Cost per watt is the only number that matters
Divide the gross system price, before any incentives, by system size in watts. A 8.4 kW system quoted at $29,400 is $3.50 per watt.
| Gross cost per watt | Verdict |
|---|---|
| $2.20 to $2.80 | Excellent - typically cash purchase, competitive local installer |
| $2.80 to $3.30 | Fair market price for most of the U.S. |
| $3.30 to $3.80 | High - ask what justifies it |
| Above $4.00 | Usually a financed deal with a large hidden dealer fee |
The dealer fee is where the money hides
A low-interest solar loan is rarely low cost. Lenders charge the installer a dealer fee of 15 to 30 percent for a 1.99 percent loan, and that fee is added to your system price. The same system paid in cash can be $6,000 to $10,000 cheaper. Always ask for the cash price and the financed price side by side.
Check the production estimate, not just the price
A proposal that assumes unrealistic annual production makes payback look shorter than it is. Compare the quoted kWh per kW per year to the NREL PVWatts estimate for your zip code and roof orientation. If the proposal is more than about 10 percent optimistic, the savings math is fiction.
Terms to nail down before signing
- Panel and inverter brand, model, and wattage - not "or equivalent".
- Production guarantee, and what the installer pays if the system underproduces.
- Roof penetration warranty length, separate from the equipment warranty.
- Escalator clause on leases and PPAs - a 2.9 percent annual escalator can outrun utility rates.
- Whether the 30 percent federal credit is applied to your price or assumed as your rebate.