How Much Do Solar Panels Cost? (Nov 2024)

Nov 10, 2024

Take control of your energy costs with solar power.

CONTENTS

Take control of your energy costs with solar power.

Solar panels generate “free” electricity, but installing a system still costs money. A typical 8-kilowatt (kW) solar panel system costs $22,712 before considering any financial incentives.

Your energy needs determine the system size you need, which affects the overall price of your solar panel installation. How you pay, how much sunlight your roof gets, what local incentives you qualify for and other factors also impact how much you spend.

Homeowners with solar panels avoid $62,219 in total utility costs over 25 years, on average.

The federal solar investment tax credit (ITC) is the most significant financial incentive for most homeowners going solar. You might be able to combine the ITC with local tax breaks or rebates.

Financing solar panels is worth it if the loan payments are cheaper than your current utility bill. Leasing a system is cheaper upfront, but you won’t get the federal tax credit.

The average 5-kilowatt (kW) solar panel system is $14,210 before considering any financial incentives. However, a typical American household needs a system closer to 10 kW to adequately power their home, which costs $28,241 in 2024. That price effectively drops to $19,873 after considering the full federal solar tax credit.

Average solar installation cost by system size

Most solar companies set the price according to the solar system's wattage. The cost per watt is what you pay for each unit of power of your solar energy system. Think of it a little like “price per square foot” when you buy a house. It helps compare the value of solar energy systems in different sizes. As of publishing, the average cost per watt is $2.84.

Answering “How much do solar panels cost?” is complicated because it’s not just one number. It depends on your energy usage, where you live, what incentives you qualify for and whether or not you want a storage battery to go along with the panels.

On the high end, we talked to a solar customer in Hawaii who spent $100,000 going solar. If you just need a few panels for a small do-it-yourself solar project, expect to pay around $200 to $350 per panel (between $0.80 and $1.40 per watt). We suggest using NREL's PVWatts Calculator for estimating your solar installation costs.

First, consider your average household energy needs. This tells you how big of a system you need. If you’re prone to regular power outages, a solar energy storage battery is definitely worth considering. Another solar cost factor people don’t always consider is the condition of their roof.

Your average household energy consumption tells you how big of a system you need. For a typical American home, that could mean about 25 to 30 solar panels, each generating around 400 watts. The exact amount depends on factors like system efficiency and the amount of sunlight (or solar irradiance) your area gets.

Considering the difference between a 7 kW system and an 8 kW system is almost $3,000, it's smart to get your electrical loads as low as possible before going solar.

It’s always worth it to compare a few quotes, whatever the size. One ConsumerAffairs reviewer, Brad in California, was quoted almost $26,000 for a 5-kW system, which works out to $5.20 per watt. California's average cost per watt is currently $2.47.

Of the three types of solar panels available, homes are most commonly powered by monocrystalline or polycrystalline panels. In general, monocrystalline panels are considered the best bang for your buck. Cheaper solar panels are typically polycrystalline.

The difference comes down to efficiency and materials: Monocrystalline panels are made from pure, single silicon crystals; various silicon fragments melted together are used to make polycrystalline panels.

Most American homes end up needing 15 to 30 panels to meet their electrical demands. If you have limited roof space, you might need more efficient panels to make the investment worth it.

Solar panels usually make up the largest portion of your hard cost, but other equipment, such as the inverter factor into the overall price.

Soft costs include labor, permits, deposits and administrative expenses.

Solar panels are designed to last 25 to 30 years, and your roof needs to last just as long. We recommend taking care of any roof repairs before installing solar panels. It’s more cost-effective than removing the panels and reinstalling them later. Get a thorough inspection of your roof now and take pictures.

One solar customer, Devin in California, discovered leaks in their roof a year after installing panels. It cost $5,000 to remove and reinstall the panels after the roof was replaced. “If I had known the roof was in such bad shape, I would've replaced the roof before installing the panels,” Devin told us.

Similarly, when Marie in Florida had to fix an old roof after going solar, she said it cost “$150 per panel to take them down so I can get a new roof and put them back up.”

The federal solar tax credit, also known as the Investment Tax Credit (ITC), is a tax credit for 30% of the total cost of a new solar PV system. Homeowners, businesses and nonprofits can qualify, but there are some limitations. For example, you must own the panels — solar leases and power purchase agreements (PPAs) do not qualify for the tax credit.

The EPA’s new Solar for All program is designed to help low-income households access solar energy. With $7 billion in funding, it’s expected to benefit over 900,000 homes by 2029. The program should save households over $350 million a year on electricity bills and significantly reduce carbon emissions.

Each state is different when it comes to Solar for All and other initiatives. Some — like New Jersey and Arizona — have sales and property tax exemptions to encourage solar energy adoption. Others, like Kentucky, not so much.

The Database of State Incentives for Renewables & Efficiency (DSIRE) is another helpful source for finding new local solar initiatives.

Over 25 years, a complete solar system saves the average homeowner approximately $41,000 to $62,000 on total avoided utility costs over 25 years. It’s a common misconception that solar panels will completely eliminate your monthly power bill. Switching to a home solar system could reduce your energy bill by 75% or more.

Assuming an upfront purchase, it takes about 9.5 years to break even (when your savings with solar panels make up for the cost). Solar savings you see will vary based on your electricity rates, the climate and your particular energy needs. Google’s Project Sunroof is a good tool for estimating how much you can save.

Anecdotally, Diana in Pennsylvania said their electric bills are between $0 and $10, even in the summer, after going solar. Similarly, Brandie in Texas took their “electricity bill down significantly, so even with the price we're paying for the solar panels and the amount of electricity we're using … it's still much cheaper than what we were paying before we had them.”

Some people do see their electricity bills go back up if they run into a problem with their system — like Eunice in Nevada, who didn't realize their inverter needed to be replaced, which led to an unexpected increase in their utility costs. “Everything had been going well and my energy bill had averaged $13 to $15 a month,” Eunice said. “Until I received a bill at the end of September 2022 in the amount of $429 from NV Energy.”

» COMPARE: Solar energy pros and cons

People often use loans, solar leases or power purchase agreements (PPAs) to pay for or avoid paying upfront costs. You might also consider a cash-out refinance or HELOC. If you can pay for the system in full upfront, it’s usually cheaper in the long run.

For example, consider this review from David in California: “Financing it was $18,000,” he said. “But if I paid cash, it was $15,000 and they gave me a $1,000 debit card. It only cost me $14,000. I'm totally satisfied. I haven't paid any electric bills in six months now. I'd recommend it to anybody.”

Solar loans work a lot like any other kind of loan: There’s an application and approval process, and you repay the loan amount in installments over time.

Just remember to pay attention to the interest rate. Jay California said he’s “paying more for the loan payment than I save from the utility. Interest payments alone are over $1,000 per year, and this will continue for a long, long time.”

Another solar customer, Christian in California, “did the math” on their solar loan, and everything worked out. “Instead of paying $100 or $200 for the electric bill, if I use the same amount of energy or less, I will end up paying just the financing, which is $150,” he said. “But only for six years, and then after that, the panels will be mine and I don't have to pay anymore.”

With a solar lease, you don’t own the equipment. Instead, you make monthly payments to use the solar energy system for the duration of the lease term. Your leasing company is responsible for maintaining and repairing the solar panel system during this time.

Another solar power customer, Dan in California, said he “opted for the lease approach instead of a purchase. So, we did not have to put any money upfront at all. Zero. I work in finance/accounting and generally feel that if it sounds too good to be true, it usually is. But in this case, it truly has turned out even better than we could have hoped for.”

At the end of the term, you typically have the option to renew the lease, purchase the system at fair market value or have the leasing company remove the system from your property.

» SOLAR PANELS: Lease vs. buy?

Like solar leases, a power purchase agreement (PPA) is another way to go solar without an upfront investment. An energy service company (ESCO) installs solar panels on your house, owns them and maintains them. You then buy the electricity generated by the panels at a fixed rate.

Take control of your energy costs with solar power.

After solar incentives, the general range is $10,000 to $30,000 for an average American household to invest in solar panels. This includes the cost of the panels themselves, installation and any additional equipment needed. It typically takes five to 15 years to break even on solar installation costs. Solar panels pay for themselves faster in states where electricity costs are high.

Whether or not it’s worth it for you depends on how much you can save on your electricity bill. If you aren’t financially ready to install solar panels yet, you still have options to incorporate solar technology into your life with solar phone chargers and passive solar home design.

» FIND OUT: Where your solar savings go the furthest

How many solar panels you need varies based on your energy usage, the efficiency of the panels and other factors.

The average household uses 886 kWh per month in electrical power, according to the Energy Information Administration.

A solar panel typically produces about 1.5 kilowatt-hours (kWh) per day, so if your daily kWh usage is 30, you would need 20 solar panels to generate all of your energy needs.

» WHAT’S THE DIFFERENCE? kW vs. kWh

Yes. Studies show that homes with solar panels sell for more than homes without them, and that increase in value can be significant. How much value the solar panels add depends on your system's quality, location and other factors.

» MORE: What is solar panel ROI?

Most solar panels last about 25 to 30 years. As with most technology, solar panels degrade over time. With proper upkeep, maintenance and monitoring you can ensure your solar panels function at maximum efficiency.

Net metering is a system that lets you send the extra power your panels produce back into the power grid (the big network of wires that carries electricity to everyone’s houses). In exchange, you get a credit on your electricity bill.

This also means that if your solar panels don’t generate enough electricity (like on cloudy days), you can still use electricity from the grid without paying for it because you’ve already earned credits through net metering.

A reviewer in Texas explains how it worked for them: “When I first signed up, my contract was a net metering, so I paid a certain cost of kilowatt-hours used, and the utility company purchased back from me at that same price. If I generated 200 and consumed 200, my net usage was zero, and my bill was essentially zero."

» MORE: Greenest states in the U.S.

The technicians install wiring connecting the panels to an inverter, which converts the DC power generated by the panels into AC power for use in your home. Installing solar panels typically takes only a few days.

“The process of buying and installing solar panels is relatively straightforward, and many companies offer turnkey solutions that take care of everything from the design to the installation of the system,” said Alan Duncan, founder of Solar Panels Network USA.

Once the solar installation is complete, an inspector checks the system to ensure it meets local safety and building codes. The system is then connected to your utility's power grid. If you’re not grid-connected, you’ll need to get a battery to store solar energy.

Once that’s done, your solar panel system is activated and ready to generate electricity. You can monitor the system's performance and energy production using a monitoring system provided by the installer.

» LEARN: What is a solar home?

ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:

Check out if solar is even worth it for your home.