Photovoltaic Solar panels cost has been diminishing drastically in the past years and is expected to continue its down slope for some time; the cost of solar panels is a variable that actually depends on the time, place and scale of your solar panel installation.

The great reduction witnessed in solar panels cost has been driven primarily by consecutive technological breakthroughs in the production of solar cells and the improvements in the manufacturing of solar panels. In addition, the need towards green energy has driven an increased use of renewable energy sources, and particularly solar energy technologies within the global energy chain. To facilitate penetration of Solar Panel Installations in the production of green energy governments have given various green incentives to make solar energy more affordable and attractive and stimulate demand for solar panels. Solar energy companies have acknowledged both the need towards green solar energy and the opportunity to explore both solar energy and financial incentives in a fast growing market. Solar energy installers and solar energy companies compete in a very competitive environment (national and global) driving the aforementioned drop in solar panels cost.

Solar panels cost – solar panels revenue

residential-solar-panels-costSo what is currently the cost of solar PV panels? – In a very simplistic approach, current overall cost figures in 2012 range between $1700-$2500 per Kw of installed photovoltaic (PV) panels (installed capacity). However, when it comes to estimating the cost of solar panels for a specific solar panel installation (e.g. residential solar panels or for a commercial power plant) one needs to consider other factors apart from direct ‘purchase’ cost per kw. Other factors influencing the overall solar panel cost include the efficiency and life expectancy of the solar panels, installation costs including actual installation of the solar panels and electrical connections, additional equipment required such as inverters, batteries and cabling. Of course, financial appraisal of a solar panel installation requires that we also consider income factors on a net cash flow statement together with related costs. The income from installing solar panels (see pros and cons of solar PV panels) is very much dependent on a range of factors that can actually make a project financially viable or not.

Income from solar panel installations – Photovoltaic (PV) panels

solar-panels-incomeApart from the Solar Panel Efficiency which is given by the solar panel manufacturer, income from installing your home solar panels will depend also on your location’s climatic and morphological conditions (solar radiance – solar potential, environmental conditions, solar panel orientation, whether solar radiation is obstructed etc.),and on the financial incentives scheme applicable to your solar panel installation. One need to consider that as solar panels costs diminish so is the required scale of financial incentives (e.g. FITS – Feed-In-Tariffs) that aim to make solar energy installations more affordable or financially viable and profitable. For example, the Feed in tariffs in an EU member state has changed from €0.35 per KWh in 2010 to €0.28 per KWh in 2012; i.e. in two years FITs has reduced by 20%. This reduction in TIFs actually reflects the reduction in overall solar panel costs. In addition to FITs, you should also consider that certain subsidy schemes have different options and requirements depending on the type of solar panel installation. For example incentive schemes for home solar panel installations allow for smaller sizes of installed capacity (wattage) and a higher rate of FIT per kwh produced than the schemes for commercial solar energy installations. In addition, non-residential solar panel installations may require additional investment costs on the installation site (e.g. requiring special fencing, a small power station etc.) driving the overall cost upwards.

Additional solar panel installations costs

solar-panels-installation-costsDifferent solar panel companies offer various alternative solutions with respect to efficiency, life-expectancy, and size; e.g. a 1 kw solar system can be achieved by different panel sizes altering the overall surface area required for the installation. It may be comprised by 8 panels of 125 W or 5 panels of 200w, or 4 panels of 250w, etc. In all different solutions you should be able to gather comparable solar panel cost information in order to be able to compare different solar panel solutions.

For home solar panels installations you can have roof-mounted or land-mounted solutions, with the former, if circumstances allow it – e.g. south facing, unobstructed solar radiation etc, can be a preferable solution as it takes advantage of otherwise unused space on the roof, leaving ground space unaffected. In general, the most suitable and more cost effective solution regarding where panels are mounted will be case specific subject to custom circumstances (e.g. if roof is strong enough for installing PV structures, if there are other installations such as solar water heaters, chimneys or trees obstructing solar radiation).

solar-panels-trackerTracking systems are special installations that can track the solar projectile, increasing the exposure time of solar panels to the sun, thus increasing production and efficiency of solar panels. However, solar panel tracking systems can only (in most cases) be installed on ground-mounted PV installations and they have a considerable cost; it is thus advisable that, before deciding upon tracking systems, you should perform a cost-benefit analysis for your specific case.

The PV panels’ circuit will need batteries and inverters for storing electrical energy and converting it to alternating current. They are both expensive equipment that certainly have an impact on solar panels efficiency and overall performance of solar panels.

solar-panels-fencingMost non-residential ground mounted solar panel installations will require site fencing and, depending on the size of installation, a small power station. Apart from site fencing, you may also wish to explore other protective mechanisms in order to protect your investment, such as security cameras for surveillance in closed circuit and insurance. If you are installing PV panels under a FITs plan, apart from insuring your solar panel equipment, you may also find useful to ask your insurance company for insuring your income from generated solar panel electricity.

Depending on the scale, location and type of your solar panels installation you may need to issue a Planning permission for the local authorities – this is usually a procedure that has a small fixed cost (fee) for small scale applications – However, larger scale solar panel installations have higher licensing costs because they usually require additional documentation in issuing a license for installation (e.g. assessment of environmental impact from the solar panels installation, etc.)

Though solar panels do not impose any serious operating expenses (as compared to other technologies incorporating more moving-mechanical parts), yet cleaning and maintenance expenses should be considered on a minimum basis to secure frequent and effective cleaning of the panels. This will help increase solar panels’ efficiency and production rate while it will also help prolong the solar panel’s life. Maintaining clean solar panels at peak production times will pay off through your FITs income scheme.

Considering these factors, it is easily understood that while making a decision for your home solar panels it may be a good idea to consult with a certified solar panel installer for assistance and professional advice.

Assessing financial viability of solar panel installations- recap.

Some important figures for estimating solar panel costs and income from your home solar panel installation are summarized below:

  • Overall (Average) Solar panels cost for 2012 ranges between $1400 – $2000 per Kw of installed capacity (average Solar panel cost per kw). This figure includes purchasing the equipment and cost for solar panel installation. Smaller home solar panel installations may cost you more per kWp whereas larger solar panel installations (e.g. 50kw – 150kw) will cost lower due to economies of scale. Utility scale solar power installations’ costs are not mentioned herein (see solar panels for home).
  • Initial investment (basically quoted above) includes purchasing of the equipment and associated installation costs. Solar panel companies and solar panel installers will quote different prices for equipment and for the associated customized installation services; In comparing alternative solutions it is advisable to gather several quotes for comparison and to make a detailed cost analysis for both costs and generated income.
  • Average annual Energy produced per Kw – the annualized average energy produced per Kw ranges between 1500kwh-1750kwh (figures are from actual installations in southern EU and California solar conditions).
  • Simplistic estimation of FITs income – For a solar panel installation under a FITs scheme of €0.28c per kWh you will receive on average 1650 kwh x 0.28 €/kwh = approx. €462 per year per kW installed. i.e. a 5kw home solar panels system will generate 5x€462 =€2,310 per year.

In assessing the financial viability of a solar panel installation one should not only consider overall total investment (cost) but the overall system’s performance and ability to generate cash flows across its projected life-span. Therefore, the most valuable solution amongst alternatives may not necessarily be the one with lower initial investment if it yields a higher output, or if it lasts longer enough to off-set its extra cost; the most valuable solution is thus decided by considering all factors mentioned above.

(* Solar panels cost and FITs may vary amongst different countries and states – figures used have been sourced from EU member states 2012)

You may also see – related: solar energy pros and cons

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  1. Dear EnergyPub.

    A good report. Some figures you have entirely missed.

    The new wave of developments in P_V (Photo_Voltaic) panels you have ignored. This is the Ultra-Thin-Film-Spray-Applied (Paint-Style) applications which associates of ours have developed as a spin-off from nano-particle developments. These applications applied by spraying an under-coat and top coat membrane – each of which is barely 2 mm thick – can be applied to any surface new or old and has been granted an innovation impetus statement for development.

    The applications of these are so wide as to be mind-blowing. imagine a factory roof that can be sprayed with this: or a dam wall: or a road-cutting/embankment: or a water treatment works: or a bridge (Pont du Nord, Millau Viaduct, Forth Railway Bridge etc. Imagine the Eiffel Tower being protectively coated this way: or the Birds-Nest Stadium (Beijing) and even now the Stadia in Qatar for the World Cup! Take it further: imagine every ship being covered with this (for this is also a protective paint system!)

    Is there a draw back? Of course there is: it is cheaper by 65% than the current systems to install as retrofitted systems to such wide-ranging structures: some disadvantage therefore? And when applied to new installations less than 40% of the current systems: another disadvantage? But you may add what is the output per area covered? It delivers the same output per square metre as it stands in the current frame of things, and as the developers have said the horizon for outputs is increasing and a further 20% is envisaged in the full development by 2021.

    We are so mind-setted to the notion that we are used to existing practices that as in your report you retell things of the past (and correctly so) without addressing the future (which indirectly you have done) that we are some times missing the developments of the future. As this system breaks ground through its proposed setting up in Malta and Turkey and is scheduled to be invited to place details on a major facility for the MENA area then the future is beyond the current systems. Whether this will mean the end of plate like thin-film P_V systems as we know them today is not for the discussion here but with a future cost of a third of the current systems “Money Talks!” This is identical in an analogy we have seen for wind energy systems where a company has developed a system that is 30% more efficient than the current bladed system and is being marketed at just under 50% the installation cost. It is likewise the same with other renewable energies and fuel systems whereby the perception is that because everyone looks through “ “Green- Tinted” Glasses ” they assume that being “Green” should always be a euphemism for Costing More! How wrong this notion is!

    So what then should be reported here? An amendment and a new blog?

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