The Best Time to Get Solar Is Before Panel Prices Start Going Back Up

If you’re a homeowner like me who has been thinking about going solar, I’ve got an important message for you – the best time to make the move is right now. After more than a decade of solar panel prices dropping steadily year after year, industry experts are predicting those days are over. Prices are expected to start creeping up again soon as demand increases, raw material costs rise, incentives decline, and supply struggles to keep up. That means the window to get a great deal on a solar installation for your home is closing.

I’ve been in the solar business for over 20 years, and I’ve never seen a better time for homeowners to make the switch. But that opportunity is quickly coming to an end. Let me walk you through what’s happening in the market, why you can expect to pay more for solar panels in the near future, and why you should act fast while deals are still to be had.

Solar Panel Pricing Has Dropped Dramatically, But Increases Are On The Horizon

Back in 2010 when I first started selling solar, the average cost of a panel was around $1.80 per watt. Fast forward to today, and panels now sell for about $0.20 per watt – a massive 90% price drop! At under $15,000 for an average sized 6 kW system, solar has become far more affordable for the everyday homeowner.

Unfortunately, this incredible price decline has slowed considerably, and is projected to reverse in the next couple years. According to market research firm Wood Mackenzie, panel pricing will increase by 5-15% by 2025. Other experts predict even larger jumps as high as 20-40% in the next 1-2 years.

After basking in ever-lower solar prices for so long, it may be hard to believe they are about to go back up. But when you look at some of the key factors at play, the writing is on the wall.

Booming Demand and Scarce Materials Are Pushing Prices Up

One of the main forces driving impending solar panel price increases is booming demand. As solar expands its global share of electricity generation, installations are growing rapidly. Wood Mackenzie expects worldwide solar demand to grow 17% annually over the next five years. That’s great news for the planet, but all those new solar farms and rooftop systems require a lot more panels.

At the same time, supply chain disruptions caused by COVID-19, shipping delays, and Russia’s war in Ukraine have made key solar manufacturing materials like aluminum frames and silicon wafers more expensive and difficult to obtain.

When surging demand meets constrained supply, prices head north. We’re already seeing panel makers announce price hikes to keep up. For example, Chinese manufacturer LONGi recently said they will raise panel prices more than 15% in the third quarter of 2022.

Policy Shifts Will Also Raise Costs

In addition to market forces, policy changes on the horizon will also drive up solar costs. For years, generous federal tax credits have helped spur solar adoption by reducing installation costs by 26% for homeowners. But those credits are set to step down from 26% to 22% at the end of 2023.

State incentives like renewable energy credits are being phased out as well. And changes coming to net metering policies, which compensate rooftop solar owners for excess energy fed back to the grid, will cause payback periods to lengthen in many states.

All of these program phase-outs mean homeowners will have to pay more out of pocket for solar installations very soon.

Why You Should Go Solar Now Before Prices Head Up

Given all the signs pointing to imminently rising system costs, the obvious question is why not just wait? The likelihood of higher solar panel pricing in the next couple years might make someone think delaying their purchase could save them money.

But here’s the reality – the additional savings you can gain by waiting 1-2 years are minor compared to what you’ll save over the 25+ year lifespan of a solar system.

My advice after decades in the industry – bite the bullet and go solar now, even if it means paying a bit more later. Let’s quickly run through three big reasons why now is the optimal time.

1. Maximize Your Solar Savings

At today’s prices, solar panels typically pay for themselves through utility bill savings in 6-8 years. So if you install a system now rather than waiting until prices increase 15% in 2024, you may recoup the investment 6 months faster. But once paid off, you’ll enjoy two full decades of nearly free electricity from the sun!

Even if future price hikes reach 40%, the extra couple thousand dollars you might pay is negligible weighed against 20+ years of solar savings. The sooner you get your system up and running, the more you pocket long-term.

2. Lock in Low Interest Rates

One way to ease the purchase price is financing your solar system. Right now interest rates sit at historic lows, with solar loans available under 3% for up to 20 years. That makes borrowing very affordable.

But the Federal Reserve has indicated they plan to continue raising rates throughout 2022 and 2023. As that occurs, financing costs are sure to rise in tandem.

Getting your solar loan locked in now means you can take advantage of incredibly cheap borrowing costs before they climb higher.

3. Capitalize on State Incentives

As mentioned earlier, solar incentives like renewable energy credits are declining in many states. By installing your system now, you can cash in on thousands in state-level rebates before they’re reduced or eliminated altogether.

For example, my home state of California offers a rebate up to $4,200 on home solar systems, but only through 2023. After that, I’ll have missed my chance to score that sweet cashback offer!

Check out current incentives where you live, because most are set to decrease moving forward. Act now to maximize what’s available.

Get The Best Solar Value Before Prices Rise

For homeowners like you and me, the writing is on the wall – the solar gravy train we’ve been riding for over 10 years is slowing down. But while the days of ever-lower pricing are likely over, solar remains a tremendous investment given how drastically installation costs have dropped.

My advice after decades in solar – get onboard now while deals are hot. Lock in the lowest rate possible before market factors drive prices up over the next couple years. Reach out for quotes so you can start generating free, clean energy from the sun immediately. Feel free to contact me directly if you have any questions! Phil Covell 703-953-9126

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