# How to Calculate Solar Cost Without a Salesman

Tori Barrington Key Points (TL;DR)
• Monthly utility bill can help find daily energy consumption.
• Solar Investment Tax Credit is a 30% tax credit for residential solar installation.
• Peak sunlight hours contribute to solar system size.
• Panel production ratio accounts for forecasted energy production.
• Average labor rate is \$0.50 per watt.
• The average lifetime of a solar panel is 25 years.
• ## Why Manually Calculate a Solar Quote?

In your journey to find the perfect solar panel system for your unique situation, you will receive many quotes from various companies who want to convince you that their deal is the best.

Calculating your own quote will teach you the basics of what each company is taking into consideration when they evaluate your home.

When a company gives you a quote, you will know what questions to ask and which factors you can adjust to guarantee the final price is within your budget.

### Outline: Solar Cost Steps

To find out how much installing a solar system will cost without consulting a solar company, follow the steps and equations below.

1. Find Daily Energy Consumption

• Monthly Energy Consumption = Monthly Utility Bill / Cost of Electricity
• Daily Energy Consumption = Monthly Energy Consumption / 30 Days

2. Consider Percentage of Energy Covered by Solar

• Daily Energy Production = Percentage Covered x Daily Energy Consumption

3. Use Daylight Hours to Find System Size

• System Size = Daily Energy Production / Peak Sunlight Hours

4. Choose Individual Panel Wattage to Find Panel Quantity

• System Size in Watts = System Size in kW x 1,000
• Initial Panel Quantity = System Size in Watts / Individual Panel Wattage

5. Account for Panel Production Ratio (Optional)

• Panel Quantity = Initial Panel Quantity / Panel Production Ratio

6. Find System Cost

• Total Panel Cost = Individual Panel Cost x Panel Quantity
• Total System Cost = Total Panel Cost + Inverter Cost + Battery Cost (Optional)

7. Find Labor Cost

• Labor Cost = Labor Rate x Panel Wattage x Panel Quantity

8. Consider Incentives to Calculate Total Price

• Total Price = (System Cost + Labor Cost) - Incentives

9. Find Years Until Breakeven

• Years to Breakeven = Final Cost / (Yearly Utility Bill x Percentage Covered by Solar)

10. Find Lifetime Savings

• Years of Energy Profit = Solar Panel Lifetime - Years to Breakeven
• Lifetime Savings = Years of Energy Profit x (Yearly Utility Bill x Percentage Covered by Solar)

If you’re feeling overwhelmed, don’t worry! We’re going to take a closer look at each step and show you where to get all the information you need.

## Estimate Solar System Size

To begin calculating your own solar quote, you need to estimate how large your solar panel system will need to be.

### 1. Find Daily Energy Consumption

Monthly Energy Consumption = Monthly Utility Bill / Cost of Electricity
Daily Energy Consumption = Monthly Energy Consumption / 30 Days

There are a few different ways to find how much energy you use in a month. For each way, you will need your monthly utility bill, so make sure to have that on hand.

Most utility bills will list your daily energy consumption in kWh (kilowatt-hours). If you are able to find that number, write it down and move on to the next step.

If you can only find your monthly energy consumption on your utility bill, divide that number by the number of days in the month.

If you can’t find your energy consumption in kWh listed anywhere on your utility bill, you can calculate it manually. Take the cost of your monthly bill and divide it by the cost of electricity in your state. Divide that number by how many days were in the month. The answer will be your daily energy consumption in kWh.

To have a more accurate daily energy consumption, you can find your daily energy consumption from several months and take the average of those numbers.

### 2. Consider Percentage of Energy Covered by Solar

Daily Energy Production = Percentage Covered x Daily Energy Consumption

While it is possible to install a solar panel system that can cover 100% of your energy consumption and cost, this may not be affordable for everyone.

At this point in the process, decide how much of your energy production you want solar to cover. Do you want solar to pay for 50% of your energy cost? Or can you afford a larger system that can cover 75% of your energy cost?

Multiply the percentage of energy you want to be covered by solar by your daily energy consumption to find the amount of energy your solar system needs to produce each day.

You can also calculate the quote without factoring this in to see how expensive it would be to install a system that covers all of your energy needs. Of course, you can always come back to this and calculate multiple quotes to see what you can afford.

### 3. Use Daylight Hours to Find System Size

System Size = Daily Energy Production / Peak Sunlight Hours

Now that you know how much energy your system needs to produce each day, you need to know how much time your system has to produce that amount during the day.

Solar panels only work when sunlight is shining, so your system will need to produce that amount of electricity during the day.

Divide your daily energy production by the peak hours of sunlight in your state. The answer to that equation is the size in kW of your solar system, meaning the system will need to produce that amount of energy each hour of the day.

For example, a 5 kW system produces 5 kW of energy each hour. If the home receives 6 hours of sunlight, it would produce 30 kWh of energy daily.

Keep in mind that the hours of peak sunlight change throughout the year. You can use the average hours of sunlight for this calculation, but remember that your system will produce more during the summer months when daylight hours are extended.

## Determine Quantity of Solar Panels Needed

With the system size, you can now calculate how many solar panels you will need to purchase for your system.

### 4. Choose Individual Panel Wattage to Find Panel Quantity

System Size in Watts = System Size in kW x 1,000
Initial Panel Quantity = System Size in Watts / Individual Panel Wattage

Each solar panel produces a certain amount of watts per hour. Solar panels that produce more watts tend to be more expensive, but you don’t need to purchase as many to cover your system size. On the other hand, panels that produce less watts are cheaper, but you will need to purchase more.

If you’ve done extensive research, you might be looking at a very specific brand of solar panel. In that case, use the wattage of those panels for this calculation.

If you aren’t sure what panels you want, you can use 320 watts, which is a very common wattage in solar panels.

Take the system size in kW and multiply it by 1,000 to get the system size in watts. Divide the system size in watts by the individual panel wattage to see how many panels your system will need.

### 5. Account for Panel Production Ratio (Optional)

Panel Quantity = Initial Panel Quantity / Panel Production Ratio

While each panel is capable of producing a set amount of watts, it is possible that they will produce more or less depending on the state and your home’s unique features.

When solar companies evaluate your home for a more accurate quote, they predict how much electricity your system will produce in a year. While your system may have the capacity to produce 13,000 kWh each year, the company may predict that your system will produce 15,000 kWh based on your location and a variety of other factors.

Divide the predicted kWh by the capacity of your system to get the solar production ratio. In this example, 15,000 kWh / 13,000 kWh gives a 1.15 production ratio.

This number can be difficult to find online, so it may need to be calculated by a professional, but if you are able to find an average solar panel production ratio in your area, we highly suggest using it.

Divide the initial panel quantity you calculated in the previous step by the solar panel production ratio to find a more accurate number of solar panels needed.

## Calculate Total Solar Cost

Now that you know how many solar panels you need to purchase to produce the amount of electricity your home needs, you can find the total cost.

### 6. Find System Cost

Total Panel Cost = Individual Panel Cost x Panel Quantity
Total System Cost = Total Panel Cost + Inverter Cost + Battery Cost (Optional)

To discover how much your solar panel system will cost, you need to know the price of each individual panel. Each solar company works with different manufacturers, and different manufacturers sell better quality solar panels than others. While panel price varies based on wattage, the quality and brand reliability also play a role.

The table below lists manufacturers, a specific panel or series, and the wattage of that panel. The estimated cost is the average price from multiple solar retail websites.

Manufacturer Panel Wattage Price
Panasonic EverVolt Series 370 W ≈ \$440
LG NeON 2 Series 340 W ≈ \$350
LONGi LR4-60HPH 355 W ≈ \$287
Jinko JKM405M-72HL-V 405 W ≈ \$377

It can be difficult to find an exact price per panel without receiving a quote from a solar company. You may use a panel listed above for the sake of calculating this quote, but if you have a specific panel in mind that you would like to purchase, use the estimated price of that panel.

Multiply the cost per panel by the number of panels needed to find the total cost of panels.

Next, you need to factor in the cost of the inverter(s). The type of inverter you buy will be dependent on the amount of shade your roof receives. If your roof is never shaded, a string inverter will work. However, if your roof is shaded (even just partially), we recommend investing in micro-inverters.

The average cost of a string inverter is between \$1,000 and \$1,500, while the average cost for micro-inverters is between \$160 and \$250 per panel. In the end, micro-inverters are more expensive, but they are more efficient for a shaded roof.

If you decide to purchase micro-inverters, multiply the price per inverter by the number of panels to find the total inverter cost. If you decide to purchase a string inverter, you will most likely only need one, so the price of the string inverter is the total inverter cost.

Add the inverter cost to the panel cost.

If you live in an area that is at risk for power outages or you want solar energy to power your home through the night, you might consider investing in a solar battery.

Some of the most popular solar batteries are the Tesla Powerwall, which costs about \$11,500.00, and the Enphase Encharge, which costs about \$8,000.00. Prices of batteries may vary based on the dealer and your home’s unique situation.

If you choose to purchase a solar battery, add the battery cost to the panel and inverter costs for the total system cost.

### 7. Find Labor Cost

Labor Cost = Labor Rate x Panel Wattage x Panel Quantity

Labor cost also varies depending on the solar installation company. This cost can be affected by system size, location, and even the height of the building. Without knowing the company’s exact formula for labor cost, this can seem like a difficult piece to factor into your quote.

However, labor rates for solar installation are \$0.50 per watt on average.

To find out how much labor would cost, multiply 0.5 by the wattage per panel. Take the answer and multiply it by the number of solar panels needed.

### 8. Consider Incentives to Calculate Total Price

Total Price = (System Cost + Labor Cost) - Incentives

According to the Solar Energy Industries Association, the solar Investment Tax Credit is “a 30 percent tax credit for individuals installing solar systems on residential property.” Other credits can be applied to commercial sites and utility solar farms.

We strongly suggest researching the solar ITC and other solar incentives that may be available in your state.

The original price for solar was the labor cost plus the system cost, but with these savings, your total will decrease.

Multiply the original price by 0.3 (residential ITC). Subtract that answer from the original price for a new more accurate total cost.

## Forecast Solar Savings

While it is very helpful to know how much a solar system will cost, a rather large benefit of installing solar in the first place is the potential savings.

### 9. Find Years Until Breakeven

Years to Breakeven = Final Cost / (Yearly Utility Bill x Percentage Covered by Solar)

As your solar system produces electricity for your home, you will pay less on your monthly utility bill and start saving money.

Eventually the savings will equal the amount spent on the solar system, essentially paying for itself.

First, multiply your yearly utility bill by the percentage of electricity solar should cover to find your yearly savings. Next, divide the final cost of your solar installation by your yearly savings. The answer is how many years it will take for your solar system to pay for itself.

### 10. Find Lifetime Savings

Years of Energy Profit = Solar Panel Lifetime - Years to Breakeven
Lifetime Savings = Years of Energy Profit x (Yearly Utility Bill x Percentage Covered by Solar)

The average lifetime of a solar panel is 25 years, although the exact lifespan may vary based on the manufacturer and model. If you know the lifetime of your solar panel, use that number for this part of the formula. If not, just assume your solar panels will last 25 years.

Subtract the number for years until you breakeven from the lifetime of the solar panels. The answer is how many years you will have to gain profit from your solar panels.

Multiply the number of years you have to gain profit by your yearly utility bill to calculate how much money you will save over the lifetime of your solar system.

## Follow Along with This Example

### 1. Find Daily Energy Consumption

Equations:

Monthly Energy Consumption = Monthly Utility Bill / Cost of Electricity
Daily Energy Consumption = Monthly Energy Consumption / 30 Days

Example:

• Monthly Utility Bill: \$200.00
• Cost of Electricity: \$0.13/kWh
Monthly Energy Consumption = \$200.00 / \$0.13 = 1,538 kWh
Daily Energy Consumption = 1,538 kWh / 30 = 51.27 kWh

Results:

This family consumes 51.27 kWh of electricity each day.

### 2. Consider Percentage of Energy Covered by Solar

Equation:

Daily Energy Production = Percentage Covered x Daily Energy Consumption

Example:

• Percentage Covered = 75%
• Daily Energy Consumption = 51.27 kWh

Daily Energy Production = 0.75 x 51.27 kWh = 38.45 kWh

Results:

This family wants their solar system to cover 75% of their daily electricity consumption. They need a solar system that will produce 38.45 kWh of the 51.27 kWh they use each day.

### 3. Use Daylight Hours to Find System Size

Equation:

System Size = Daily Energy Production / Peak Sunlight Hours

Example:

• Daily Energy Production = 38.45 kWh
• Peak Sunlight Hours = 5 hours

System Size = 38.45 kWh / 5 hours = 7.69 kW system

Results:

The area where this family lives receives 5 hours of peak sunlight each day. For their system to produce 38.45 kWh each day, it needs to produce 7.69 kW each hour. We can round up and say they need an 8 kW solar panel system.

### 4. Choose Individual Panel Wattage to Find Panel Quantity

Equations:

System Size in Watts = System Size in kW x 1,000
Initial Panel Quantity = System Size in Watts / Individual Panel Wattage

Example:

• System Size in kW = 8 kW
• Individual Panel Wattage = 320 watts
System Size in Watts = 8 kW x 1,000 = 8,000 watts
Initial Panel Quantity = 8,000 watts / 320 watts = 25 solar panels

Results:

This family chose solar panels that were each 320 watts. To have a system that produces 8,000 watts, they will need 25 solar panels.

### 5. Account for Panel Production Ratio (Optional)

Equation:

Panel Quantity = Initial Panel Quantity / Panel Production Ratio

Example:

• Initial Panel Quantity = 25 solar panels
• Panel Production Ration = 1.4

Panel Quantity = 25 panels / 1.4 = 17.85 panels

Results:

Based on their location, the solar panels will actually produce 1.4 times their capacity. To produce the necessary wattage, they will actually only need about 18 solar panels.

### 6. Find System Cost

Equations:

Total Panel Cost = Individual Panel Cost x Panel Quantity
Total System Cost = Total Panel Cost + Inverter Cost + Battery Cost (Optional)

Example:

• Individual Panel Cost = \$440.00 per panel
• Panel Quantity = 18
• Micro-Inverter Cost = \$160.88
Total Panel Cost = \$440.00 x 18 panels = \$7,920.00
Inverter Cost = \$160.88 x 18 panels = \$2,895.84
Total System Cost = \$7,920.00 + \$2,895.84 = \$10,815.84

Results:

After doing research, this family decided they wanted to purchase panels from the Panasonic EverVolt series. Each panel costs \$440.00, so with 18 panels, the total panel cost is \$7,920.00. Their roof receives some shade throughout the day, so they decided to buy the Enphase IQ7 Microinverter at \$160.88 per panel, so the total inverter cost is \$2,895.84. The total system cost comes out to \$10,815.84.

### 7. Find Labor Cost

Equation:

Labor Cost = Labor Rate x Panel Wattage x Panel Quantity

Example:

• Labor Rate = \$0.50 per watt
• Panel Wattage = 320 watts
• Panel Quantity = 18

Labor Cost = \$0.50 x 320 watts x 18 panels = \$2,880.00

Results:

This family chose to use the average labor rate in their calculations. At \$0.50 per watt, they will pay \$2,880.00 for the installation.

### 8. Consider Incentives to Calculate Total Price

Equation:

Total Price = (System Cost + Labor Cost) - Incentives

Example:

• System Cost = \$10,815.84
• Labor Cost = \$2,880.00
• Incentive: 30% Tax Credit
Total Incentive = 0.30 x (\$10,815.84 + \$2,880.00) = \$4,108.75
Total Price = \$10,815.84 + \$2,880.00 - \$4,108.75 = \$9,587.09

Results:

This family qualifies for the 30% tax credit, so they will receive credit for \$4,108.75 of the total cost of their solar system. The total price after incentives is \$9,587.09.

### 9. Find Years Until Breakeven

Equation:

Years to Breakeven = Final Cost / (Yearly Utility Bill x Percentage Covered by Solar)

Example:

• Final Cost = \$9,587.09
• Yearly Utility Bill = \$2,400.00
• Percentage Covered by Solar = 75%

Years to Breakeven = \$9,587.09 / (\$2,400.00 x 0.75) = 5.33 years

Results:

It will take 5.33 years for the solar system to pay for itself.

### 10. Find Lifetime Savings

Equations:

Years of Energy Profit = Solar Panel Lifetime - Years to Breakeven
Lifetime Savings = Years of Energy Profit x (Yearly Utility Bill x Percentage Covered by Solar)

Example:

• Solar Panel Lifetime = 25 years
• Years to Breakeven = 5.33 years
• Yearly Utility Bill = \$2,400.00
• Percentage Covered by Solar = 75%
Years of Energy Profit = 25 years - 5.33 years = 19.67 years
Lifetime Savings = 19.67 x (\$2,400.00 x 0.75) = \$35,406.00

Results: Because the solar system will pay for itself after 5.33 years, this family will have 19.67 years to save money from their solar system. If it pays for 75% of their utility bill, they will save \$35,406.00 over the lifetime of their solar system.