Solar Energy System Pricing: Understanding the PPW Calculation

If you have considered a solar energy system for your home or business, you’ve probably looked into photovoltaic pricing as well.

Energy experts recommend requesting estimates from at least a few installers. Before you speak to any solar contractors, however, it can be helpful to understand some basic facts about how photovoltaic systems are priced.

You will undoubtedly hear installers refer to the PPW, or price per watt, of photovoltaic systems. Here’s what you need to know.

What Does the Solar Energy System PPW Include?

The PPW for a solar energy system is typically based on the total cost. In other words, it should be a full package deal. Calculating the PPW in this manner is the standard for the solar industry.

Your solar energy system estimate may — or may not — have the various system costs broken down by categories, such as labor, materials, permits and financing. But all of these costs should be wrapped together for the total price per watt.

If they aren’t, you won’t be able to accurately compare price quotes among solar energy contractors.

How Is a Solar Energy System’s PPW Calculated?

To calculate the PPW, the installer will first add up all of the costs for the photovoltaic array to arrive at the gross price for the system. This figure is then divided by the number of watts of power that the system will provide.

But, since photovoltaic systems are measured in terms of kilowatts (kW), the array size must first be converted to watts. This is achieved by multiplying the number of kilowatts by 1,000.

Don’t worry if this sounds complicated. Give it a try. Consider a 5 kW solar panel system with a gross price of $18,000. First, multiply 5 by 1,000 to find out the number of watts, which is 5,000.

Now, take the gross price and divide by 5,000. This gives you a system cost of $3.60 per watt.

When you receive a solar energy system estimate, make sure that the installer uses the gross price for the system, not the net price. The net price is the total cost after federal, state and local tax credits and rebates have been applied.

Quotes that are based on the net price cannot be accurately compared to other PPW estimates.

Factors that Affect Solar System PPW

System size has a big impact on the PPW.

Generally, the larger the photovoltaic array, the lower the PPW. Roof type is another factor involved in pricing, as installations on tile or steep roofs can increase system costs.

The different components to be used in the system also have an effect. Brand-name solar panels are more expensive than those from discount manufacturers, for example, and the type of inverter you choose can result in a price difference as well.

Before you consider the apparent bargain you get with discount components, however, be sure to carefully evaluate the product’s warranties, expected output over time and reliability. What may seem like a bargain today won’t do you much good if the panels fail early on in the system’s life, and the manufacturer is no longer around to honor the warranty.

Now that you have a better understanding of PPW, you’re ready to get some price quotes.

Start with an estimate from the professionals at Intermountain Wind & Solar. We are the Intermountain West region’s largest provider of alternative energy systems. Our bulk purchasing programs allow us to offer exceptional pricing for the high-quality, name-brand equipment you can rely on for decades to come.

Call us to schedule a consultation today and learn how much money a solar energy system can save you.