Solar Panel Cost Per Watt

Solar panel cost per watt, also known as price per watt (PPW), is a very useful measurement for comparing multiple solar quotes to see which provides the best bang for your buck.

In this article, we’ll explore calculating PPW, how to use PPW to compare solar quotes, and factors that influence solar panel cost.

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How to calculate solar price per watt (PPW)

Calculating solar price per watt is pretty simple. Simply divide the cost of the system (in dollars) by the size of the system (in watts).

PPW = System cost / System wattage

Now, solar systems are typically sized in kilowatts (kW), so you’ll have to multiply by 1,000 to convert to watts. For example,a 5.5 kW solar system is equivalent to a 5,500 Watt solar system.

It’s also important to distinguish between the PPW before accounting for incentives (the gross cost of the system) and the PPW after accounting for incentives (the net cost of the system).

For example, the PPW of a 5,500 Watt system looks quite different before and after accounting for the 30% tax credit.

According to the Solar Energy Industries Association, the average price per watt for residential solar projects was $3.27 in the first half of 2023. That is up slightly from a low of $2.92 before the pandemic, but down over 50% from the price of $6.65 per watt in 2010.

How to compare solar quotes using PPW

Knowing the price per watt of solar is good for two things.

First, PPW allows you to get a ballpark estimate of how much solar would cost for your home. Use this article to see how many solar panels you’d need, and then multiply the size of the system by the SEIA’s average PPW of $3.27 to get an estimated cost for the system.

Second, it allows you to easily compare solar quotes for various-sized systems. 

For example, let’s say you have three different solar companies design a custom solar system for your roof. Chances are, there are going to be slight differences in the size and cost of the systems they design based on their design techniques, equipment pricing, installation costs, and overhead. PPW allows you to make an apples-to-apples comparison of how much solar capacity you are getting for your money.

At first glance, Quote 1 seems like the best deal because it has the lowest sticker price. However, when you calculate the PPW for each quote, you find that Quote 3 provides the most bang for your buck at $3.25 per Watt.

In general, larger solar systems have a lower price per watt. That’s because soft costs (permitting, installation, inspection, customer acquisition, and overhead) are roughly the same from project to project and don’t add capacity to the system.

Here are some other factors that influence the price per watt of a solar system.

What influences the price per watt of a solar system?

System size

This is a factor of economy of scale. An installer needs to roll a truck to your house whether it’s a 5 kilowatt system or a 20 kilowatt system. There are fixed costs that go into this.

For example, the installer will need to pull a permit for your project, regardless of the size of your project. This fixed permitting cost will be more expensive for a smaller solar array, relative to the other costs.

The larger the system, the lower the installer can offer you on a price per watt basis.

System Adders

There are certain added costs — known as “adders” — that may be included in the solar cost per watt.

Some examples of adders include:

• Electrical work
• Roof work
• Trenching
• Electric Vehicle charger
• Interior conduit
• Atypical Roofs

Because these added costs don’t change your system size, but add to the total system cost, this will increase your project’s total cost per watt.

You may also see adders for certain roof types that are more complex to install solar panels on. Some examples of roofs with extra charges are:

• Spanish Clay Tile (common in California)
• Metal Standing Seam
• Flat Roofs

Finally, if your installer has a long trip to your home, they might add on a travel charge that can increase your PPW. This is one of the many reasons we recommend working with a local installation company.

Premium Solar Equipment

If you want premium equipment, it’ll come at a premium cost. You may need higher-efficiency solar panels due to space constraints, or you may just prefer the aesthetics of certain solar brands.

Premium equipment may increase the PPW of your project, however, it may also be the more cost-effective option in the long term thanks to higher performance and more robust warranties.

Sales Markup

There are many great solar companies out there, but there are still a lot of companies that unfortunately practice certain sales tactics.

If you’re working directly with an installation company, the installer may give their salesperson the flexibility to charge you whatever they think you’re willing to pay. You may see your PPW increase from $3 to $6 per watt. There’s no fixed value for what a sales markup can be, but a significantly higher solar cost per watt can be a red flag regarding the quality of the company you’re working with.

That’s why getting multiple quotes is so important to identifying outliers and solar scams. Always get three or more bids from local installers to get a sense of fair pricing!

How you get your solar quotes

How you go about gathering your solar quotes also impacts the PPW of your project. For example, a 2018 study by the National Renewable Energy Lab found:

“By using quote platforms rather than directly soliciting quotes from installers, PV customers might save roughly $0.20/W–$0.40/W, which is equivalent to $1,000–$2,000 in savings for a typical 5-kW residential PV system.”

This study specifically focused on Pick My Solar, which powers the solar.com marketplace.

Compare quotes on solar.com to lower your PPW

PPW is a great tool for comparing solar quotes, and one of the easiest ways to lower the cost per watt of solar is to get quotes through solar.com.

On solar.com, you team up with a dedicated Energy Advisor to design a custom system, compare live and binding pricing from vetted local installers, and manage your project for the entirety of its life.

Get started with free quotes today.