Quite a few homeowners may be waiting to get solar panels installed on their homes.
Rumors of lower solar panel prices and higher efficiency solar panels might make waiting seem like a good idea. However, taking a closer look into this situation reveals that waiting may not be financially beneficial. Let’s take a closer look at efficiency and pricing expectations.
#1 Solar Cell Efficiency
Solar cell efficiency has improved very slowly over the past few decades. Thousands of engineers and scientists have been working for years on improving current technologies. In this industry, an improvement of 1 percent is considered quite an achievement. There are always news stories about potential breakthroughs in solar efficiency yet none of these new ideas have been taken to market. Even a doubling of efficiency levels would not have a drastic effect on overall pricing because solar panels are only about a third of the total cost of solar.
#2 Solar Panel Prices
Those not familiar with the residential solar power industry may assume that the majority of the cost of going solar lies in the cost of the panels. As just mentioned, panels only represent one third of total costs. Another third goes to the inverter and other materials with the final third being interconnection, permitting, and installer fees. So, again, if solar panel prices decrease, this represents a decrease in only one of the three cost categories. Also, panel prices have all but bottomed out. Installer and red tape fees may drop a bit in the future. Affordable, local installers already charge reasonable rates.
Time for an example.
Going Solar Now
Currently, the national average for affordable solar installation is about $3.50 per watt. The average install size is 5,000 watts. So the price would be $17,500 before tax incentives or local rebates. This is a realistic price point for millions of Americans choosing to go solar now.
Waiting 3 Years
Let’s consider a realistic example of where pricing may be 3 years from now. Taking into account the effects of a slow increase in efficiency levels and minor reductions in panel prices and install rates, we might be looking at a $3.00 per watt charge as a national average in 3 years from now.
In our example, a homeowner pays 15 cents per kilowatt hour, which millions of Americans pay (many pay much more than that). 15 cents is an approaching average for the country. This homeowner requires a 5,000 watt solar panel system to offset a very high percentage of electricity costs.
The homeowner in question has decided to wait 3 years to go solar. During the first three years, the homeowner continues to pay conventional electricity prices. At 15 cents per kilowatt hour for an average of 800 kilowatt-hours per month, the monthly electric bill is $120/mo. After 3 years the total is $4,320. This person can now go solar for $3.00 per watt, our future pricing speculation. So the cost of solar in this case is $15,000. Total cost is the $4,320 paid for conventional electricity while waiting plus the 15k which is a total of $19,320.
1. Go solar now cost – $17,500
2. Wait to go solar cost – $19,320
So based on this very likely scenario, it does not make sense to wait to install solar panels. Here’s another post on the discussion on why it makes sense to – buy solar panels now.
Again, this example is obviously based on a small amount of speculation. However, it represents a very likely scenario of where prices should be 3 years from now.
The bottom line is that solar power is now cheaper than conventional electricity from your utility, so the sooner you go solar the sooner you can start saving money.