According to an analysis conducted by the National Renewable Energy Laboratory (NREL), the cost of home solar installations in early 2022 was found to be 2-12% higher compared to 2021. This increase was attributed to extreme market conditions that led to higher prices for modules, inverters, labor, and permitting. However, the NREL analysis also suggests that solar costs are expected to decrease in 2023, making rooftop solar more affordable for homeowners.
In November 2022, the NREL published their analysis of solar and energy storage system installation costs for the first quarter of 2022. The data revealed that solar prices were higher than anticipated. The extreme market conditions experienced in 2021 and early 2022 were cited as factors that contributed to a 13-15% increase in solar costs beyond long-term trend predictions. However, as these market conditions subside, prices are expected to stabilize, and solar costs are likely to decrease in 2023.
When considering the cost of home solar, it’s important to note that https://www.leafscore.com/solar-guide/benefits-of-going-solar/federal-solar-investment-tax-credit/a significant portion of the cost is attributed to soft costs, including permitting, sales tax, interconnection and inspection fees, transmission lines, profits, and other overheads. The upfront costs can vary depending on factors such as the presence or exemption of sales tax in a particular location and regulations that limit permit costs and utility charges for interconnection.
The NREL’s modeled market price (MMP) for Q1 2022 was 2-12% higher than Q1 2021. This means that if your neighbor installed solar in January 2021 for $30,000, you might have paid $600-$3,600 more for the same system installed by the same installer in January 2022. Inflation, market conditions, and supply chain disruptions have contributed to cost increases, with early projections suggesting a further 2-12% increase in solar costs in early 2023.
However, there are positive indications for the future. Inflation is decreasing, more people are being trained to install solar, and there are significant investments from the federal government. Supply chain issues, including import bans on solar modules, have also been resolved. Additionally, there are predictions of a substantial drop in the cost of battery storage in early 2023, making solar storage more affordable than in 2022.
In summary, home solar remains a worthwhile investment for most homeowners, particularly in areas with high or rising electricity prices. Many states, cities, and utilities offer rebates, tax credits, and other incentives for solar, including net metering. Some jurisdictions are even introducing additional incentives for grid-connected battery storage. Furthermore, the federal solar investment tax credit (ITC) has been reinstated and increased in 2022, allowing homeowners to claim 30% of the cost of home solar on their income tax, reducing the payback period and providing free electricity for years to come.
To learn more about home solar and explore your options, contact us today!