What Are the Most Efficient Solar Panels?
If you’re looking for the best solar panels, efficiency can be a good metric to consider. In this blog, we’ll explain what exactly solar panel efficiency means, and we’ll also share the brands with the top ten most efficient solar panels.
What Does Solar Panel Efficiency Mean?
The efficiency of a solar panel is the percentage of the sun’s energy the panel converts to electricity.
For example, let’s say the sun shines the equivalent of 1 kilowatt (kW) or 1,000 watts on your solar panel. Your solar panel converts that energy into 200 watts of electricity that you can use to power your home or business. This panel would have an efficiency of 20%.
Most solar panels today are between 17% to 19% efficient. The least efficient panels will be around 15% efficient, and the highest are just shy of 23% efficiency.
The more efficient your solar panels, the more electricity your system will produce. In some cases, installing panels with higher efficiency means you can install fewer panels and still meet your electricity needs. This can be helpful with space concerns. However, it’s often the case that the more efficient the solar panel the more expensive they are as well. Typically, a higher quantity of less efficient panels will be cheaper than a smaller quantity of high efficient panels, even if the total system size is the same.
Why Aren’t Solar Panels 100% Efficient?
The most efficient solar panel comes in at 22.8%. That number can seem underwhelming. But the sun gives off such an immense amount of energy that even capturing a fraction of it can generate enough electricity to power many homes, businesses, and farms.
The efficiency of a solar panel is limited by the type of energy the sun produces. This energy falls across a large spectrum. Just like only a small fraction of this energy is visible to humans, present-day technology allows for only a portion of it to be converted into electricity with solar panels. Research and development teams at solar panel manufacturers are continuously working to harness a larger percentage of energy on that spectrum, which leads to increased efficiency of their panels.
If solar panels continue to get more efficient, you may wonder whether you’d be better off waiting until technology advances a bit more. But most people won’t be better off, as the small incremental gains in panel efficiency won’t make up for the months or years of free energy you’re missing out on.
The Ten Most Efficient Solar Panels
Here are the brands that offer the ten most efficient solar panels.
| Manufacturer | Solar Panel Model/Series | Efficiency |
| SunPower | X Series | 22.8% |
| LG Solar | LG NeON R | 21.7% |
| REC | Alpha Series | 21.7% |
| Jinko Solar | Tiger Pro | 21.4% |
| Canadian Solar | Series 7 | 21.4% |
| Trina Solar | Vertex | 21.1% |
| LONGi Solar | Hi-MO4m | 20.7% |
| Panasonic | 340N HIT | 20.3% |
| Q Cells | Q.PEAK DUO | 20.2% |
| Solaria | PowerXT | 20.2% |
While efficiency can certainly be a valuable metric when selecting the solar panels for your system, it shouldn’t be the only thing you take a look at. A high-efficiency percentage isn’t the only indicator of a high-quality panel.
You should look at the duration of the product and performance warranties offered by the manufacturer. You should also take into account what size (60-cell vs. 72-cell) and what type (monocrystalline vs polycrystalline) of solar panel best suits your installation budget, available space, and aesthetic style.
In addition to installing both the high-efficiency LG Solar and Q-Cell panels, we’re proud to install Axitec panels, which come in with efficiency ratings at 17.9%.
While not high enough to crack the top ten list, this brand creates high-quality, well-warrantied panels in a variety of sizes and types. Depending on the specifics of your system, you may be better off installing panels from this brands, even if that means a few additional panels.
What Factors Cause Variations in Panel Efficiency?
The solar panel efficiency rating you’ll see advertised on the manufacturer’s website or the solar panel’s spec sheet won’t always be the real efficiency level of your panels once they’re installed.
The number advertised by the manufacturer is the panel’s efficiency under standard testing conditions. These are lab-controlled conditions that stay constant across the industry to account for any possible variables. Ratings and measurements that are taken under standard testing conditions make it easy to compare products, but these conditions aren’t always replicated out in the real world.
Here are a few factors that could cause your solar panels to produce less electricity than what’s predicted by the spec sheet.
Irradiance is how much energy an area receives from the sun. The greater this number, the more electricity your solar panels will produce. Variations in irradiance reaching your solar system can occur due to the tilt of the panels, the seasonal variations in the sun’s location in the sky, and weather patterns.
The optimum tilt will vary depending on where you’re located. If you install a system at a higher latitude, you’ll be better off installing your solar system at a higher degree tilt. If you’re closer to the equator, you’ll have a more efficient system the flatter it is. As a rough rule of thumb, the degree tilt of your solar system should about match your latitude.
The sun’s rays hit the Earth differently as seasons change. The northern hemisphere gets the most direct sunlight during the summer, and the least during the winter, due to the Earth’s tilt on its axis. The more direct the sunlight, the more electricity your solar system will produce. During the summer months, your output will be higher than during the winter when the sun sits lower in the sky and the days are shorter.
Weather can also impact irradiance. Clouds, be them white and fluffy or dark and stormy, can stop sunlight from reaching your solar panels. This will impact how much electricity your solar panels generate.
You might think summer is the time of year your panels are most efficient. However, when it’s cooler out, your solar system produces more voltage and more electricity. As temperature rises, your panels will generate less voltage and will become less efficient. For each degree below standard testing condition, your panel will become about ½ percent more efficient.
Dust, Dirt, and Shading
Anything that blocks sunlight will hinder your solar panels’ production. A thick build up of dust and dirt, especially if you live in a dusty area prone to droughts, can cause enough blockage to negatively impact your solar system’s production. Depending on how thick this layer of dirt is, and how often your area gets rain showers, you may be better off cleaning your panels.
In addition to dust and dirt, shade from nearby trees, buildings, exhaust fans, or even mountains or hills can reduce your solar system’s production by blocking sunlight from reaching your panels.
Getting the Best Solar Panels on the Market
The more efficient a solar panel is, the more electricity your system is capable of producing. That’s an attractive prospect when choosing which solar panels to install. You want to optimize the energy you produce with the space that you have.
However, efficient solar panels are also more expensive, and efficiency shouldn’t be the only factor you consider when choosing a panel. Wattage size is a very important factor when trying to optimize panel production. Additionally, the price, quality, warranty, and panel type are all things you need to take into account as well.
Your solar installer will be able to help you determine which brand and type of solar panel will be best for achieving your production and financial goals.
Solar Panel Efficiency: What Does It Really Mean?
When you review the technical specifications of solar panels, their efficiency values may give a negative first impression. As of 2021, monocrystalline solar panels are in the range of 20-23%, while polycrystalline panels are below 20%. However, conversion efficiency is not a critical factor when using sunlight. a free and virtually limitless resource.
Save on electricity bills and cut building emissions with solar power.
On the other hand, when the energy inputs for power generation are fossil fuels, efficiency becomes much more important. Coal power plants are typically 30-40% efficient, while combined cycle gas plants are around 50-60% efficient.
- These generation systems have a higher efficiency than solar panels, but looking only at this metric can be misleading.
- Solar panels are less efficient in terms of energy conversion, but their input is free and they operate with zero emissions.
Solar panel efficiency is only an issue when space is limited, since you may not reach the planned capacity in kilowatts. The solar panels used in commercial and industrial roofs have typical dimensions of around 80” x 40”, and the most efficient models exceed 400W. If you want to install 400 kW, you need 1000. this represents more than 22,000 sq.ft. for the solar panels alone, plus the spacing required for maintenance purposes.
What Determines Solar Panel Efficiency?
The top solar manufacturers are constantly investing millions in research and development, with the goal of improving their photovoltaic cells. However, this has paid off over time:
- Back in 1990, solar panels could only convert around 10% of sunlight into electricity.
- As of 2021, the most efficient solar panels in the market are approaching 23% efficiency.
- In other words, solar panels can now produce 2.3 times more energy with a given space, compared with how they performed 30 years ago.
The efficiency of solar cells is determined by the photovoltaic material, and also how the module is wired and designed overall. Monocrystalline cells are more efficient, since they’re made of single silicon crystals of high purity. On the other hand, polycrystalline cells are made of multiple crystals, and this impacts their efficiency.
This does not mean that polycrystalline solar panels have a lower quality. They have a lower conversion efficiency due to their material properties, but there are high-quality solar modules of both types.
What Are PERC Solar Cells?
Many of the top-performing panels that are currently available use PERC technology, which increases productivity by up to 12%. PERC stands for Passivated Emitter and Rear Contact, and these cells have many design features that boost their efficiency.
- PERC cells have a reflective layer below them. sunlight that goes through is reflected back into the photovoltaic material, generating more power.
- They also have anti-reflective coatings and surface textures that maximize the sunlight captured and converted into electricity.
PERC cells are often cut in half to reduce their electrical resistance losses, further increasing their power output. You will notice that many solar panels are now using 120 or 144 half-cells, instead of the traditional 60-cell and 72-cell designs. Since solar cells are cut in half, their total space requirements are almost the same and panel dimensions are not affected significantly.
How High-Efficiency Solar Panels Save Space
As the efficiency of photovoltaic cells continues to increase, solar panels will be capable of generating more watts per square foot.
- A 400W solar panel that measures 80” x 40” is producing 18W per sf.
- With an efficiency increase of 33%, it would be possible to generate 24W per sf.
Generally, having space for solar panels is not an issue in buildings like shopping malls and distribution centers. However, multi-story buildings have a large floor area relative to their roof area. and plenty of the available space is already used by HVAC equipment. In these cases, high-efficiency solar panels will maximize the kWh output per square foot covered.
RD has also reduced the cost of solar panels. You could expect to pay more than 10,000 per kW of capacity 20 years ago, but now home solar systems cost less than 3,000 per kW in many parts of the US. Even lower are possible in the utility sector, where solar arrays are being installed for less than 1,000 per kW.
The Best Performing Solar Panels in 2023
If you are considering going solar, you may have noticed that there are different types of solar panels, different power outputs they can produce, as well as different efficiency levels. In considering the system you need and which type of solar panels to install, efficiency is the key. Efficient solar panels may cost more but will produce more electricity as well. So, let’s dive in and see which type is the most efficient solar panel.
What is Solar Panel Efficiency?
A solar panel efficiency means the percentage of sunlight power that the panel can convert into electricity. The solar system works to convert photons (the light) into electricity, and all of them combined can produce much. But just how much depends on how efficient the solar system is.
A 20% efficiency means that you will get around 200W of power for every 1000W that falls onto your solar panel. It also means that you will get 400W out of every 2000W that falls onto the panel. The best solar panels available on the market today have around 22% efficiency.
When you are designing a solar panel system, understand that this efficiency is already included in the specs of your solar panel models. That means that a 15% and a 20% efficient 10kWh solar array will both produce the 10kWh of power that they are certified to. The catch is that the less efficient solar array will take more space on your roof.
Furthermore, more efficient solar panels will cost more money. If you want to install solar panels and the space is not a problem, then going with a slightly less efficient system will save you a lot of money and make your solar investment pay off more quickly. At the same time, if you are pressed for space, but money is not a problem, going with the most efficient solar panel is the best thing to do.
While some people may enjoy having fewer solar panels in the sunniest part of their roof, others may enjoy solar power coming from a multitude of panels. If you are a large real estate owner in Texas, you may go for less efficient panels, but if you have a small house in Connecticut, you may want to save space and get ready to invest a little more.
How do you Calculate Solar Panel Efficiency?
To calculate solar panel efficiency, take a look at their specifications. Every solar panel will have a detailed specs page or a label where you can find a solar panel efficiency rating. In general, solar panels can be anywhere from 9-23% efficient, depending on the type of the panel and the materials they are made of.
Monocrystalline panels in general are the most efficient solar panels. Monocrystalline panel’s efficiency can go anywhere from 15-23%. These are panels made of single crystal solar cells. The single crystal offers the electrons more space to move and reduces the resistance. The solar efficiency of these panels is currently the top among commercial solar panels. They have a lifespan of around 25-30 years. They are perfect for limited roof space, as you need fewer panels.
Polycrystalline solar panels are less efficient panels. They are made of many small crystals of silicon that are melted to make wafers. They achieve efficiency of around 12-18% and have a lifespan of 23-27. The benefit of polycrystalline compared to monocrystalline silicon panels is the price: they are much cheaper to produce.
Finally, there are Thin-Film solar panels, which reach efficiencies of around 9-14%. Their life span is around 20 years. This is a very thin silicon layer that is applied to plastics so that they are flexible. They can be used on uneven surfaces and can even be wrapped around poles and boats, taking over a part of energy production from generators.
Alternatively, maybe you would like to manually calculate your solar cell efficiency. To do this, you need to:
- Find out about solar irradiance in your area (AKA: incident radiation flux),
- Multiply this number by the area of your solar panel (in square meters),
- Divide the maximum wattage of your solar panel or solar cell by this number and
- Multiply the result by 100%.
The number you get is how much energy, in %, your silicon solar cells can produce. A higher number indicates that you can install fewer panels, while a lower number means more panels to get the same amount of usable electricity.
Solar Panel Efficiency in 2021
Solar Panel Efficiency in 2021 is approaching 20%. Most solar panels reach a 15%-20% efficiency, while the high-efficiency solar panels go above 20%. Some experimental solar panels go as far as 47% efficiency but it may be another decade or two before solar panel manufacturers roll them out to the market.
Solar Cell Technology
Not all solar cells are created the same. Depending on the type of the solar cell, the material it is made of, as well as how it converts solar energy into usable electricity, there are several kinds of solar cells and solar panels.
PERC Solar Cells
PERC solar cells are solar cells developed with the aim of improving the efficiency ratings of solar technology. Although it may not seem like much, this new technology can improve the efficiency of solar panels by around 1%. Bear in mind that it took nearly 150 years to reach 20% efficiency, so adding one more percent to this number is a big achievement since they can reach around a 5% higher power output.
Increased efficiency comes from a special passivation layer. This layer is supposed to slow down electrons as they travel to the panel and allow for a more efficient capture. Currently, leading manufacturers are switching to this type of panel. No need to worry – they still come in standard forms and your solar installer will have no problems installing them on your roof.
HIT Solar Cells
HIT solar cells are a modification of monocrystalline solar panels, in which the crystalline layer is surrounded by an ultra-thin ‘a-Si’ silicon layer. These experimental solar panels are the next big breakthrough in power generation, as they can reach an efficiency of up to 28%. This technology also has a lower temperature coefficient and the production process is somewhat cheaper. The lower temperature coefficient also means higher overall efficiency, as more energy can be produced per square meter.
Multi-busbar Technology
The MBB or MultiBusBar technology wants to reduce resistive losses by shortening the distance that electrons have to travel before entering the busbar. Bus bars are the thin silver or grey lines on the surface of your solar panels. This tech can affect efficiency by increasing the power output in direct sunlight. There are no new materials used in MBB high-efficiency solar panels.
Split Cell Technology
Split Cell Technology increases the efficiency of solar panels by addressing several factors:
- It halves the cell size, which converts to a higher efficiency,
- It lowers the cell temperature, making it more efficient,
- Lowers manufacturing costs and makes the panels more stable,
- Promotes a higher absorption of electrons, even in real world performance.
Since efficiency matters, each of these technologies has the potential to lower the upfront cost for both manufacturers and customers. They can also improve the power rating of each individual panel and help them reach efficiency levels. Furthermore, they could reduce the panel size and have a significant impact on how much more electricity your solar system can produce.
Solar PV Cell Efficiency
Solar system efficiency is a priority factor to consider when installing solar panels. Efficient solar panel costs more but will cover a smaller area of your roof, produce more electricity and offset a higher percentage of your electric bill. A good efficiency rating also means a shorter payoff period.
Solar PV Cells have different efficiency ratings, which can range from 6-44.4% for some non-commercial technology. While you may not need ISS-range of efficiency, the higher efficiency solar that you can install, the better. Most home solar has an efficiency of 15-20%.
Importance of Solar Panel Efficiency
Faster Payback
The payback period of going solar in the USA is around 8 years. This means that a 25,000 solar system will be able to save you around 3,100 per year. With Federal Tax Credit and your local state incentives, you can reduce the solar payback period.
Another way to a faster payback when going solar is choosing efficient panels. Panels with good efficiency ratings will cost more money, but will also produce more power. Over their lifetime, the best solar panels will save you more money (and maybe even make you some, depending on your utility) than most solar panels on the market today.
Higher Wattage per Square Foot
Efficiency also matters because you will be able to get a higher wattage per square foot. This is the reason why increased efficiency is one of the key features of any good solar panel. If you are pressed for space but want to go green, having efficient solar panels can help you produce more solar energy than with a regular system.
Solar panel manufacturers keep trying to make the solar panel casing thinner and decrease their size, but size reduction can only go so far. The only way to make sure that even a system covering a small area of your rooftop can produce enough solar energy for you is to go with high-efficiency solar panels.
Factors Causing Variations in Panel Efficiency
There are several factors to consider in panel efficiency. No solar panel can produce a constant amount of electric energy for the duration of a day. The amount of power (kWh) produced depends on the amount of sunlight receiver, cell temperature reached, the power rating, as well as the orientation and how clean the panel is.
Irradiance
Irradiance or solar irradiance is the amount of solar radiation that falls on a certain area at a certain time. The higher the irradiance in your area, the more sunlight there is. If you live in a high-radiance area, such as Texas or Florida, you may even consider going for less efficient solar panels, since the long sunny hours guarantee more power produced even with lower efficiencies.
Shading
Any shade will limit or completely shut down one or more solar panels on your roof. What happens is that, because of the internal wiring, the solar panels cannot take any shade. Even the shade of a nearby tree trunk can completely shut off your solar panel and make your solar system less efficient.
Panel Orientation
Solar panel orientation is one of the key factors to consider when installing solar. Ensuring the best orientation to the cardinal points of the world and proper solar panel tilt will enable you to maximize the power output as they will be exposed to the maximum amount of sunlight.
Temperature
Temperatures that are too high or too low can decrease the power output of even the most efficient solar panels. Solar panels in general do not function so well in extreme cold and extreme heat, so making sure that there is some air movement both above and under your solar array will ensure they stay as close to their optimum temperature as possible. These issues can be avoided with panels with a lower temperature coefficient.
Dust and Dirt
Dust and dirt cover the surface of your solar panels and reduce the amount of sunlight that enters the panel and gets converted to electricity. Being mindful and occasionally removing any dust or debris from your solar panels can significantly increase their efficiency. In areas with regular rainfall, you do not need to do this.
Location
Location is another important factor to understand the system size and efficiency. In northern locations, you may want to go with more efficient solar panels to ensure your energy needs are met since northern locations receive less sunlight with lower intensity. Your latitude or the distance from the equator also determines the best tilt of your solar panels. High-efficiency solar cells can produce the most power when tilted properly. The higher your latitude, the higher the tilt.
Time of the Year
Solar panels cannot produce the same amount of energy throughout the year, regardless of their efficiency rating and the system size. In designing your solar system, you should always make sure that it can cover your average annual electricity needs in areas with net metering. In areas with no net metering, you should choose the most efficient solar panels for winter production, but only if you would produce all of your energy needs.
Is the Efficiency Worth the Cost?
Efficiency costs a lot of money, so the most efficient solar panels cost the most money. In trying to better understand how much money you should spend on a solar system, take into consideration factors such as your energy needs, the area you can put solar panels on, as well as the amount of sunlight your area receives per year.
In sunny states, efficiency does not matter as much, since even a smaller system can produce enough solar energy for your household, thank more sunlight received throughout the year. However, having a smaller rooftop area (such as in multistory houses) in the north of the USA should mean that efficiency is more important. In this case, investing more means that you get the most efficient solar panels and the higher power output.
Most Efficient Solar Panels in 2021
Each of the following solar panels is a high-efficiency solar panel produced in 2021. Some of the producers, such as Sun Power and Trina Solar (and others), experiment with new technologies to be able to provide the market with the best of the best. This is the list of the top 10 most efficient solar panels in 2021:
| 1 | SunPower | Maxeon 3 | 400W | 22.8% |
| 2 | LG | Neon R | 380W | 22.0% |
| 3 | REC | Alpha Pure | 405W | 21.9% |
| 4 | Panasonic | EverVolt | 380W | 21.7% |
| 5 | LONGi | Hi-Mo 5m LR-72HPH | 550W | 21.5% |
| 6 | Jinko Solar | Tiger N-type 66TR | 410W | 21.4% |
| 7 | FuturaSun | FU M Zebra | 360W | 21.3% |
| 8 | Hyundai | HiE-S400UF | 400W | 21.3% |
| 9 | Risen Energy | Titan S RSM 40-8-4-410M | 410W | 21.3% |
| 10 | Jetion | Jenius III JT545SGh | 545W | 21.1% |
FAQs
What is the most efficient energy source?
Among all renewable sources, solar has been proven to be the most efficient and the most effective energy source. Although it is not present at all times, solar systems are easily combined with a solar battery to increase your energy independence. In areas where net-metering is available, it is best to use this option to your advantage, as you save on the cost of the battery.
How can we increase the efficiency of solar panels?
Even the most efficient solar panels need a little bit of maintenance to help them achieve the highest effective efficiency rating. Keeping them properly tilted and oriented (towards the south in the northern hemisphere) as well as clean from any dust and debris will ensure high efficiency for years to come. Keeping them elevated a few inches above your roof will decrease overheating, as excessive heat is a problem even in panels with low-temperature coefficients.
How hot is too hot for solar panels?
Any high-efficiency solar panel is rated to perform the best in temperatures between 59°F and 95°F. In real-world conditions, solar panels can get way hotter than this, as they are placed on roofs and exposed to direct sunlight. In this case, your solar panel will reach a somewhat lower power output.
Are solar panels worth the investment?
Yes, solar panels are worth the investment. Depending on your electricity usage and system size, a solar system can offset up to 100% of your energy bill. In some areas, you may even be able to sell excess electricity to your utility company, making even more money.
Conclusion
There are many types of solar panels in the market. There are also different materials used, different layering methods and other factors that can all influence how much power your solar array can produce. Sunpower produces nearly 2.3% of total electricity in the USA. With new breakthroughs and advances made in the field, solar panels are set to become more affordable and efficient with each passing decade.
The Cost of Solar Panels: Is It Worth It?
Do the benefits of solar panels outweigh their costs?
Nathaniel Riley brings 28 years of experience in financial services, including merger-arbitrage trading, hedge funds, and alternative investments.
Somer G. Anderson is CPA, doctor of accounting, and an accounting and finance professor who has been working in the accounting and finance industries for more than 20 years. Her expertise covers a wide range of accounting, corporate finance, taxes, lending, and personal finance areas.
Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies.
What Is Solar Power for the Home?
Homeowners who install solar power systems can receive numerous benefits: lower electric bills, lower carbon footprints, and potentially higher home values. But these benefits typically come with significant installation and maintenance costs and the magnitude of the gains can vary widely from one house to another.
This article will help homeowners make the financial calculations required to determine the viability of solar power in their homes.
Key Takeaways
- Those seeking to go green may want to consider equipping their home with solar panels.
- Not only is solar power good for the environment, but you can earn money selling back excess power to the grid.
- While costs have come down over the past years, installation and maintenance of solar panels can be quite expensive.
- Solar panels are best suited for homes that receive ample sun exposure throughout the year.
- Before committing to solar power, be sure to understand both the social and economic factors.
Understanding Solar Power
In principle, working out whether it makes financial sense to install solar power for your home is simple. You will need to calculate:
- The cost of a solar power system
- How much energy it will produce
- What you would otherwise pay for the same amount of energy
- How many years it will take for your upfront investment to pay for itself in saved energy costs
- Whether the system will pay for itself in five years
If it does and you have the upfront capital, it’s probably a great idea. If you’ll have to wait longer for savings or take out a loan to afford the system, you’ll need to think the decision through carefully.
In practice, however, things are not this simple. There is a large variation in each of these factors, and that can make the costs and benefits of installing solar power for two homes—even if they are neighbors—radically different.
There are some tools that can help, though. Solar Reviews offer a calculator that will quickly provide you with representative costs and savings for a solar power system in every part of the U.S. Calculators like this are a good place to start if you are new to solar energy and want to understand the basic cost model.
In the rest of this article, we’ll take you through each of the key factors you should consider when calculating the costs and potential savings of solar power for your home.
Before getting solar panels, get quotes from several reputable installers to compare.
The Cost of Solar Power for Homeowners
First, let’s look at the cost of installing a solar power system for your home. The average, upfront cost of a residential solar power system is between 3,500 and 16,000.
Why the huge range of costs? Well, a lot of the variation depends on the size of the system you’d like to install and the type of panels you want to use. Whatever system you use, keep in mind that solar power is capital intensive and the main cost of owning a system comes upfront when buying the equipment. The solar module will almost certainly represent the largest single component of the overall expense.
There are some additional costs, as well. Other equipment necessary for installation includes an inverter (to turn the direct current produced by the panel into the alternating current used by household appliances), metering equipment (if it is necessary to see how much power is produced), and various housing components along with cables and wiring gear. Some homeowners also consider battery storage. Historically, batteries have been prohibitively expensive and unnecessary if the utility pays for excess electricity that is fed into the grid (see below). The installation labor cost must also be factored in.
In addition to installation costs, there are some further costs associated with operating and maintaining a PV solar array. Aside from cleaning the panels regularly, inverters and batteries (if installed) generally need replacement after several years of use.
Subsidies
While the above costs are relatively straightforward—often a solar installation company can quote a price for these for a homeowner—determining subsidies available from the government and/or your local utility can prove more of a challenge. Government incentives change often, but historically, the U.S. government has allowed a tax credit of up to 30% of the system’s cost.
details on incentive programs in the U.S., including programs within each state, can be found on the Database of State Incentives for Renewables Efficiency (DSIRE) website. In other countries, such information is often available on government or solar advocacy websites. Homeowners should also check with their local utility company to see whether it offers financial incentives for solar installation and to determine what its policy is for grid interconnection and for selling excess power into the grid.
97.7 gigawatts
The U.S. installed 19.2 gigawatts of solar PV capacity in 2020 to reach 97.7 GWdc of total installed capacity, enough to power 17.7 million American homes.
Calculating Your Energy Production
The second factor you’ll need to consider in your calculations is the amount of energy your system will produce and when it will do that. This can be a very complicated calculation to make, even for experienced solar engineers. However, let’s run through the basics.
One of the most important considerations is the solar irradiation levels available in the home’s geographical location; in other words, how sunny it is where you live. When it comes to using solar panels, being closer to the equator is generally better, but other factors must be considered. The National Renewable Energy Laboratory (NREL) produces maps for the U.S. showing solar irradiation levels and the tools on its website provide detailed solar information for specific locations within the U.S.
Equally important is your home’s orientation: For rooftop arrays, a south-facing roof without trees or other objects obstructing sunlight maximizes the available solar energy. If this is not available, panels can be mounted on external supports and installed away from the house, incurring additional costs for the extra hardware and cables.
And then you must factor in the size of your system. Solar panel size is quoted in terms of the theoretical electrical output potential in watts. However, the typical output realized for installed PV systems—known as the capacity factor—is between 15% and 30% of the theoretical output. A 3 kilowatt-hour (kWh) household system running at a 15% capacity factor would produce 3 kWh x 15% x 24 hr/day x 365 days/year = 3,942 kWh/year or roughly one-third of the typical electricity consumption of a U.S. household.
How Much Will You Save?
Once you know how much a solar power system will cost upfront, and how much energy it will produce, you can (theoretically) predict how much you can save in energy costs per year.
This is another tricky calculation, however, because a lot depends on how you pay for electricity at the moment. Utilities often charge residential consumers a flat rate for electricity, regardless of the time of consumption. This means that instead of offsetting the expensive cost of peak electricity production, homeowners’ solar power systems merely offset the price they are charged for electricity, which is much closer to the average cost of power production.
However, many utility companies in the U.S. have introduced pricing schemes that allow homeowners to be charged at different rates throughout the day in an attempt to mirror the actual cost of electricity production at different times: This means higher rates in the afternoon and lower rates at night. A PV solar array may be very beneficial in areas where this sort of time-varying rate is used since the solar power produced would offset the most costly electricity.
Exactly how beneficial this is for a given homeowner depends on the exact timing and magnitude of the rate changes under such a plan. Similarly, utilities in some locations have pricing schemes that vary over different times of the year due to regular seasonal demand fluctuations. Those with higher rates during the summer make solar power more valuable.
Some utilities have tiered pricing plans in which the marginal price of electricity changes as consumption rises. Under this type of plan, the benefit from a solar system can depend on the electricity use of the home; in certain areas subject to rates that increase dramatically as consumption increases, large homes (with large energy needs) may benefit most from solar arrays that offset high-cost marginal consumption.
For some homes, it might even be possible to make money by selling solar power back to the grid. In the U.S., this is done through net metering plans, in which residential consumers use the power that they put into the grid (when the rate of electricity generation from the solar array is greater than the rate of household electricity consumption) to offset the power consumed at other times; the monthly electric bill reflects net energy consumption. The specific net metering regulations and policies vary across regions. Homeowners can refer to the DSIRE database and should also contact their local utilities to find more specific information.
Calculating Solar Power Costs
At this point, you will be in a position to make a final calculation, and an assessment of whether solar power makes sense for you.
The overall cost and benefit of a solar system can theoretically be evaluated using the discounted cash flow (DCF) method. Outflows at the beginning of the project would consist of installation costs (net of subsidies) and inflows would arrive later in the form of offset electricity costs (both directly and through net metering).
However, rather than using DCF, the viability of solar power is usually evaluated by calculating the levelized cost of electricity (LCOE), then comparing it to the cost of electricity charged by the local utility. The LCOE for household solar will typically be calculated as cost/kilowatt-hour (/kWh or ¢/kWh)—the same format commonly used on electricity bills. To approximate the LCOE, one can use the following equation:
LCOE (/kWh) = Net Present Value (NPV) of the Lifetime Cost of Ownership / Lifetime Energy Output (kWh)
The useful life of a PV solar module is generally assumed to be 25 to 40 years. The cost of ownership includes the maintenance costs, which must be discounted to find the NPV. The LCOE can then be compared to the cost of electricity from a utility; remember, the relevant price is that which occurs during times at or near peak PV solar production.
Is Solar Power Worth It?
Once you’ve worked through all of these calculations, you’ll likely end up with a single number—the number of years it will take for a solar system to pay for itself in savings from your energy bills. If you live in a sunny part of the country and have high utility bills at the moment, you could be looking at a system that will reach this point in five years. Other homeowners may have to wait 10 or 20 years to reach this point.
In other words, most homeowners will eventually see a benefit from a solar power system; it might just take decades for this to be realized. Whether it is worth installing such a system therefore often comes down to a number of much less technical factors than those we’ve listed above: how long you are going to stay in your home, the subsidies available in your area, and simply whether you want to do your bit for the environment.
Pros and Cons of Solar Panels for Your Home
Like most things, solar power has its benefits and drawbacks. At the same time, some economic costs may be defrayed by the social benefits to the environment and lowering your carbon footprint, which may be more important to you than a purely monetary evaluation.
- Green energy that lowers your carbon footprint
- Net metering allows you to sell back excess energy produced
- You may be eligible for certain tax breaks
- Installation and maintenance costs are still high
- Solar only works when the sun is out
- Parts of the system need to be replaced every few years
- Some tax breaks may have expired or will be expiring
Can a House Run on Solar Power Alone?
Practically, it is not often possible. This is because solar only works when the sun is shining—when it is cloudy or nighttime, they do not generate electricity. There are some battery solutions to provide power during these times, but they still tend to be quite expensive. Most homes with solar panels still rely on the grid from time to time.
Do You Really Save Money With Solar Panels?
Depending on where you live, it is possible that the system can pay itself back and more over time. This is because you won’t be spending as much money buying electricity from your utility. If net metering is in place, you could reduce your bills even further.
How Much Does a Solar Panel Cost?
have been coming down steadily over the years. The total cost will depend on how many kilowatts of power your array will generate. According to consumer reports, after solar tax credits are accounted for, the cost for a solar panel system on an average-sized house in the U.S. in 2021 ranges from 11,000 to 15,000.
How Long Will It Take To Recoup the Initial Cost?
Depending on where you live and the size of your system it can take, on average, anywhere from 10 to 20 years to break even on a solar installation.
The Bottom Line
Determining whether to install a PV solar system may seem like a daunting task, but it is important to remember that such a system is a long-term investment. In many locations, solar power is a good choice from a financial perspective.
Even if the cost of solar power is found to be marginally more expensive than electricity purchased from a utility, homeowners may wish to install solar power to avoid future potential fluctuations in energy costs, or may simply wish to look beyond their personal financial motivations and use solar for green living.