Solar Panel Cost: Why Are Solar Panels So Expensive?

With solar systems costing around $16,000 you might be wondering why solar panels are so expensive. You might also be wondering if they are worth the investment. We have put together our guide below to share why the cost of solar panels is pretty high and if a solar panel installation is worth it or not.

Keep reading to learn why solar panel cost is so expensive.

Production Costs

When a solar panel is being built there are plenty of different materials that go into the build. Many of the processes are expensive and complicated. One example is, if the solar cell is made up of silicon which is a material that is widely available, it takes a lot to refine it to a stage where it is possible to use it in a solar cell.

Another material that is necessary is photovoltaic cells because this is what converts the sunlight absorbed into electricity. Producing these cells requires using high-precision machinery and also expensive silicon wafers.

Other raw materials that are needed for production include glass and metal which also impact the overall cost of solar panels. Special equipment is needed in order to manufacture each panel because the process itself is complex.

Research and Development

Another reason that solar panels are expensive is because of all the money that goes into research and development. Trying to make the panel as efficient and as cost-effective as possible takes a constant amount of research. Unfortunately, these costs are passed on to the consumer making the systems a bit more expensive.

Solar Panel Installation

Something else that drives the price of solar systems is installation costs. The person that installs your system needs to know what they are doing. They will usually charge according to their experience.

In some homes, your entire electrical system will require modifications which will increase the price. If your home needs some type of special equipment to sit the panels correctly this will also increase your final price.

Also, you need to take permit costs into consideration because this is something else that will be added to the price of your installation. Your installer might have a package deal where the permits are included with their total price.

Make sure you ask about permits when you are shopping around for an installer. You can go here for solar installations to look for a reputable installer in your area.

Limited Economies of Scale

In comparison to other energy sectors like oil and gas, the solar panel industry is pretty small. Because of this, the economies of scale that typically lead to lower costs for larger industries have not yet fully developed in the solar panel market, so it drives the price for solar up. Thankfully, as the industry continues to grow, economies of scale will become more prevalent, leading to a decrease in solar panel costs.

Government Regulations

Sometimes regulations and taxes from the government can increase the cost of solar panels. Here in the United States, the federal government charges an extra tax on solar panels that are imported, which drives the cost up. Also, certain states and local counties charge extra fees or have certain regulations on system installations.


One of the main benefits is that you will receive much lower electricity bills. Although the initial cost is high, once you install your system you will generate your own energy and this is going to reduce your dependence on being hooked up to the grid. You will either see a very small electricity bill or no bill at all, depending on how much sun your panels are absorbing.

In some states, if you produce more electricity than you consume you can actually get credits on your electricity bill for future use, or you can get paid for the extra power generated. Another benefit is that you will help increase the value of your property.

Buyers are a lot more attracted to a home that already comes with solar installed because they see the potential of saving money on their electricity without having to pay for the solar installation. Who knows – your home might also sell a lot faster than another one in your neighborhood because of your solar.

Another benefit is that using solar power helps reduce greenhouse gas emissions. Every time we burn fossil fuels in order to create electricity, carbon dioxide is released along with other harmful pollutants. The pollutants unfortunately add to the issue of climate change and of course air pollution.

One last benefit worth mentioning is that solar energy is a renewable and sustainable source of energy. It uses the rays from the sun to create electricity, and as long as the sun continues to shine, we will always have access to this energy source. Unlike fossil fuels, which are finite and will eventually run out, solar energy is virtually unlimited.

Feeling Like a Solar Panel Cost Pro?

Now that we went over the reasons why solar panel cost is high and the benefits of moving forward with a solar panel installation you can make an informed decision about whether solar is right for you or not. Keep in mind that if you opt to go this route you will be helping the planet in the long run because of all the clean and renewable energy you will be making.

Did our blog post come in handy? Make sure you keep browsing this section for more guides.


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