Will Solar Panels Get Cheaper?
September 25, 2023
But despite this incredible technology being around for so long, solar systems have remained generally expensive until the 2000s. Still, vast technological improvements have occurred over the years across solar components. And as a result, we’ve seen drops in costs across both residential and commercial systems.
Will solar panels get cheaper? Let’s take a closer look at past costs, current costs and future projections so we can better answer the question.
Are Solar Panels Becoming Cheaper? An Overview
Within the past 15 years, solar energy has scaled to a point where installing solar panels isn’t just a luxury for the wealthy. Now it’s much more common for medium-income households and a broad range of businesses to invest in solar panels and enjoy solar’s benefits.
These days, solar panels are less expensive, better quality and far more accessible. With rising national energy rates and a greater desire to gain energy independence, solar has become quite popular. And rightfully so!
However, every rose has its thorn.
In the case of going solar, inflation and supply chain issues have been the thorns. We saw a temporary increase in the cost of solar installations in 2021 and 2022. But overall, the cost of solar has been trending downward and has become even cheaper since 2010.
Now let’s look at some of the factors driving lower solar panel costs, including the impacts of the 2022 Inflation Reduction Act (IRA).
Will solar panels get cheaper in 2023? We’ll explore the question in a minute.
The Cost of Solar Has Dropped Substantially Since 2000
Thanks to rapid advances in solar technology, we’ve seen increased solar panel efficiency levels across the board. For one, SunPower® solar panels are some of the most efficient panels on the market — and we at Freedom Solar Power provide them.
But why is efficiency so important? Well, higher efficiency means that a single solar cell can generate more electricity. As a result, you see greater efficiency within each panel and then your solar system as a whole.
In turn, you need fewer panels to meet your energy needs, which saves you substantial long-term costs. Plus, you have a better chance of furthering energy goals like these:
- Gaining net metering credits
- Reducing your carbon footprint
- Generating excess energy to store in backup power solutions, like the SunPower SunVault and Tesla Powerwall
Why Has Solar Gotten Cheaper?
We’ll illustrate how solar has gotten cheaper:
- A 50-kilowatt (KW) solar system would have cost a homeowner an average of $11 per watt in 2000, or about $550,000 total.
- In 2010, the cost of that same system would work out to about $6 per watt, or about $300,000.
- In 2020, that same 50-KW system, with available incentives like the federal solar investment tax credit (ITC), would cost about $1.70 per watt — or about $84,000.
For clarity, a 50-KW solar system produces enough power to eliminate $600 from your monthly electric bill. In this scenario, a solar system quickly pays for itself and generates thousands of dollars in energy savings over its projected 25-year life span (a well-maintained system can last much longer).
However, the average cost per kilowatt hour (kWh) directly correlates with your solar panel system’s size. Regardless of size, the cost of a residential solar system decreased approximately 80% from 2000 to 2020.
And that makes solar a viable energy alternative for average energy consumers like you.
[Related: How Many kWh Does a House Use Per Day?]
Will Solar Panels Get Cheaper in 2023? Are Solar Panels Becoming Cheaper at All?
While 2021 and 2022 saw higher solar panel costs due to rising material costs and supply chain issues, most experts predict solar will get cheaper.
According to a November 2022 report by the National Renewable Energy Laboratory (NREL), extreme conditions in the solar market might have increased the installation cost of an average-size residential system (7.9 KW) by up to 15% by January 2023.
However, inflation is falling. More people are learning how to install solar panels thanks to Biden’s huge federal investment in alternative energy sources via the IRA. Supply chain problems are easing as well.
In 2019, before the pandemic and extreme conditions hit the solar market, Bloomberg predicted the overall cost of solar would drop by 34% by 2030. With available tax credits and relevant solar rebates and incentives, you’re looking at some serious savings!
The bottom line is that solar panels will continue to get cheaper.
The 2022 IRA
As a refresher, Congress passed and Biden signed the IRA in 2022.
This legislation expands the solar ITC to 30% and keeps it in place through 2032. After that, the tax credit will decrease and possibly phase out altogether.
In sum, the IRA creates 10 years of relative certainty in the solar market.
The sustained 30% tax credit lowers installation costs and makes solar panels more affordable for the average homeowner. What’s more, solar installers can hire more staff, and manufacturers can more safely make long-term investments.
This growth and stability will likely translate into further future cost savings!
Don’t Wait To Go Solar
If you’re considering going solar, you need to determine your energy needs and goals, then choose the right system size. Particular states provide additional rebates and incentives to reduce the cost of a solar installation, which you’ll also need to explore.
But remember: If you wait too long, you might lose out on the 30% solar tax credit! Incentives come and go, so now is the time to move.
Featured image via Pixabay