How Much Is the Cost of Solar Panel Installation at Home?


A lot of householders who are planning to go solar, want to know the installation cost of the solar panel.

Let us look at the breakdown of hard costs vs. soft costs linked to the installation of residential solar panels.

What Is the Average Installation Cost of Solar Panels?

The average cost of solar panel installation is calculated by adding the panel cost and federal tax incentives. Smaller panels come at a low cost than larger panels. In addition to it, the cost also includes labor costs, cost of operation, maintenance cost, and cost of additional equipment like inverters. In addition to it, there are a few more factors that impact the installation price of solar panels.

  • Federal and state incentives
  • Electricity needs
  • Selection of panels
  • The place you live
  • Buying options

Hard Costs for Housing Solar Panel Installation

To arrive at the solar panel installation cost for your home, you need to assess the cost of hardware or the physical products required to install a new solar panel system and keep it in running condition. The hardware products include solar panels, solar mounting racks, inverters, storage batteries, etc.

The cost of solar panels accounts for 25% to 30% of the total cost of a solar panel system.

The other hard costs are:

  • A solar inverter accounts for 10% of the total hard costs
  • Electrical equipment, and solar mounting that accounts for 10% of the total hard costs

Soft Costs of Solar Panel Installation

The soft costs of solar panel installation include the cost of administration for the firm, acquisition of customers, marketing, permits, fees for grid connection, system design, and labor charges.

You may notice that the soft costs are low, but they add up over some time. The Solar Industry Information Association (SEIA) has come up with a report that shows that soft costs contribute to around 68 % of the total solar panel installation cost.

To some extent, the soft cost is a part of executing a business. Solar companies have to pay employees to entice new customers and earn a profit. The Department of Energy’s Solar Energy Technology Office has launched an initiative “Sunshot” in the year 2011. The purpose of this initiative was to put solar energy on par with other sources of energy by 2020.

Various laws and permitting entities throughout several jurisdictions can reduce the solar installation process and increase costs. They also account for research for methods to streamline operations of solar companies.

Improved processes and software assist solar firms to reach new customers. It will help in smooth execution and reduce soft costs too. All these efforts help in passing savings on to solar customers.

How much does a solar panel save?

When you choose a solar energy system, it can reduce your utility bill by around 75%. The savings that you get depends mostly on the place you live, the climate in your area, and your specific energy requirements. A majority of solar energy firms provide a free of cost calculator to easily estimate the installation cost and money savings on your home.


The cost of installation of solar panels depends on several factors. It can be different from one state to another. By considering all the above factors, you can easily compute your solar panel installation cost.

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