In talking about the cost of residential solar systems, it has become apparent that there is a great deal of misinformation circulating the internet. This guide aims to demystify that misinformation and provide prospective buyers with reliable information about the cost of residential solar on Long Island. When attempting to understand the cost of residential solar power systems it is important to understand both where the system costs come from, as well as the government rebates available to offset the total system cost. With regard to system cost from a complete perspective, it is important to understand the multiple factors that impact the total system cost.
Generally speaking. the cost of installing a solar system can be divided into four distinct categories; solar panel costs, inverter costs, solar panel supporting costs (including mounting systems and wiring) and Instillation costs. On average, solar panel costs comprise roughly 60% of the total system cost as they are the primary technology in the system.
Inverters which are used to condition the power generated by the solar panels in order make it usable for your home (more on that later) typical account for roughly 10% of the system cost.
Solar panel supporting costs that include things such as the racking system that allows the solar panels to be attached to your house and the wire that is required to interconnect the entire solar system typically account for roughly 15% of the entire system cost.
Finally, the installation labor costs required to physically install a solar system on your home typical account for roughly 15% of the total system cost however this figure can vary based on factors such as the complexity of the installation and the steepness of the roof the solar panels are being installed on.
While every solar project is different both in terms of size and complexity, the ratios outlined above are generally very consistent with regards to the breakdown of costs associated with a residential solar system. Overall while the net cost of a residential solar system does vary greatly based on size, typically most residential solar projects in New York state range from roughly $20,000 – $50,000 with some outliers on both sides of the cost curve.
Solar Rebates Available on Long Island
Before we further explore the cost breakdown of a residential solar system it is useful to have a basic understanding of the government incentives that are available to offset the cost of a residential solar system in the state of New York (including Long Island).
Homeowners in the state of New York are eligible for both federal as well as state solar incentive programs. Currently, the federal government offers a 30% solar tax credit, meaning that the federal government will reimburse a homeowner who purchases a solar system up to 30% of the total system cost through tax liability reduction. To give an example if a homeowner purchases a solar system for a net cost of $50,000 they will be eligible for a $15,000 federal tax credit. If that same homeowner earns $70,000 in a year and in turn pays $12,000 in federal taxes they will be eligible to receive up to $12,000 in federal solar rebates that year and the remaining $3,000 of the initial $15,000 federal tax credit will be rolled over to the next year’s tax cycle. It should be highlighted that federal solar tax credits can be collected for up to five years so as long as your federal tax liability for the next five years equal or exceed the amount covers by the 30% solar tax credit you will receive the full federal rebate available.
In addition to the federal solar tax rebate available to virtually all Americans, New York State also offers a state tax credit for 25% of the total system cost up to $5,000. It is worth noting that many states do not offer a state solar tax credit which makes New York one of the most optimal solar markets in the US. As was previously mentioned, the New York State (NYS) tax credit is available to cover 25% of the solar system cost up to $5,000, so for example if you pay a net cost of $50,000 for a solar system in New York you will be eligible for a state tax rebate of $5,000. In the case of the state tax credit typically most homeowners max out the state tax credit at $5,000 due to the fact that most residential solar systems exceed $20,000 in cost. If however a homeowner was to install a small $18,000 residential solar system they would receive a $4,500 tax credit (because $4,500 is 25% of $18,000). Ultimately the main takeaway to understand with regards to the state tax credit is that as long as your net system cost exceeds $20,000 you will be eligible for a $5,000 state tax credit. With regards to the dispersion of your state solar tax credit, it functions very similarly to the federal tax credit in that it is reliant on your tax liability. For example if a homeowner has $5,000 in state tax liability in one year they will receive their full state tax credit in the first year, on the other hand if that individual has $3,000 in tax liability in one year they will receive a $3,000 in the first year and the remaining $2,000 the following year. All things considered, most homeowner in New York who install a residential solar system receive a 30% federal tax rebate and a $5,000 state tax rebate (assuming the net cost of the system exceeds $20,000).
Solar Financing Options Available
While financing is somewhat outside the scope of this article it is worth noting that both state financing through Energy Finance Solutions (EFS) as well as private financing options are available to homeowners on Long Island. By taking advantage of EFS loans as well as private loans available to homeowners interested in solar it is possible for homeowners to buy a solar system with no money down and with a loan interest rate far lower than a solar lease. Thanks to the solar finance programs available in New York it is possible for homeowners to buy a solar system at a far less expensive price than what they would otherwise pay for a solar lease or PPA.
Solar Panel Costs
As was previously mentioned, solar panel costs typically account for roughly 60% of total residential solar system costs. When considering the cost of solar panels a variety of factors are important to consider such as the cost of the panels as well as the output of the panels. Due to the intersection of solar panel cost and solar panel output, in the industry solar panels are generally evaluated on a basis of price per watt. For example, if one 300 watt solar panel costs $1,200 then the panel costs $4.00 per watt.
When considering the price per watt of solar panels it should be kept in mind that not all solar panels are created equally and that some panels offer superior warranties over others. While quality and warranties are very important when purchasing solar panels it should be kept in mind that like most other electronic devices with solar panels more expensive does not always mean better. For example, a 280 watt solar panel may produce slightly less power per panel than a 300 watt solar panel, however, if a 280 watt panel cost less per watt than a 300 watt panel it may be more advantageous for the homeowner to purchase 280 watt panels instead of 300 watt panels depending on their available roof space.
Solar Inverter Costs
As was mentioned above, inverters typically comprise roughly 10% of total system costs. Inverters are necessary to all solar systems as they convert the Direct Current (DC) produced by the solar panels into the Alternating Current (AC) used by your home. Generally speaking, inverters are one of the most overlooked areas of residential solar system costs. It is equally important to note that having a quality inverter is critically important to an overall highly functioning solar system. Most inverters used today by high quality solar installers are generally similar, however, it is important to understand that some inverters are more efficient than others at converting the power generated by your solar panels from DC to AC so that the power can be utilized in your Long Island home.
System Support Costs
When understanding the total cost of a residential solar system it is important to factor in the cost of system support components such as panel racking/mounting systems, waterproofing and wires. Like the other components of residential solar systems, not all support system components are created equal. For example with regards to solar flashing/waterproofing some solar companies use flashing systems that are superior to others. When it comes to your roof, waterproofing is clearly not an area where a homeowner should compromise. In terms of total system costs, typically solar support systems account for roughly 15% of total system costs however as was previously mentioned there is some degree of variation when it comes to system support component prices and quality.
Solar System Installation Costs
Out of all the system costs components discussed so far, installation costs are the area where quality is most critical. While many solar systems may seem similar, the quality of the installation makes a huge difference in the long-term functionality of the system. For example, one area of system installation that varies from installer to installer is the way in which the required wire and piping is run. While some installers take shortcuts and will run solar conduit all over your roof, other solar installers will take a higher quality approach and will conceal external wire piping by running it through attic of the home.
Additionally, when it comes to the physical wiring of the solar panels some solar installers will take shortcuts and use subpar panel wiring methods which can lead to suboptimal system design, functionality and even lead to the possibility of malfunctions. In the long run, investing in proper solar panel installation the first time greatly reduces long-term costs of a residential solar system as fixing a poorly installed system can be costly and time-consuming. One example of doing things right the first time with a solar installation would be installing a squirrel guard. Homeowners often opt to not install a squirrel guard with the goal of initially saving money on installation costs however this can often be a costly decision in the long run as rodents can quickly damage the wiring of a solar system if proper precautions are not taken. Overall, the key takeaway with regards to installation costs of a residential solar system is that doing things right the first time pays of significant dividends in the long run.
Wrapping Up Solar System Costs
When it comes to the system costs of installing a residential solar system the expense can best be understood in terms of multiple components. While solar panels comprise the largest portion of total system costs, the costs from other component categories such as solar inverters, support systems and installation costs are also critically important to understand when considering purchasing a residential solar system.
As was previously highlighted, federal and state rebates play a large role in making residential solar system affordable. Even when factoring in the available rebates, understanding the breakdown of system costs is fundamental to being an informed and savvy solar consumer. Many solar companies (especially national lease & PPA companies) will strive to divert attention from the true cost breakdown of installing a residential solar system, however, with the information from this guide you are now equipped with the information necessary to make a smart solar decision. With the help of GreenLeaf Solar you can become an educated consumer to making the right choice for your solar panel system.
If you are interested in a free and friendly on-site solar consultation for your home, we invite you to call us at 844-464-7652, locally at 631-509-1747 or simply fill out our contact form. A representative will be happy to set up an appointment for one of our specialists to meet with you in your house to go over specific pricing and how much you’ll save by switching to solar on Long Island.