Head of Sales & Operations
Director of Installers
Understanding Solar Cost Per Watt
March 2, 2019
In this week’s livestream, we go over a popular term within the solar industry, cost per watt.
Solar Panel Cost Per Watt. Also referred to as the Solar Price Per Watt or PPW.
What is Solar Cost Per Watt and How do You Calculate it?
Solar panel cost per watt is pretty simple. It’s your gross system cost divided by your system wattage.
Total System Wattage: Usually, you’ll see your system in terms of kilowatts (kW), so multiply that by 1,000 to get your total system wattage.
Gross System Cost: Make sure your gross system cost is your full, all-in cost before incentives and rebates.
All Solar Cost Per Watt really is, is a way to compare solar quotes. If you’re looking at solar quotes and don’t know what it is… stop and give us a call. Cost Per Watt is an important way to understand what you’re paying per unit.
Here’s that equation:
Solar Cost Per Watt = Gross System Cost / Total System Wattage
Let’s look into what determines solar cost per watt, what increases it, and what decreases it.
Example of Solar Panel Cost Per Watt for a Solar System
Three dollars per watt ($3/W) means that for a 5 kilowatt system, a common solar system size, the gross system cost will be $15,000.
Please note: Kilowatts shouldn’t be confused with kilowatt-hours, which is the metric to show you how much electricity your system produces.
For 5,000 watt systems, if you’re using a 300 watt panel, 17 solar panels will be used to make up that 5,000 watt system. That’s how we arrive at the total wattage of your system – the combined wattage of all the solar panels in the system.
Factors That Will Increase Solar Panel Cost Per Watt
This is a factor of economy of scale. An installer needs to roll a truck to your house whether it’s a 5 kilowatt system or a 20 kilowatt system. There’s fixed costs that go into this.
For example, the installer will need to pull a permit for your project, regardless of the size of your project. This fixed permitting cost will be more expensive for a smaller solar array, relative to the other costs.
The larger the system, the lower the installer can offer you on a price per watt basis.
There are certain added costs that may be included into the solar cost per watt. Adders will vary per installer. Some installers will include certain adders for free, and some will charge. These “little extras” are either added because of necessity or by customer preference.
Because these added costs don’t change your system size, but add to the total system cost, this will increase your project’s total cost per watt.
Some examples of adders include:
- Electrical work
- Roof work
- Electric Vehicle charger
- Interior conduit
Some installers will charge more for certain kinds of roofs. These aren’t heavy charges, but this different type of labor and different hardware will result in added costs to the price per watt.
In locations where certain roof types are uncommon, you’re more likely to see an added cost for a solar installation there.
Some examples of roofs with extra charges are:
- Spanish Clay Tile (common in California)
- Metal Standing Seam
- Flat Roofs
Ideally you’re working with a local installer, which is what Pick My Solar tries to pair you with. If, however, you live in a rural area and it’s a significant trip for any installer, you might have a higher price per watt than someone who lives in a more urban area.
Premium Solar Equipment
If you want premium equipment, it’ll come at a premium cost. You may need higher efficiency solar panels due to space constraints, or you may just prefer the aesthetics of certain solar brands. This will increase the solar cost per watt for your project. Toyotas and Ferraris don’t cost the same…
There are many great solar companies out there, but there are still a lot of companies that unfortunately practice certain sales tactics.
If you’re working directly with an installation company, the installer may give their salesperson the flexibility to charge you whatever they think you’re willing to pay. You may see your PPW increase from $3 to $6 per watt. There’s no fixed value for what a sales markup can be, but a significantly higher solar cost per watt can be a red flag regarding the quality of the company you’re working with.
For any large purchase, you shouldn’t only obtain a single project quote because you won’t have any basis for comparison. That’s really what Pick My Solar’s quote platform was born out of. We’re trying to fight the perception within the solar industry of “slimy” sales tactics. Obviously, every company needs to make a profit and sales markup will exist, but working with a platform like ours helps reduce this and ensure you get a fair quote.
Factors That Will Decrease Solar Panel Cost Per Watt
As mentioned previously – economies of scale. Larger systems will result in a lower price per watt.
Base solar panels (also called solar modules) are not bad solar panels. Pick My Solar’s most commonly selected solar panel brand, Hanwha Q Cells, is considered a base solar panel. Q Cells offers 18% efficiency, all-black options, and solid bankability – all great features to consider.
If you have the roof space, we’d recommend base equipment for you. With base equipment, you may need to add a couple more solar panels just to achieve the necessary production, but you’ll save money compared to higher efficiency premium panels.
This speaks to the importance of the Solar Panel Cost Per Watt calculation. If you’re going to increase your system’s number of panels, you’ll increase your cost. But this may be more cost effective on a per watt basis than opting for high-efficiency options.
Marketplaces like Pick My Solar create competition between solar installers for our homeowners. This naturally brings the price per watt down.
If you have your entire neighborhood ready to make the switch to solar, a solar company will be inclined to provide you all with a discount. If everyone’s in one area, less trips (and less costs to the installer) are necessary.