Solar is a popular alternative energy source that can reduce energy bills and increase home value. Our overview of solar panel costs will help you learn more about the pros and cons of going solar.
As solar energy continues to grow in accessibility and popularity, the average cost of solar panels is decreasing. According to the Solar Energy Industries Association (SEIA), residential solar panel systems have dropped in price by an annual average of more than 60% over the past decade — from upwards of $50,000 for a 6-kilowatt-hour (KWh) system in 2011 to between $16,000 and $21,000 in 2022.
We at the Home Media reviews team have researched dozens of solar panel manufacturers and solar companies to calculate average solar panel costs. If you’re ready to connect with solar companies near you,use this online tool to get a free quote. On Average, Homeowners Save $5,000–$20,000 with Solar Panels.
How Much Do Solar Panels Cost?
Switching to solar energy requires an up-front investment in equipment and installation. But after that initial cost, the only recurring charge is the electricity you use beyond the power your panels generate. Assuming your solar system is the right size for your home and is properly installed and maintained, homeowners typically see long-term savings on electricity bills and a return on their investment after several years.
The SEIA estimates the national average cost of a residential solar panel system is $2.94 per watt.* That translates to just under $11,000 for a 5 kW system, the average size of a standard residential solar system in the United States.
The price of solar panels varies by brand and retailer. Keep in mind that solar panels are only a fraction of the total cost of going solar. Installation (including supporting equipment) and ongoing maintenance make up the remaining expenses.
The table below gives an overview of solar panel costs by state to give you a general starting point for pricing. For comparison, the Energy Information Administration breaks down electricity prices by state for 2020 and 2021.
|State||Average Cost of Solar Per Watt||Average Cost of a 5kW System After Tax Credit|
Are Solar Panels Worth the Cost?
Investing in solar panels is expensive, but the long-term benefits make them worth the cost. Solar panels are a good solution if you have consistently high electricity bills or your cost is more expensive than in other areas of your state.
Solar power also helps customers reduce their fossil fuel use and overall carbon footprint. These are just a few of the benefits of installing a solar power system. See the infographic below for more long-term advantages of going solar.
Pros and Cons of a Home Solar Power System
ProsIncreases property valueLowers home energy costsProvides energy independenceReduces carbon footprint
ConsInefficient in poor weather conditionsNeeds a lot of roof spaceNot beneficial in areas with low electricity ratesRequires a large financial investment
Calculating Solar Power Costs and Savings
If you’re unsure if a solar panel system is right for your home, use this solar calculator to estimate your potential costs and savings. Our calculator weighs several factors including your home’s location, size, roof structure, and current energy usage. You’ll get a better picture of your estimated cost, long-term savings and payback period.
Factors Affecting Solar Panel Cost
Various factors can affect the cost of solar panels.
Photovoltaic panels — those typically used in home solar systems — can absorb direct and indirect sunlight so that solar power can be harnessed basically anywhere in the United States. “There is a misconception that solar power only works in hot, sunny environments,” says Garrett Nilsen, the deputy director of the U.S. Department of Energy’s Solar Energy Technologies Office. “Actually, solar technology can generate power in practically any weather condition and every U.S. climate.”
Most solar companies will install monocrystalline panels. These panels’ photovoltaic cells absorb the most energy and can therefore maximize sunlight exposure, no matter where you live.
However, there are some states that average more sunlight year-round, according to the World Population Review:
Not surprisingly, many of the above states top the SEIA’s list of top cumulative solar electric capacity, including Arizona, Texas, California, Nevada and Florida. But some states that have the most solar panel systems — including North Carolina, New Jersey, Massachusetts and New York — are not necessarily the sunniest. Residential solar systems in states that are sunnier will typically perform better.
The most significant cost impact in terms of location is not geography; it’s legislation. “The cost of solar technology has fallen in recent years, but the costs associated with permitting and inspecting solar systems have remained high,” Nilsen says. While sunnier states tend to have more solar power output, states that have solar incentives — such as a solar investment tax credit and other solar-friendly programs — tend to have high output levels as well, regardless of sun exposure.
Your roof’s layout and can affect your solar panel price as well as your return on investment. Solar panels generate the most energy production on angled roofs that allow for maximum sun exposure. The direction of your roof also plays a part, with south-, west- or southwest-facing roofs getting the best sun exposure. Flat roofs require the construction of angled platforms, which will add to your labor costs and increase your total price.
Your roof’s age and structural soundness are also important factors in solar panel cost. If roof repairs or a different roof material is needed to support panels, each will come at an additional expense.
System Panels and Equipment
The cost of your system is also dependent on the number of panels you need and the type of panels you select.
The average home solar system is 5k W, although larger homes may require a 6k W system. Assuming your system uses 250-watt photovoltaic panels, that equates to approximately 20 panels per home, at the cost of roughly $11,000. Prices increase from that starting point for larger systems requiring more panels.
You should also consider how well the panels perform and invest in solar panels with better efficiency ratings. When we surveyed 1,000 solar power customers, 35% of respondents ranked efficiency as their No. 1 priority when shopping for panels. 54% of respondents ranked brand name as the least relevant factor for panel selection. High-efficiency panels are more expensive but have longer lifespans and guaranteed performance supplemented with at least 25-year warranties.
Home solar systems also typically require an inverter. Most solar companies will design your solar system with these components included, but selecting specific inverters or batteries, such as a Tesla Powerwall, may increase your overall cost. On Average, Homeowners Save $5,000–$20,000 with Solar Panels
How Does Solar Panel Installation Work?
The process for switching to solar doesn’t happen overnight. It may take weeks or even months to decide on a solar provider and an additional several weeks to six months before your system is fully operational. The amount of time it takes depends on a company’s availability and schedule, as well as the permitting and inspection processes where you live. The size and type of solar panels you choose can also affect the length of this process.
In general, though, solar panel installation occurs in five steps: survey, design, permitting, installation and connection. If you’re ready to speak with an installer, enter your zip code here to get quotes from local solar companies near you.
Survey Your Home
Your selected solar provider will arrange for an engineer to complete a site review of your home as the first step to solar panel installation. Many solar providers, such as Momentum Solar, have in-house engineers. Others outsource the job to local contractors. The engineer will review your roof to ensure it can accommodate solar panels and inspect your current electrical system. This home visit will guide the design of your residential solar system.
Design Your Solar Power System
Following an in-person roof assessment, your solar company will create a customized system for your home. At this point, companies will provide recommendations on specific brands and products and allow you to pick the ones that best fit your budget. You will also have a chance to review and approve the design before the company moves on to the permitting phase of the process.
Solar panel installation can happen only after obtaining essential permits and other paperwork. While this can take several weeks, most solar companies will handle this step in the process for you.
Required permits include written permission from your utility company, often in the form of an interlocal agreement. If applicable in your state, the agreement will include enrollment in a net metering program. Net-metering credits homeowners who own their solar systems for any excess electricity their panels produce, essentially billing them only for their net energy usage.
As of 2022, 34 states plus Washington, D.C., Guam, Puerto Rico and the U.S. Virgin Islands have net-metering programs in place. An additional six states — Arizona, Georgia, Hawaii, Louisiana, Mississippi and Utah — have other available forms of solar energy compensation.
The following states are starting to phase out their net-metering programs:
- New York
The following states do not offer net-metering at all:
- South Dakota
Your solar company will also need to secure local electrical and building permits. And you’ll want to make sure the solar company can file applications for any state or federal incentive programs to help offset the cost of your solar system.
Install the Panels and Components
While installation time depends on the size and complexity of your solar system, the typical time frame is one to three days. Installers will ensure all roofing tiles or shingles are attached, then connect wiring that will feed into your power system. Racks must be installed to support panels properly; then, your panels will be placed onto your roof. Support equipment such as inverters — components that convert the electrical energy from the panels to usable alternating current (AC) power — and batteries, which store excess energy to power your home at night or during outages, will be installed after panel placement.
Inspect and Activate the System
Assuming your solar power system passes inspection and meets local regulations, your solar system can officially be connected to the power grid. Then, it’s as simple as flipping a switch to begin generating solar energy from your panels.
How Do I Pay for Solar Panels?
If your state doesn’t offer solar rebates, you may still be eligible for state-issued Solar Renewable Energy Credits (SRECs). Some states allow you to earn and sell credits for the electricity your solar system produces through a net-metering program. And many states offer a solar investment tax credit or other similar incentives to help offset the total cost of your solar panel system and maximize savings on utility bills.
The federal government also offers the solar Investment Tax Credit (ITC). Created in 2005, this federal solar tax credit is available in all states, including those with no SRECs or state rebates. The 30% tax credit applies to solar energy systems installed between 2022 and 2032. The tax credit value will decrease to 26% in 2033 and 22% in 2034.
Although payment options vary, most solar companies offer at least two of the following choices: purchasing the residential solar power system outright, signing a solar lease or power purchase agreement (PPA) or taking out a solar loan. Keep in mind that a solar lease or PPA will disqualify you from receiving the federal solar tax credit and state incentives since they apply only to the owners of the solar panels. Certain financing options can also add to your overall solar system costs. For example, solar loans include interest rates that result in higher long-term payments.
The Bottom Line
Solar panels can be a beneficial investment, saving you money on electricity and increasing your property value. However, there are factors you should consider before switching to solar power, including your home’s daily sun exposure and roof layout. You should also review your monthly electricity bill and compare it against your state’s average electricity rates.
We recommend taking advantage of federal and state incentives to lower the overall cost of your panels. If you’re ready to go solar, fill out this online form to get quotes from top solar installers in your area.
Dylan Welch is the CEO and Host of Going Green, a podcast, website, and social media brand that highlights renewable energy, cleantech, and sustainable news.