Why Are Solar Panels So Expensive?

Why are solar panels so expensive?

Let’s find out!

What is Solar Energy?

The sun is one of the most significant sources of energy in the solar system.

Since time immemorial, planet Earth has used the sun’s energy for the natural processes needed to ensure the continuity of life.

Sun’s energy is considered renewable and sustainable.

Humans can “harvest” the sun’s energy using photovoltaic or thermal solar cells, and, recently, the efficiency of these processes has risen to a level never imagined before.

As it was mentioned before, there are two ways for humans to take advantage of the sun’s radiation; these are photovoltaic energy and solar-thermal energy.

Solar-thermal consists of the reflection of the sun’s radiation to concentrate it into a single point, and it’s mostly used to raise the temperature of a fluid to produce power in a turbine.

The Photovoltaic (PV) energy working principle is very different.

PV cells are based on the photovoltaic effect in which light incident on certain materials generates an electric current.

The principal advantage of PV energy over solar-thermal is that the energy is obtained directly from the sun–there’s no need for a turbine or a large facility to produce PV solar energy.

Both systems are applied all around the globe, but they only represent about 0.8% of the total amount of energy consumed by humans.

Solar-thermal and PV energy are mostly used for residential purposes.

Besides representing only 0.8% in the overall world’s energy production, in countries like Germany, it represents up to 10% of the total energy produced, check these charts about 2021 energy production.

If you consider yourself a solar energy enthusiast or a clean energy supporter check this article about the benefits of using Direct Solar Energy

This article focuses on PV energy and solar panels used to produce electricity and the costs related to this energy conversion process.

What is the Average Electricity Consumption in Residential Homes?

Before proceeding to the cost analysis of the main components of the PV system, it’s vital to analyze the energy consumption of the average house.

Electricity consumption varies with the country and climate conditions.

In the US, the average family consumes about 11.7 MWh annually.

Meanwhile, in France, the amount drops to 6.4 MWh, and in China is almost the tenth part than in the US, with only 1.3 MWh consumed per family.

The world’s average electricity consumption is about 3.5 MWh annually, as can be seen here.

If you want to know how many solar panels are needed to run a house, check this article in SolarPowerNerd.

It’s essential taking into account the fact that solar energy is not always available, and for at least half of the day, your house will have to run on private electricity, or you’ll need to invest in an expensive battery bank capable of running at least the most essential devices.

What Are the Main Components of a Photovoltaic Solar System?

PV solar panels directly convert solar light into DC electricity thanks to the valuable properties of semiconductor materials.

These panels are only a part of a complex system that is used to ensure the accessibility to PV solar energy.

Solar PV systems are assembled using photovoltaic panels, battery banks, charge regulators, inverters, and wiring.

Each of these components has a specific function, which is extremely important when it’s time to calculate the overall efficiency of photovoltaic systems.

It’s essential to know about each component in particular to understand their importance for the system and their costs.

Costs are an essential parameter to measure and, by clicking here, you can check a chart about the costs of many energy sources in dollars per kilowatt-hour installed.

These charts take into account the installation costs, capacity factor, and the Levelized cost of electricity.

The latter means the expenses required to be charged to recover the investment for a particular project duty cycle.

Let’s figure out why installing them is so expensive by checking each of the components of the solar photovoltaic system, starting with the panels.

What Are Solar Panels (PV Solar Panels) Made of?

The main component used in today’s market to produce solar PV panels is silicon, which is the second most available element on Earth’s surface.

Silicon is a semiconductor metal which is mostly used to produce electronic devices, but nowadays, it has found its way into the energy market for its application as the main component for solar panels.

There are three types of silicon cells used for solar panels production.

They’re monocrystalline, polycrystalline, and amorphous silicon.

Monocrystalline silicon is the most expensive with prices that range from 0.75 to 3.81 USD per Watt installed, depending on the supplier.

Mono-silicon has the highest efficiency ranging between 25% and 35%, so it requires a smaller area per kWh of electricity production.

This means that land costs are significantly reduced.

A disadvantage related to mono-silicon is that at high temperatures, efficiency drops about 15%, which makes it a lousy option for places with a hot climate like Australia during the summer.

Polycrystalline silicon efficiency ranges from 12% to 18%, but it has the best price per Watt of electric power produced with ranges between 0.62 and 3.12 USD.

Poly-silicon produces less silicon waste than Mono-silicon, but its less temperature resistant.

Amorphous silicon has the lowest efficiency ranging between 6% and 8%.

It means that per kWh installed, you’ll need about 12 to 20 square meters of solar panels.

More square meters mean that more land is needed, and the investment will be higher.

Amorphous silicon is mostly used to charge small devices, like calculators and portable lamps.

Its lowest price, which is based on lists of wholesalers and retailers, is 0.69 USD per Watt installed.

In addition to its low efficiency, another disadvantage is that it tends to degrade faster than poly and mono-crystalline technologies, but amorphous silicon can tolerate extremely high temperatures.

Considering the average electrical consumption discussed in section 2, an average house needs 9600 Wh daily, and if we suppose the use of the cheapest monocrystalline PV cells, you’ll need to install at least a 4500 W system to cover the demand of energy during winter.

During the design process, it’s essential to consider the worst-case scenario, which is winter for solar installations.

By multiplying 4500 W by the cost per W installed related to the cheapest monocrystalline PV cell, it results in an investment of 3375 USD only in solar panels to cover the demand during winter.

But that calculation was made considering the world’s average energy consumption.

In the case of the United States, where the annual consumption of a household is 11.7 MWh, you’ll need to invest around 10000 USD to cover for winters energy demand, supposing that the panels are always working at peak efficiency levels.

The estimation done before does not consider the costs related to the other components needed for the system to work or the fact that the energy is not always available at its maximum conversion efficiency.

The most significant portion of the costs related to the diverse types of silicon panels comes from the research needed to obtain better technologies and test them.

Most of the raw material needed to produce silicon PV panels can be found in the sand, which needs to pass through a sequence of chemical processes to extract silicon in its purest form.

The relative costs of the extraction process vary with the quality of the sand, and, of course, this depends on the country where the silicon is being obtained.

In a vast number of countries, the process of obtaining silicon is exceptionally cheap and ranges from 5 to 12 US dollars per kilogram.

Even though the silicon is cheap, the most significant part of the total cost of the panels comes from research.

The International Energy Association provides information about the investment done to produce electrical power around the globe.

By clicking here, you can check the whole investment done on energy matters, renewable and traditional sources are taken into account.

As seen on their page, in 2018, the world invested almost 500 billion USD on renewable energies, and solar power covers nearly 22%, which means that about 110 billion USD was invested in improving the overall efficiency of PV panels.

Research centers have estimated that the energy obtained from PV cells could be used to give electricity to about 140 million people annually.

Dividing the 2018 research investment by the number of humans that could see the benefits of these cells, we estimate that the average consumer invested almost 800 $ in 2018 only to increase the efficiency of the energy transformation process.

The building process of a solar panel is relatively simple and consists of many cells placed on the surface of the panel.

These cells are divided by thin layers of glass.

Panels are made by two groups of PV cells differenced by their properties, and these groups are separated by a thin layer of dielectric material, which is an insulator.

The group of cells in which the solar light is absorbed is called the type-n group, and the other one, located on the back of type-n, is called the type-p silicon cell.

Manufacturing costs range from .25 to 1.35 USD per Watt but, by 2025, it’s foreseen that the manufacturing process will drop between 0.03 and 0.1 USD per Watt.

Drops of these manufacturing processes are directly related to the prices of the raw material and the complexity involved in the design.

By 2030, it’s estimated that the overall price of solar panels will drop to 1.2 USD per Watt for high-quality panels.

Now that we know that solar panels mean a significant portion of the overall cost of the system let’s go on and analyze the values of the other components of the PV system.

What is a Solar Inverter?

PV panels generate DC current, and the devices used daily by humans use AC current.

Inverters are devices used to convert DC into 50 or 60 Hz depending on the country you live in.

As a critical component to solar PV systems, the cost of an inverter ranges from 50 to 120 US dollars per kW installed for systems that convert DC to 120V AC, which is needed for low consumption devices like blenders, refrigerators, TV, gaming consoles, PC and many others.

For more significant devices like air conditioners, washing machines, and water pumps, a 220V AC is needed.

Prices of AC 220V inverters for solar PV systems range from 140 up to 320 US dollars per kW installed.

These devices are expensive because of the complexity involved in the production required to obtain a high-performance device that meets the safety standards needed worldwide.

Inverters are usually located directly under the panels in large systems used to generate high amounts of electricity, but if the purpose is to power a single home, they can be located in separated rooms near the battery banks, it depends on the configuration adopted.

These devices are medium in size and consider battery banks and inverters as a whole.

They could be fitted with the average ventilation system in a 14 square meters room.

If you’d like to know more about inverters, you can check this article.

What Are Battery Banks?

Battery banks’ purpose is to store energy to make up for those times of the day when energy production is not at its peak or at night time.

The battery bank must be capable of storing the energy required to run your house at night when the sun is not charging the batteries anymore.

The cost of this component depends on the size in kWh needed to meet your consumption requirements and the quality of the batteries installed.

Also, you’ll have to consider the wiring needed to connect the batteries efficiently.

There are three types of batteries: Flooded Lead Acid, Sealed Lead Acid, and Lithium.

Lithium batteries are the most expensive.

They cost about 640 USD per kWh required, but the advantage related to them is their 10 to 15 years of duty life and that they require almost no maintenance.

Lithium batteries also have the advantage that they require less ventilation, and they charge faster than Lead Acid batteries.

Flooded Lead Acid lasts between 5 and 7 years, but they cost about 140-220 USD per kWh required; however, they need constant maintenance, which increases the cost in time.

Sealed Lead Acid batteries require no maintenance, but they’re the ones with the shortest duty life ranging from 2 to 5 years, and the average cost is 350 USD per kWh.

Lead Acid batteries come with two significant disadvantages, which are their need for a complete ventilation system and their slow charging time.

These batteries can heat up to undesirable temperatures if they’re not ventilated correctly, and this might cause system failures that may even put human life in danger.

A ventilation system capable of keeping the batteries at a regular operation temperature costs between 72 and 120 US dollars per kW installed.

The ventilation system components need maintenance, and depending on the standard room temperature of the room they’re installed, they can last for 5 to 10 years.

If you want to learn more about battery banks, check this article.

Why Do We Need Charge Regulators?

The primary function of these devices is, as their name suggests, to regulate the charging process of the batteries and improve battery life.

Charge regulators measure the charge level of the batteries and avoid overcharges and high discharges of the batteries, which affect their performance level.

There are many types of regulators, depending on how they work, and the prices vary with each type.

It’s also important to mention that not all the regulator types can be used for every system; this depends on the energy generation and consumption of the system.

To know more about how the different types of regulators work, click here.

Most regulators work as protections, too, and their prices vary for each Ampere of current that passes through the device.

Their prices range from 22 to 57 dollars each, and if you want to install a PV system to feed your whole house, you’ll need about 12 of them depending on the capacity installed.

Here you can check some charge controllers and their reviews.

The price of these components is relatively low when compared with the other ones, but these are the ones that fail the most, this means that you’ll need to replace them regularly.

For a duty life of 15 years for the whole system, you’ll need to replace at least three times each regulator.

Some inverters come with stock charge regulators installed, but their cost is higher.

Based on the kWh consumption regulators, the price varies between 0.19 and 0.57 US dollars.

What Are the Components of Solar Panels?

Apart from the main components of the system, the relevance and the cost of wiring and charge meters make them important enough to be mentioned here.

Wires connect each of the components of the system and are also used to connect your house to the solar power supply.

These wires are made of copper and insulating material, and their cost varies from 3 to 8 USD per linear foot of wire.

Wiring represents between 4% and 8% of the total cost of the photovoltaic system; hence it’s important to mention them in this article.

You could save in wiring by placing all the systems as near as you can, but this isn’t always a practical solution.

Placing the components too close isn’t practical because most of the installations for residential purposes are installed on the roofs, and the top floor is always used for the bedrooms.

In addition to wiring, photovoltaic systems it’s highly recommended to measure the amount of energy produced by the panels to keep a record of the investment feasibility.

These meters work as counters, and they’ll let you know how much energy you used from your solar PV system and how much you used from the conventional ways to produce electricity.

Electric meters are sold as single units with prices ranging from 150 to 400 USD.

In most countries, the electricity meters are provided by the energy supplier, and they might even help you out while making the connection to your solar power system.

Final Thoughts

Why are solar panels so expensive?

PV solar systems able to run a complete house have prices between 10.000 and 25.000 USD.

Most of their prices come from the research that needs to be done to reach efficiency levels high enough to ensure the continuity in energy production on cloudy days.

Research is also focused on increasing the maximum temperature panels that panels can resist without losing a considerable amount of their overall efficiency.

Almost 40% of the cost of PV systems is attributed to research.

To obtain the raw material needed to build the solar panels, it’s also needed to invest in research.

Right now and maybe for a long time, silicon will be the best option as the primary material required to build solar panels since there is plenty of it available on the earth’s surface.

Based on its availability, researchers prefer to invest in how to make silicon more efficient rather than using other materials to build solar panels.

Most advantages of solar power are related to independence related to the system. This means that every house can install its solar PV system to cover its energy demand.

If you consider that solar power is too expensive and you’re not able to install a system to maintain the whole demand of your house, simply install a smaller system to decrease the dependence on the conventional systems and reduce the electricity bill.

Solar energy investments are said to pay themselves, they need almost no maintenance, and in time you’ll have a self-sustainable source of energy.

Thanks to all the engineering advance done lately, efficiencies of the solar PV system have been raised to a level never imagined before, which makes them a more reliable source of energy for the world of tomorrow.

Today it may not seem like a cheap energy source, but in the next 10 years, solar panels will prove how worthy they’re.

Solar energy is listed as one of the best sources of employment of the future because of its fast growth and that when it’s compared to other sources of energy, it shows to be the most sustainable.

The only disadvantage related to solar energy is its availability because the sun does not shine for an entire day, but hopefully, in the future, we’ll learn to overcome this problem.