Solar Panel System Prices: Understanding Soft Costs

Solar panel system prices have steadily declined over the last several decades, coming down by an incredible 80 percent just within the last eight years.

But while the costs of photovoltaic panels, inverters and other system components have reached historic lows, other expenses involved with installation — called soft costs or indirect costs — also have an effect on the overall price of adopting photovoltaic solar energy.

What Are Solar Panel System Soft Costs?

Typically, the indirect costs for a solar panel system are said to include all expenses not related to equipment and hardware.

Surprising to many is that these costs typically make up a significant percentage of the total price for a photovoltaic system. In fact, according to the U.S. Department of Energy (DOE), soft or indirect costs can account for as much as 64 percent of the total cost.

What exactly are these soft costs?

The DOE breaks them down by percentage. Supply chain costs usually represent the largest percentage of non-hardware expenses, at up to 12 percent of the total price. Labor charges for installation come in next at up to 11 percent, followed by customer acquisition, indirect corporate costs and installer and developer profits, each at up to 9 percent.

The remaining 15 percent is made up of miscellaneous transaction costs, sales tax and permitting requirements.

How Soft Costs Affect Solar System Installations

Non-hardware expenses can present an obstacle for some home or business owners interested in adopting solar. In many cases, however, consumers view these fees as simply a part of the process. In fact, these costs are not unlike those you encounter when buying a new car or hiring a construction contractor.

How it may affect you depends on several factors.

According to the DOE, solar soft costs are not consistent from one city to the next. For example, recent research by DOE grant recipient Clean Power Finance found that more than 35 percent of solar contractors avoid certain markets because of issues such as permitting fees.

Finding Solutions for Solar System Soft Costs

The DOE has been working toward decreasing the non-hardware expenses involved in photovoltaic installations.

Through their SunShot Initiative, which funds research on methods to lower the price of adopting solar energy, the DOE launched two rounds of a Rooftop Solar Challenge. Teams across the country participated in these challenges, developing innovative solutions for solar system soft costs.

More than 45 million people have already benefited from the results of the challenges, and the SunShot Initiative is continuing to work on more programs to make photovoltaic energy more affordable.

Fortunately, these problems don’t plague the Intermountain West as they do other parts of the country. And because of our bulk purchasing power and programs, Intermountain Wind & Solar has some of the lowest overall solar pricing in the United States.

In fact, we don’t anticipate that the price of adopting solar energy will decrease much past its current point.

Contact us today to learn more about how to make PV energy work for you. With the federal tax credit and other incentives available today, you won’t find lower solar panel system prices ever, so get started saving money today.