Solar panels are a practical investment. The price of solar energy systems has dropped by 8% since 2016. Prices are about to decrease some more as technology undergoes further refinement. Additionally, solar power can go down to $1.33 AUD per watt after government rebates.
Solar panels, however, still command a significant overhead for residential and commercial applications. So, there’s a question on everyone’s minds. Why are solar panels expensive? The reasons may not be what you think they are.
Breaking Down the Cost of Solar Panels
For residential solar installations, every solar panel cost has some crucial price components. These are crucial to the unit but, at the same time, make them more expensive. They split into two categories: hard costs and soft costs.
Solar panels, batteries, and components in the system make up 25% of the installation price tag. Hard costs refer only to the hardware price, and this is not too much. Most of the cost comes from the soft costs – the non-hardware cost with solar panels.
Understanding Solar Soft Costs
So, what are these soft costs? Many businesses have expenses unrelated to the product they sell to you. The solar community is no different.
Some of these soft costs include:
- Permits and certifications
- Overhead costs
- Labour and employment salaries
- Marketing and sales
- Taxes and margins
All these soft costs make up around 75% of the total cost of the installation.
Breaking Down Solar Panel Soft Cost
Marketing and sales can cost up to 20 percent of the price of the solar panel installation. As there is steep competition in the solar industry, knowing how to reach customers is crucial.
Overhead costs in your solar installations refer to the operational costs of the business. It can include solar monitoring, maintenance, repair, and even insurance costs. This can be up to 20 percent of the cost.
Labour and employment costs will take up around 10-15% of the cost of a solar installation. While many solar companies are small owner-operator businesses, many need to hire certified people. Engineers and electricians are not cheap to hire, together with a legion of labourers.
Taxes and margins can be steep too. Every business has to pay taxes and needs to have a margin. At 15-20%, this helps your small business solar company keep afloat and keep up with demand.
Permits and certifications are vital in the business. State governments need companies to secure permits and find certified installers. This costs between 5-10% of the solar installation cost, which is a must-pay cost.
Is Solar Worth It?
The price ranges of solar panels in Australia go down due to the changes in hardware. Some newer, more inexpensive brands can cut down on the price of the installation. It’s vital to know for yourself if the brand of the panel is worth the extra cost.
The average cost of a solar panel installation for a good quality Tier 1 solar panel can vary. Prices can be around $3,000 for 1.5 kW solar systems up to $9,000 minimum for 10 kW panels. Prices change according to the number of panels and the system capacity.
If you’re an average consumer, it’s a big chunk of money. Even with rebates, you’re looking at a steep investment for your home. It’s best to assess if the cost of the investment with solar analytics and estimates.
Even then, solar panels are worth it. Over its lifetime, a solar panel can pay for itself in electrical savings. Some can even get rebates for on-grid power return.
What makes it a significant investment, however, is your contributions to the environment. You’re reducing your footprint by thousands of kilos of carbon dioxide when you use solar. It helps in the grand scheme of things and will save you a good chunk of money.
Why are Solar Panels Expensive?
For homeowners looking at the value of solar energy, the key question is: Why are solar panels expensive? Solar panel installation is a growing industry and, like any business, there are costs to both the market and install the technology.
Even then, solar panel installations are worth it in both long-term savings and eco-friendliness. Looking for the best solar prices? Talk to Aztech, and we’ll show you how we can give you the best installation.