Factors Affecting Solar Panel Installation Costs 

Solar Panels Cost

Solar energy has offered us endless advantages in terms of utility bills, environmental friendliness, energy savings, etc. It is cheaper and eco-friendly in the long run, but greater savings demand higher investment. So, the initial cost of installation can be high, including the cost of the product, labour, and maintenance. 
There are several factors that can affect the solar panels cost, whether purchasing it or installing it, such as the size of the system, the quality of the panels, and the location of your property. Read along as we dissect the factors affecting the cost of solar panel installation.

Cost Factors Explained!

The solar panel’s cost differs from one another depending on conditions like size, location, interconnection and grid compatibility, and many more. We have explained some of the factors that influence the installation cost.  

Capacity And Size

The capacity and size of the solar panel have a significant impact on the cost of its installation. According to the scale of the installation, the price might increase or decrease, and you can get added benefits. Here’s how the capacity and size impact the cost.

Economy Of Scale

The cost per watt of the installed capacity tends to decrease with the increase in the size of the system, as the fixed cost associated with designing, permitting, and installing a solar power system can be spread out over a larger number of panels, leading to a lower cost per panel.

Bulk Discount

Some manufacturers and suppliers offer discounts when you purchase a large quantity of solar panels, lowering the overall cost of the panels and installation.

Installation Cost

While the installation cost might increase with the increase in capacity, it may be lower per unit due to installation logistics efficiencies and reduced labour costs.

Permitting And Interconnection Cost

Larger solar panel installations may incur higher permitting and interconnection costs than smaller systems.

Inverter Sizing

The capacity of the inverter also affects the size of the solar power system. Larger systems may require higher-capacity inverters, which can be more expensive.


It is essential to consider location-specific factors when planning a solar PV system installation, as these affect not only the cost but also the electricity production.

Solar Irradiation

Areas with higher solar irradiation require fewer solar panels to generate the same amount of electricity as the amount of sunlight a location receives directly affects the efficiency and output of solar panels, potentially reducing the overall installation cost.

Local Regulation And Permitting

Different regions may have varying regulations, permitting processes, and fees for installing solar panels. So the costs also differ accordingly.

Accessibility And Logistic

The ease of access to the installation site, transportation costs, and logistical challenges can also influence the installation cost. The nearer the installation site, the lesser the costs.

Grid Connection And Interconnection Cost

Connecting the solar power system to the grid may involve additional costs, such as installing inverters, transformers, and other equipment. The distance to existing grid infrastructure and the grid connection capacity can impact these costs.

Additional Equipment And Components

Depending on the type of solar system you need, you may have to acquire additional equipment to install the panels and ensure proper and efficient functioning.


Inverters are essential components of a solar power system that convert the direct current (DC) electricity generated by the solar panels into alternating current (AC) electricity used in homes and factories. High-capacity inverters may have a larger upfront cost but can improve system performance and efficiency.

Batteries And Energy Storage

Adding energy storage, such as batteries, to a solar power system can increase the installation cost but provides the benefit of backup power during outages and the ability to store excess energy for use at night or during peak demand periods.

Safety Equipment And Backup System

Safety equipment, such as disconnect switches, surge protectors, grounding systems, and backup systems, such as generators or grid interconnection for backup power, can add to the overall cost but provide added reliability and security.

Tax Incentive

There are several tax incentives to promote the adoption of solar energy and reduce the cost of solar panel installation for homeowners, businesses and other stakeholders.

Accelerated Depreciation

Accelerated depreciation can significantly lower the effective cost of solar panel installation for commercial and industrial consumers, help businesses reduce their tax liability, and improve the return on investment for solar projects.

Generation-Based Incentive (GBI)

This scheme promotes solar power generation by offering solar power producers financial incentives based on the electricity generated by their solar power plants. 

Modified Special Incentive Package Scheme (M-SIPS)

This scheme provides various financial incentives, including tax benefits, to promote the manufacturing of solar PV cells, modules, and other components in India.


Factors like the capacity and size of the solar panel, location, additional equipment and components, and tax incentives are some of the key components that affect solar panel costs. Before you install solar panels for your home or business, research and analyse the advantages and the tax incentives and exemptions provided by the government and reap their benefits. 

Here at Inter Solar Systems, our solar PV panels are highly affordable and top-notch in their quality and efficiency.  Contact us now and save extra with our reliable products and after-sales services that make your solar power system last longer. 

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