficiency of only 7%, thin-film cells occupy the last place in terms of productivity.

If you want to buy a solar system, think carefully beforehand about how high your desired output is and how much roof area you want to cover as a maximum.

4. PV grants

The US state is offering more photovoltaic subsidies and grants to advance the energy transition. If you, as a homeowner, take advantage of these subsidies, you can significantly reduce the costs of a solar system.

Examples of grants include the Illinois Solar for All Program and the New York State Energy Research and Development Authority (NYSERDA) grants.  

Net metering allows solar system owners to receive credits for excess electricity they generate and send back to the grid. Some states offer their own tax credits that can further reduce the upfront cost of installing a solar system but note that these may vary in eligibility criteria and amounts. Examples include the New York Solar Tax Credit and the Massachusetts Residential Solar Credit.

With so many options at the federal and state level, it is difficult to keep track of them. That's why we've researched for you and compiled the most important funding programs for each federal state. So you have all the relevant information at a glance.

Why buying a solar system is not always the best choice

Having your solar system is great. Nevertheless, you must not forget one thing: ownership not only gives you freedom but also risk and responsibility.

After the purchase, owners must take care of many other things: repair and maintenance, monitoring, replacing the inverter, replacing the 12v lithium battery, etc. In addition, the insurance must be taken out independently to protect in the event of damage. If something goes wrong, owners are otherwise on their own. Manufacturers or sellers of the solar system only help in rare cases. These costs quickly add to larger sums, especially when you factor in costly items like inverters and storage replacements.

Additionally, it would help if you considered the time you spend researching and hiring installation and maintenance companies. So when you convert that time into money, the cost is even higher.

On top of that, ownership is nerve-wracking. If you own a car, you know it. You must go to the MOT regularly, at least twice a year, to the workshop to change the tires and take care of the oil and petrol. If you own a solar system, you have to make and keep regular solar panel maintenance appointments and also worry that something will happen to the system. In the event of a problem, you will have to organize the repair and pay out of pocket. In addition, you will not be compensated for the downtime of the plant in the meantime.

Alternative: rent

A new trend has recently developed that offers homeowners enormous advantages: renting a solar system. On the one hand, there are no acquisition costs of several thousand dollars; on the other hand, tenants benefit from a complete service.

This means the company takes care of installation, maintenance, repairs and cleaning for a monthly fee. You don't have to worry about anything, and in addition to the service, you get free insurance that protects you from damage and breakdowns. This saves you time and nerves with your solar system.

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Carlos Diaz
I believe in making the impossible possible because there’s no fun in giving up. Travel, design, fashion and current trends in the field of industrial construction are topics that I enjoy writing about.

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