How to Calculate the Cost of a Solar System for Your Home — the clear, no-fluff guide
If you want to know how to calculate the cost of a solar system for your home, you’re in the right place. This guide walks you, step-by-step, through everything you need to measure, calculate, and budget for — written in plain English, with real-world examples and numbers so you can walk away with a practical price estimate you can actually use.
I’ll show you:
- what numbers to collect,
- the exact formulas to use,
- where costs come from (panels, inverter, batteries, labour, extras),
- a worked example with Nigerian market prices (so you can see a real calculation),
- and smart tips to reduce cost without sacrificing quality.
Let’s get started.
Why “how to calculate the cost of a solar system for your home” matters
Buying solar isn’t just about panels. A properly sized system costs money up front but saves you later — if it’s sized correctly. If you under-size, you’ll be frustrated by shortfall. If you oversize, you wasted money. Learning how to calculate the cost of a solar system for your home means you buy the right system the first time.
Quick overview: the cost components you must include
When calculating cost, include these items:
- Solar panels (number × price per panel)
- Inverter(s) (convert DC ➜ AC)
- Batteries (if you want backup or time-of-use shifting)
- Mounting structure, rails, clamps
- Cables, junction boxes, breakers, fuses, charge controllers/MPPTs
- Labour / installation fees
- Permits, inspections, and transport/import fees (if applicable)
- Contingency (warranty registration, small extras, 5–10%)
In many markets the hardware (panels + batteries + inverter) is the largest chunk. In Nigeria, for example, full residential systems commonly fall in the range of a few million naira depending on size and battery needs. (solardepotng.com)
Step-by-step: how to calculate the cost of a solar system for your home
Step 1 — Find your real energy use (the starting point)
You must know how much energy you use:
- Look at your last 12 months of electricity bills. Note the monthly kWh number.
- Calculate your average daily use:
Daily kWh = (Monthly kWh) ÷ (Number of days in month)
Example: monthly consumption 300 kWh → daily = 300 ÷ 30 = 10 kWh/day.
This number (daily kWh) is the foundation for sizing the whole system.
Step 2 — Decide how much of that load you want solar to cover
Do you want:
- Full replacement of grid power? (100% solar + batteries)
- Partial coverage (e.g., daytime loads only — fridge, lights, fans)
- Backup only (short outages only)
Be explicit — it affects panel and battery sizes and therefore cost.
Step 3 — Convert daily energy need into required solar array size
Use peak sun hours for your location (average “full sun” hours per day). For many Nigerian cities use ~4–5 peak sun hours/day as a working figure (use a local solar map for exact).
Formula:
Required array power (kW) = Daily kWh ÷ (Peak sun hours × System derate factor)
System derate factor accounts for real losses (wiring, inverter, heat, dust). Use 0.75 – 0.80 for conservative planning.
Worked example (clear math):
- Daily need = 10 kWh
- Peak sun hours = 4.5 h/day
- Derate factor = 0.75
Compute denominator first:4.5 × 0.75 = 3.375
Now divide:10 ÷ 3.375 = 2.962962962962963 → round to 3.0 kW of panels.
So: you need roughly a 3 kW PV array to cover ~10 kWh/day under these assumptions.
Step 4 — Convert array size to panel count
Pick a panel wattage (commonly 300W–550W today).
If we choose 400 W panels:
Panels required = (3000 W) ÷ (400 W) = 7.5 → round up to 8 panels
So a 3 kW system ≈ 8 × 400W panels.
(If you pick 350W panels, you’ll need more panels; pick what’s commonly available or what your installer recommends.)
Step 5 — Size the inverter
Inverter power should handle the peak simultaneous load (sum of appliances that may run together). Then add a safety margin.
If your simultaneous peak is 2.4 kW, choose an inverter ~25–30% larger:
2.4 kW × 1.25 = 3.0 kW → choose a 3 kW inverter (or a 3.5 kW for some headroom)
Step 6 — Size the batteries (if you want backup)
Decide days of autonomy (how many days you need power without sun), and the usable Depth of Discharge (DoD) of chosen battery chemistry.
Formula:
Battery capacity required (kWh) = (Daily kWh × Days of autonomy) ÷ (DoD × battery round-trip efficiency)
Example: one full day backup for 10 kWh/day, using lithium DoD 0.8 and efficiency 0.9:
Battery capacity = (10 × 1) ÷ (0.8 × 0.9) = 10 ÷ 0.72 = 13.888... → round to 14 kWh
So you’d need ~14 kWh of battery storage for one day of backup.
Step 7 — Calculate component costs (price × quantity)
Now plug in market prices. Prices vary, so always use local quotes. Below I use Nigeria 2025 market ranges as examples (you can swap these numbers for your local market). Sources for these ranges are local market price guides and retailer listings. (electricalpanel.com.ng)
Representative price ranges (Nigeria, 2025 examples):
- Panels (400 W): ₦120,000 – ₦170,000 each (use a mid price when estimating). (electricalpanel.com.ng)
- Inverter (3 kW – hybrid/pure sine): ₦160,000 – ₦600,000 depending on brand and features. (Solar Energy Supply Stores)
- Batteries (Li-ion): ₦1,850,000 for a ~10 kWh unit (prices scale with capacity; premium brands cost more). (Maypatronic)
- Installed system packages (residential) in Nigeria typically run roughly ₦2,000,000 – ₦5,000,000 depending on size and battery. (solardepotng.com)
Sample full calculation (clear numbers) — “how to calculate the cost” in action
Let’s apply everything to our 3 kW example (covers ~10 kWh/day) and pick realistic mid-market prices.
Assumptions (example):
- Panels: 8 × 400W
- Panel price (mid): ₦140,000 per 400W panel. (source ranges cited above) (electricalpanel.com.ng)
- Inverter: 3 kW hybrid — use ₦300,000 as a mid-range price. (Solar Energy Supply Stores)
- Battery: need ~14 kWh — use 10 kWh battery price ₦1,850,000 as baseline and scale proportionally. (Maypatronic)
- Labour & mounting & cables & misc: estimate 12% of hardware cost (common ballpark).
- Contingency & permits: 5%.
Step A — Panels cost
- Panels:
8 × ₦140,000 = ₦1,120,000
Step B — Inverter cost
- Inverter:
₦300,000
Step C — Battery cost
- 10 kWh battery price (reference):
₦1,850,000 - We need ~14 kWh → scale:
1.4 × ₦1,850,000 = ₦2,590,000
Step D — Hardware subtotal
Panels + Inverter + Battery = ₦1,120,000 + ₦300,000 + ₦2,590,000 = ₦4,010,000
Step E — Labour & accessories (12%)
12% × ₦4,010,000 = 0.12 × 4,010,000 = ₦481,200
Step F — Contingency & permits (5%)
5% × ₦4,010,000 = ₦200,500
Final estimate (example):
Total = Hardware + Labour + Contingency = ₦4,010,000 + ₦481,200 + ₦200,500 = ₦4,691,700
Round up for neat quoting: ≈ ₦4.7 million for a 3 kW PV + ~14 kWh battery hybrid system (mid-range components, Nigeria example). This sits within typical residential package ranges reported locally. (solardepotng.com)
Note: If you remove batteries (grid-tied or daytime-only system), your price can drop dramatically — often to under ₦2 million for a 3 kW system, depending on panel quality and inverter choice. (solardepotng.com)
How to adapt this calculation to your local market (swap in your numbers)
- Replace panel/inverter/battery unit costs with quotes from 3 local suppliers (compare).
- Replace peak sun hours with the figure for your city (solar maps or installer can help).
- Adjust derate factor (0.75 is conservative).
- Decide autonomy days for battery sizing.
- Recalculate with the same formulas above.
Ways to reduce the cost without hurting performance
- Prioritize loads: If you only need fridge + lights during outages, you can get away with smaller batteries.
- Buy mid-tier panels and premium inverters — inverter failure costs more later; panels degrade slowly so choose a reliable brand.
- Stagger upgrades: Install panels now, add batteries later (system can be designed to expand).
- Get multiple quotes — prices vary widely between vendors. Tech platforms show wide price spreads for the same panel models. (Techpoint Africa)
- Negotiate on installation — reputable installers may provide package discounts.
- Consider financing — loans or pay-monthly plans spread cost and can be cheaper than diesel genset fuel.
How to estimate payback and ROI (quick method)
- Annual kWh from your system ≈
Array kW × Peak sun hours × 365 × system efficiency. - Annual savings =
Annual kWh × local electricity price (₦/kWh). - Payback period ≈
Initial cost ÷ annual savings.
Example (quick):
- 3 kW × 4.5 h × 365 × 0.75 ≈
3 × 4.5 × 365 × 0.75 =compute:4.5 × 0.75 = 3.375→3 × 3.375 × 365 = 10.125 × 365 = 3,695.625 kWh/year→ round to 3,696 kWh/year.
If electricity price = ₦120/kWh, annual savings ≈ 3,696 × ₦120 = ₦443,520/year.
If system cost = ₦4,700,000, payback ≈ 4,700,000 ÷ 443,520 ≈ 10.6 years.
(These are illustrative numbers — swap with your electricity tariff and your exact production estimate.)
Common pitfalls to avoid when calculating cost
- Forgetting the derate factor (results in undersized systems).
- Using the wrong peak sun hours (local microclimates matter).
- Ignoring battery DoD and efficiency (leads to undersized battery bank).
- Cutting corners on the inverter (inverter failures stop the whole system).
- Not budgeting labour and contingency — installation, transport, and permits add up.
Checklist: what to get from suppliers before you calculate final cost
- Panel wattage and price per panel (ask for model and datasheet). (electricalpanel.com.ng)
- Inverter model, continuous rating, and price. (Solar Energy Supply Stores)
- Battery type, usable capacity (DoD), and price per kWh. (Maypatronic)
- Mounting, cables, and included accessories (or price separately).
- Labour/installation quote and warranty details.
- Expected lead time and delivery fees.
Final words: how to calculate the cost of a solar system for your home — summary
- Start with real bills — find daily kWh.
- Choose coverage level (full/partial/backup).
- Compute needed array kW using peak sun hours and derate factor.
- Pick panel wattage and count panels.
- Size inverter and battery using the formulas above.
- Collect local prices for panels, inverter, batteries and plug into the cost table.
- Add labour, accessories, contingency (10–20% typical).
- Check payback using expected annual kWh production and your electricity price.
If you want, I can do this exact calculation for your home — tell me:
- your average monthly kWh (or list of appliances + hours),
- whether you want full backup or daytime only, and
- your city (so I can pick local peak sun hours).
I’ll return a neat budget estimate (panel count, battery size, inverter size) and three pricing scenarios: budget, mid, and premium — using current local price ranges as shown above. (electricalpanel.com.ng)
Sources and price guides used for the example numbers
- Local panel price ranges and market survey (Nigeria, 2025). (electricalpanel.com.ng)
- Inverter price ranges and retail listings (Nigeria, 2025). (Solar Energy Supply Stores)
- Battery price examples / 10 kWh Li-ion price listings (Nigeria, 2025). (Maypatronic)
- Typical residential package ranges and market reports (Nigeria). (solardepotng.com)
- Global context on installation cost per watt (for comparison and ROI discussion). (Investopedia)
