Solar Panel Cost in 2024

Jul. 15, 2024

Solar Panel Cost in

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The cost of solar panels has declined dramatically over the last several decades and, with a sharp rise in utility electricity rates in , home solar now offers more cost savings potential than ever before.

In fact, the Heatmap Climate Poll found that 46% of US adults want to power their homes with solar panels in the future while 13% already do.

So, what&#;s standing in the way of American homeowners and solar panels? The biggest hurdle is often the cost of solar panels. And like a monster in a horror movie, the cost of solar panels is far less intimidating once you shine some light on it and understand how it works.

In this article, we&#;ll explore:

As always, our goal is to empower you with the resources and knowledge to make educated decisions during the solar process.

Get multiple binding solar quotes from solar installers in your area.

Is the price of solar panels falling?

The price of solar panels has declined substantially over the last decade as the industry has matured and reached production at the largest global scale.

Since , residential solar panel prices have fallen by roughly 50% while US solar deployment has grown by over 2,000%. The slight rise in residential solar pricing from - is largely attributed to supply chain tangles from the pandemic. US solar prices are largely expected to continue falling in the coming years as local manufacturing plants come online.

Just like computers, big-screen TVs, and cell phones, the economies of scale that solar panels now enjoy have produced a dramatic cost curve that has fundamentally changed the energy industry.

Utility-scale solar installations are now cheaper than all other forms of power generation in many parts of the world and will continue to replace older, dirtier power plants that run on coal and natural gas.

Additionally, homeowners are now able to own their power production more cost-effectively than ever before.

How much does a solar panel cost?

Today&#;s premium monocrystalline solar panels typically cost between $1 and $1.50 per Watt, putting the price of a single 400-watt solar panel between $400 and $600, depending on how you buy it.

Less efficient polycrystalline panels are typically cheaper at $0.75 per watt, putting the price of a 400-watt panel at $300.

The cost of a solar panel also depends on how you buy it. If you purchase through a full-service installer, you will likely get a lower price for each panel than buying them individually from a retail store.

It&#;s worth noting (as we&#;ll explore further below) that solar modules typically make up less than 20% of the overall cost of a home installation. So, opting for less expensive (and lower quality) panels isn&#;t a very efficient way to reduce the overall cost of a project.

Price per Watt vs cost per kWh

There are two main ways to calculate the cost of a solar system:

Price per watt ($/W) is useful for comparing multiple solar offers
Cost per kilowatt-hour (cents/kWh) is useful for comparing the cost of solar versus grid energy

Let&#;s dive a little further into each measurement.

What is solar price per watt?

A fully installed solar system typically costs $3 to $5 per watt before incentives like the 30% tax credit are applied. Using this measurement, 5,000 Watt solar system (5 kW) would have a gross cost between $15,00 and $25,000.

The price per watt for larger and relatively straightforward projects are often within the $3-$4 range. Claiming incentives like tax credits and rebates can bring the PPW even lower.

However, the following factors may push your solar price per watt into the $4 to $5 range.

Smaller system size
Unusual roof material or layout
Premium panel and inverter models
Multiple arrays versus a single array
Additional work like panel box upgrades, trenching, or roof repair

How to calculate solar price per watt

Calculating the price per watt for a solar system is very straightforward &#; it&#;s simply the system cost divided by the number of watts in the system.

Price per watt ($/W) allows for an apples-to-apples comparison of different solar quotes that may vary in total wattage, solar panel brands, etc.

Pro tip: It can be helpful to know your solar price per watt before and after claiming the 30% tax credit.

Ultimately many factors figure into the price per watt of a solar system, but the average cost is typically as low as $2.75 per watt. This price will vary if a project requires special adders like ground mounting, a main panel upgrade, an EV charger, etc.

Solar Price Per Watt Solar Price Per Kilowatt-Hour

GROSS system cost / Total system wattage

NET system cost / Total lifetime system production

Useful for comparing solar quotes against one another

Useful for comparing solar versus utility bill

Pertains to the POWER of a system

Pertains to the PRODUCTION of a system

Typically $3.00-4.00/watt

Typically $0.06-0.08/kWh

Cost Per Kilowatt-Hour (kWh)

Another measure of the relative cost of solar energy is its price per kilowatt-hour (kWh). Whereas the price per watt considers the solar system&#;s size, the price per kWh shows the price of the solar system per unit of energy it produces over a given period of time.

Net cost of the system / lifetime output = cost per kilowatt hour

You may also see this referred to as levelized cost of energy (LCOE).

What is a kWh?

A kilowatt-hour is a unit of energy and is equivalent to consuming 1,000 watts &#; or 1 kilowatt &#; of power over one hour. For reference, an energy-efficient clothes dryer uses around 2 kWh of electricity per load, while central air conditioning uses around 3 kWh per hour.

While price per watt is most helpful in comparing the relative costs of solar bids, solar energy cost per kWh is best used to illustrate the value of solar relative to buying your power from the electric utility.

For example, the average cost of a solar system purchased through solar.com is 6-8 cents per kWh, depending on the size of the system, type of equipment, and local incentives.

Let&#;s compare that to the average cost of utility electricity in each state.

Based on these prices, it costs around 46 cents to dry a load of laundry using grid electricity in New York and only 14 cents to dry a load using solar power.

How do I calculate the cost of solar panels?

There are a few ways to get a rough estimate of how much solar panels will cost without sitting through a sales pitch. These include:

Online calculators
Hand calculations based on your electricity usage
The average cost of solar panels for comparable homes

Let&#;s start with the quickest method: online calculators.

Using a solar panel cost calculator

First, you can use an online solar cost calculator, like this one powered by solar.com. Simply punch in your address and your average monthly electricity bill, and the calculator will give you a side-by-side comparison of the cost of solar versus paying for utility electricity.

But before you use any solar panel cost calculator, it&#;s important to understand that there are dozens of variables that affect the cost of solar panels, and solar calculators work by making assumptions about those variables.

For example, your solar savings depends largely on how much utility rates increase over 25 years. Most calculators assume 3-5% annual inflation based on historical averages &#; but nobody can know for sure where prices will go over the next 25 years.

Solar savings are also geographically sensitive since every state has different incentives, electricity rates, sun exposure, and net metering policies.

For example, a solar panel cost calculator for California would have drastically different assumptions than a cost calculator for New York.

How to calculate the cost of solar panels by hand

If you&#;d rather make your calculations offline, there are a few simple steps to estimate the cost of your solar system based on your electricity usage.

To get started:

Dig up some recent electricity bills (the more the better!)
Average them together to get a baseline for your monthly electricity consumption
Divide your monthly consumption by 30 to get your daily electricity consumption.

Once you have your average daily electricity use, follow the steps in the graphic below. Here are a few tips:

You&#;ll have to assume the price per Watt (PPW) you can get from a local solar installer. This typically ranges between $3.50 and $5 before incentives
- Pro tip: Run the high and low PPW scenarios to get a range of solar costs
Research local incentives like rebates and tax credits that can further reduce the cost of solar panels
Consider future increases in electricity consumption like buying an EV, heat pump, or air conditioning

If hand calculations aren&#;t your thing, you can get a quick-and-dirty estimate based on the cost of solar for comparable homes.

How much do solar panels cost per square foot?

The third &#; and least accurate &#; way to get an idea of how much solar panels will cost for your home is to see how much solar panels cost for homes similar to yours.

Now, we absolutely encourage you to talk to friends, family, and neighbors who have installed solar systems to get a sense of the pros, cons, and costs. However, we&#;ve done a lot of that legwork for you.

We analyzed thousands of systems sold on solar.com in to find the average cost of solar panels for homes based on their square footage of living space and number of bedrooms.

On average, solar panels cost $8.77 per square foot of living space, after factoring in the 30% tax credit. However, the cost per square foot varies based on the size of the home.

For example, the post-tax credit cost of solar panels for a 2,500-square-foot home is around $20,000 for a rate of $7.96 per square foot.

But how much do solar panels cost for a 1,500-square-foot home? The average system cost only drops by $1,000 and the cost per square foot increases to $12.83.

Square footage of living space Solar cost per square foot (after tax credit) 1,500 $12.83 2,000 $10.23 2,500 $7.96 3,000 $7.02 3,500 $5.79 Average $8.77

Based on systems purchased on solar.com in . Square footage per Zillow.

If you don&#;t know your home&#;s square footage, you can either look it up on Zillow or get a rough estimate using the number of bedrooms.

What&#;s the cost of solar panels for a 3-bedroom house?

The average pre-incentive cost of home solar is $29,161 for a three-bedroom house, or $20,412 after claiming the 30% tax credit.

However, as shown in the chart below, the number of bedrooms isn&#;t a great indicator of the size and cost of a solar system &#; and neither is living space, for that matter.

Solar systems are typically sized based on electricity consumption &#; not square footage or number of bedrooms. That&#;s because a two-bedroom house with two EVs and an electric heat pump would likely use more electricity than a four-bedroom house with no EVs and gas heating.

So, you can use this method to get in the right ballpark, but keep in mind that the previous two methods are more accurate.

Once you have a rough cost estimate for your solar system, it&#;s time to compare it to the cost of buying electricity from a utility provider to get a sense of how much you can save by going solar.

Do you really save money with solar panels?

Yes, homeowners across the US can save money on energy costs by powering their homes with solar panels instead of purchasing electricity from a utility. This is especially true following the rapid rise in grid electricity rates in and .

Home solar is essentially a way to buy electricity in bulk &#; similar to buying a giant can of coffee grounds from Costco instead of 50 individual cups at Starbucks. The $25 can of grounds costs more upfront but pays for itself after just 9 Grande Lattes at $3 each and nets $125 in savings over its lifespan.

It&#;s the same concept with home solar, just on a much larger scale.

Related: Will Electricity Prices Go Down in ?

How much money do you save a month with solar panels?

Exactly how much money you save a month with solar panels depends on a few main ingredients:

Utility electricity rates
Electricity consumption
How you finance your system
Your energy goals

These factors vary from household to household, so let&#;s take a look at the average monthly electric bill with solar panels and without solar panels.

By paying cash for a solar system, you can enjoy maximum lifetime savings &#; often north of $50,000 &#; but it can take several years to reach a payback period
By taking out a solar loan, you can front-load your cost savings by making solar loan payments that are less than your average electricity bill, but interest payments eat into your lifetime savings

Adjusting the size of your solar system and how you finance it gives you control over your essential electricity costs &#; something you&#;ll never have by purchasing electricity solely through a utility company.

How long does it take for solar panels to pay for themselves?

The payback period for solar panels is typically 6-11 years, depending on factors like your utility rate, electricity consumption, and how you financed the system.

With a solar loan, many homeowners can achieve &#;Day 1&#; savings by having a loan payment that&#;s lower than their average electricity bill. However, interest payments on the loan eat into the long-term energy cost savings.

By paying cash for solar, homeowners maximize their lifetime savings potential but typically need to wait 6-11 years to recoup the upfront investment.

Is solar worth it financially?

As a hedge against energy inflation, home solar is considered a safe and steady investment with a rate of return similar to real estate and 401k. Remember, home solar allows you to replace your electricity costs with lower, more predictable monthly payments on your solar system.

Why is it financially beneficial to pay for solar rather than utility electricity?

The chart below shows the steady rise of utility electricity prices from 5 cents per kWh to 16.5 cents per kWh over the last 44 years.

For non-solar owners, this trend is a nightmare because it shows that utility rate hikes are about as certain as death and taxes. But if you have a home solar system, utility rate hikes are the fuel for your energy cost savings over the 25-year warrantied life of your solar system.

Home solar also acts as a time machine, of sorts. Instead of paying the current utility rate for electricity, the cost per kilowatt-hour of home solar is typically around 6-8 cents &#; roughly what utilities were charging 40 years ago.

So, are solar panels worth your money?

Solar panels are worth your money if you want to want to:

Take control over your essential electricity costs
Hedge against energy inflation
Reduce your carbon emissions
Increase your home value
Provide backup power for grid outages (when paired with battery)

However, if you have a hunch that grid electricity prices are suddenly going to plummet below 8 cents per kWh and stay there for 25+ years, then don&#;t buy solar panels.

How much does solar panel installation cost?

Installation labor accounts for around 5.5% of the total cost of a residential solar project, according to a report from the National Renewable Energy Laboratory.

That amounts to $1,375 for a $25,000 solar project.

This figure often seems surprisingly low to homeowners who are used to labor being a bigger chunk of the cost for car repairs, landscaping work, and other home upgrades.

Data via NREL.

It&#;s worth noting that installation costs vary from project to project based on the local wage and scope of the project. For example, labor for specialized electrical work typically costs more than general labor for panel installation. This variability is why it&#;s tough to find a solar installation cost estimator online.

Overall, labor costs have fallen in the last decade as technology has improved and the labor force has matured. The chart below shows the solar panel installation cost breakdown since .

It&#;s notable that:

The overall cost of residential solar fell by 64% in the s
Solar module, inverter, and labor costs have come down substantially in the last decade
Non-labor soft costs and electrical hardware have been more stubborn

At the end of the day, the installation labor makes up a very small chunk of the total cost of a solar system &#; and it&#;s well worth having professionals install a system that you want to last for 25 years or more.

Can I install solar panels myself?

Some homeowners with advanced knowledge and experience in construction, circuitry, and local permitting guidelines (not to mention a good amount of time on their hands) can successfully install solar panels up to inspection and interconnection standards.

However, it&#;s important to consider that DIY solar installation may void the manufacturer&#;s warranties on the equipment and does come with workmanship warranties.

So, if there are problems with the equipment or the installation, like a panel broken during installation or a leaky hole in the roof, you are on your own to solve and pay for them.

It&#;s also worth noting that full-service installers typically handle permitting, interconnection, and applying for incentives &#; which can be complicated and time-consuming.

How much does one solar panel cost?

The average cost for one 400W solar panel is between $250 and $360 when it&#;s installed as part of a rooftop solar array. This boils down to $0.625 to $0.72 per watt for panels purchased through a full-service solar company.

At a retail vendor, such as Home Depot, you can buy a single 100W solar panel for $100 or a pack of 10 320W solar panels for $2,659, which boils down to $0.83 to $1 per watt.

Given the relationships with panel manufacturers, full-service solar companies can offer a much lower cost per solar panel than retail establishments.

How long do solar panels last?

Today&#;s solar panels typically have 25- to 30-year performance warranties that guarantee a certain level of production (usually 85-92% of its Day 1 capacity) during that time. However, the panels themselves can last and generate a meaningful amount of electricity for much longer.

For example, the first modern solar cells were created in and are still producing power from their display case in a museum. Similarly, a solar panel installed in on a rooftop in Vermont is still producing at 92% of its original capacity.

Based on manufacturer warranties, it&#;s safe to assume today&#;s solar panels will produce at a high level for at least 25-30 years. The real question is how far will they overshoot that warrantied lifespan.

How can I lower the cost of solar panels?

Although home solar is already more affordable than paying for utility electricity, there are a few ways to reduce the cost of your system and maximize your energy cost savings.

Solar incentives

First, there are solar incentives offered by federal, state, and local governments, in addition to utility providers.

The most notable is the federal solar tax credit worth 30% of what you pay for solar panels. So, if your all-in cost is $25,000, you can claim a tax credit worth $7,500 on your federal income tax return for the year your system was deemed operational.

https://www.youtube.com/watch?v=9pNWgAbZ1Cg&t

Next, many states have additional incentives like tax credits, tax exemptions, and rebates for residential solar systems. For example, New York has all three with its NYSERDA rebate, 25% state tax credit, and sales and property tax exemptions for solar installations.

At the local level, many city governments, municipal utilities, and investor-owned utilities have incentives for solar panels, battery storage, and other energy-efficiency home upgrades.

Some examples include:

It&#;s well worth spending 5-10 minutes searching for solar incentives through your state, county, city, and utility provider.

Compare multiple quotes

The next way to reduce the cost of solar panels is to shop for the lowest price like you would for cars or a new pair of hiking boots.

Additional reading:
Maximizing Energy Storage: Breakthrough Battery Solutions
Are half cell solar panels good?
How Polycrystalline 144 Half Cells Solar Panel Works
How Fivepower Transforms Team Dynamics in Workplaces?
CE Certification vs C&I Energy Storage: Key Differences Explained
10 Questions You Should to Know about 120 Half Cell Solar Panel Kits China
The Advantages of Choosing Monocrystalline 120 Half Cell Solar Panels

GECONA SOLAR Product Page

In most areas of the US, there are at least a handful of solar installers willing to compete for your business. Getting quotes from at least three reputable installers gives you a sense of a fair price, weeds out scammers, and gives you leverage to negotiate for a lower price.

Admittedly, it takes time and effort to research installers, set appointments, and sit through sales pitches to gather quotes. Solar.com simplifies this process by instantly generating dozens of quotes from our network of trusted installers so you can easily compare quotes in a pressure-free environment.

However you choose to do it, comparing multiple quotes is crucial to lowering your solar cost and setting yourself up for a long-lasting and productive solar installation.

Can I get free solar panels?

Despite what the ads on Facebook and YouTube say, it is not possible to get free solar panels from Tesla, Home Depot, or the US government. This is a common scam used to gather personal data and/or trick people into signing long-term solar lease agreements that are far less favorable than owning solar panels.

For example, in February , a Facebook page called &#;Solar Panel Rate&#; ran multiple ads claiming Elon Musk was paying homeowners $2,500 to test out new solar technology. Further inspection revealed that the account was run by three individuals in Indonesia and the ads were designed to collect personal information.

There are also dozens of YouTube ads claiming that the &#;US government is giving away free solar panels.&#; While it&#;s true that the federal government strengthened the solar tax credit and created new home electrification incentives by passing the Inflation Reduction Act, it is not &#;giving away&#; solar panels.

Recap

The falling cost of solar panels coupled with the recent spike in grid electricity prices have made home solar a reliable means of reducing your essential energy costs.

While the five-figure price tag for home solar often gives people sticker shock, it&#;s important to remember that going solar is like buying 25 years&#; worth of electricity in bulk. It may cost more upfront, but it is much more affordable than buying electricity at the retail rate from a utility.

Plus, there are zero-down solar loans that can spread out the cost of solar panels and, in many cases, provide instant energy cost savings.

Installation accounts for roughly 5.5% of the total cost of solar projects. However, non-labor soft costs like permitting, inspection, interconnection, and general overhead make up around half of the cost of home solar.

There are a few ways to reduce the cost of going solar. First, research federal, state, and local solar incentives to make sure you&#;re not leaving money on the table. Second, shop around for the best price by getting multiple quotes from vetted local installers. (Solar.com makes this quick, easy, and pressure-free).

Finally, neither Elon Musk nor the US government are giving away free solar panels. And if they were, they wouldn&#;t be advertising it on Facebook and YouTube.

Steer clear of free solar ads to avoid giving away personal information or ending up in a long-term solar lease.

Frequently asked questions

Is one solar panel enough to power a house?

One solar panel is not enough to power a house. Home solar systems typically feature 10-20 panels to produce enough power to offset 100% of the average household electricity consumption.

It&#;s also worth mentioning that installing one solar panel at a time isn&#;t very efficient, as there are soft costs associated with designing, permitting, inspecting, and interconnecting solar systems. Homeowners typically get the most bang for their buck by installing at once as many solar panels as they&#;ll need to offset current and near-future electricity needs.

How long can a house run on solar power alone?

According to the NREL, a small solar system with 10 kWh of battery storage can power the essential electrical systems of a home for three days in parts of the US and in most months of the year.

Essential electrical systems do not include electric heating or air conditioning, which require massive amounts of electricity.

However, it&#;s worth noting that solar systems need to be paired with battery storage to provide backup power during outages. Solar-only systems are automatically shut off during outages as a safety precaution to protect the technicians repairing the grid.

What is the main downside of solar energy?

The main downside of solar energy is that it&#;s intermittent. In other words, solar panels need sunlight to produce electricity, and when the sun goes down production stops.

This intermittence poses challenges to grid operators because it creates an influx of energy during the middle of the day, when consumption is down, and a lack of energy in the evening when consumption is peaking.

The most obvious solution to this challenge is various forms of energy storage including batteries, pumped hydro, compressed air, and thermal technologies.

In fact, residential solar and battery systems in California provided around 340 MW of power during a heatwave in September to help prevent power outages.

Is it worth it to get solar panels in California?

Given its abundant sunshine and high utility electricity rates, California is one of the best states to save money with home solar.

In fact, even after reducing the value of solar exports through NEM 3.0 solar billing, Californians can still save more money with solar than homeowners in most other states. Under NEM 3.0, it&#;s much more beneficial to pair solar systems with battery storage to use as much of your own solar production as possible instead of exporting it onto the grid.

Many installers are offering less expensive &#;arbitrage&#; battery systems that allow solar owners to store and use their own electricity, but don&#;t provide backup power during outages (hence the price decrease).

How Much Do Solar Panels Cost? ( Guide)

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The Average Cost of a Solar System

For the average home installing a 6 to 8kW system, solar panels will cost between $15,000 and $22,500 before applying incentives.

&#;Residential solar energy is gaining in popularity because of a few important factors &#; first, the cost has decreased dramatically over the past 15 years,&#; said Matthew Aldeman, PhD, the associate dean of the College of Engineering at Illinois State University.

By using the 30% federal solar tax credit, you can expect to pay between $10,500 and $15,750. Most homeowners will recover the cost of their solar panels in electric bill savings in 8.5 years, resulting in savings of $25,260 over the lifetime of their system.

Homeowners in New Mexico have the cheapest solar panel costs, with an average price of $9,996 after using the federal solar tax credit. Solar panel pricing is the most expensive in Massachusetts, where estimated costs are around $18,900 after the tax credit.

What Impacts Solar Panel Cost?

There are many factors that impact the overall cost of your solar system. Learn which factors you can control to help lower the cost of your system and maximize your lifetime system savings.

Your Location

Two significant location-based factors will determine your total cost and savings of going solar: the cost of energy where you live and how much sunlight you receive.

In states where traditional energy is more expensive, like California, Hawaii and New York, you stand to save more on energy bills when you switch to solar. However, if you live in a super sunny state like Arizona or New Mexico, you&#;ll have more daily peak sunlight hours, requiring fewer panels to meet your energy needs.

That&#;s not to say solar isn&#;t worth it if you don&#;t live in a state with high energy costs and abundant sunlight. See how energy costs compare in your state using the map below, and learn more about how you can determine how many solar panels you need.

Home Energy Needs

The typical U.S. household uses 10,632 kilowatt-hours (kWh) of electricity each year or around 886 kWh monthly. However, several factors can affect your energy needs, including the size of your home, how many people are in your household and if you have an electric vehicle (EV).

The higher your household&#;s energy consumption, the larger the solar panel system necessary to offset your usage. For example, based on our average cost of a solar panel at $3 per watt with installation, a 6 kW system would run you around $18,000, while a 12 kW system would double the cost.

Solar System Size

The cost of your solar system is directly proportional to its size. The more solar panels you install, the more expensive your system will be.

The ideal system size for your home depends on personal factors like your roof size and angle, energy usage and location. Ultimately, solar system size depends on your household&#;s energy consumption and how much energy you want to generate with your panels.

System SizeEstimated Annual Energy ProductionAverage System Cost (Before Incentives) 4 kilowatts (kW) 5,600 kilowatt-hours (kWh)$11, kW8,400 kWh $17, kW11,200 kWh $22, kW 14,000 kWh $28, kW 16,800 kWh $34,200

Purchasing Options

The most cost-effective option when purchasing solar panels is paying in cash upfront. With a cash purchase, you will own your system and not pay interest on a loan.

However, because solar systems are expensive, paying in cash is not an option for most homeowners. The next best option is to put some money down and finance your panels. Although you will pay interest over the loan period, you will still own your panels and benefit from energy savings. The more money you put down, the less interest you will pay over time.

Solar Panel Type

The cost of your panels and equipment is by far the largest expense you&#;ll pay during your solar installation. There are many solar panel options available, and the manufacturer, installer and type of panels you choose will affect the final cost of your system. There are three common types of solar panels: thin-film, monocrystalline and polycrystalline.

We recommend installing monocrystalline panels due to their high durability and efficiency. The overall system cost ends up being comparable to the cost of using the other types of panels available because you will need fewer monocrystalline panels to produce the same power output.

Panel TypeEfficiencyAverage Cost per Watt Before Installation*MonocrystallineHigh (17%&#;20%)$0.75&#;$1.50PolycrystallineModerate (14%&#;17%)$0.40&#;$0.80Thin filmLow (7%&#;12%)$0.30&#;$0.60

*Average cost calculations are based on wholesale pricing from Solar Electric Supply, Inc. and A1 Solar Store.

Solar Panel Installation Cost Breakdown

Although the exact cost of your solar panel installation will vary depending on the company and type of panels you choose, you can expect your equipment (panels, inverters, batteries, racking or mounting hardware, etc.) to make up nearly half of your total cost.

Labor costs, administration fees, taxes, building permits and electrical permits comprise the rest of your expenses. Jesse Solomon, the co-founder of NCSolarNow, explained the cost breakdown of a typical solar panel installation as follows:

Here is a sample cost breakdown using the national average cost of a 6kW system of $17,100:

Solar Installation Cost FactorEstimated CostPV Materials: Panels, Inverters and Hardware$8,066.07Electrical Labor$2,252.07Administration, Grid Connection Request and Design$2,081.07Installation and Labor$2,081.07Taxes, Fees, and Permits$1,397.07Electrical Materials$1,222.65

How To Save Money on Solar Panels

Although the upfront cost of solar panels can be intimidating, there are several steps you can take to help reduce the total cost as well as maximize the amount of money that solar panels save you in the long run.

MARKETWATCH GUIDES TIP

In general, we recommend leveraging federal, state and local incentives as well as purchasing more efficient solar panels to save money.

Use the Federal Solar Tax Credit

The Solar Investment Tax Credit (ITC) is a tax incentive worth 30% of the total cost of your solar panel system. All U.S. homeowners who install solar panels are eligible for this credit, and it reduces what you owe in federal income taxes. For most solar systems, this credit is worth several thousand dollars, which is a significant savings.

This tax credit and others like it have made going solar more affordable. Sergio Castellanos, PhD, an assistant professor in civil, architectural and environmental engineering at the University of Texas at Austin, explained that &#;the economics of high retail electricity prices, coupled with existing Inflation Reduction Act incentives, [can] make installing solar PV quite attractive."

However, if you choose to lease your panels, you will not be eligible for this tax credit. You can only claim this tax credit if you own your panels.

The credit was renewed by the Inflation Reduction Act of and is currently set to decrease to 26% in and 22% in before expiring in .

Look Into State Solar Incentives

In addition to federal incentives, many states offer other incentives to go solar, including tax breaks, credits and rebates. If you&#;re interested in the solar incentives available in your state, you can browse the Database of State Incentives for Renewables & Efficiency (DSIRE) or visit your local government website to learn more.

Additionally, net metering is a program that allows you to sell the excess electricity your solar panels generate to your utility company for billing credits. Forty-one states and Washington D.C. have a state-mandated net metering policy, though some policies are better than others. States without a mandated net metering policy, like Texas and Idaho, may have utility companies that offer the program.

Many states also offer solar rebate programs for low- and moderate-income households or community solar programs that aim to make clean energy more accessible.

Purchase Efficient Panels

Efficient solar panels maximize your system&#;s energy production while requiring fewer solar panels and less roof space. You will save more money in the long run by maximizing your output and will often be required to purchase fewer panels up-front. SunPower currently offers some of the most efficient solar panels on the market, at 22.8% efficiency.

How Long Does It Take to Break Even With Solar?

According to our research, the average payback period for a solar panel system in the U.S. is 8.5 years, compared to the typical lifespan of a solar panel system of at least 25 years. With the average yearly electric savings being $1,531, according to data sourced from the Energy Information Administration (EIA), you can expect to save around $25,260 in electric bills over the lifetime of your solar panels.

ASK THE EXPERTS: Are solar panels becoming more affordable?

"Yes. Because costs have come...

down, the value of residential solar has significantly improved for households, especially in areas with high electricity prices."

Michael Craig

Assistant Professor in Energy Systems at the University of Michigan

"The decline in the cost of...

installing solar panels has been one of the great successes in the energy sector over the last decade or so. The all-in cost for installing a residential solar system is less than half of what it was in .

It now takes around six to 10 years to recover an investment in a solar system, a payback period that is likely to shorten even more as time goes on."

Joe Kantenbacher

Assistant Professor of Sustainability at the University of South Dakota

"Solar panels today are half...

as expensive as they were 10 years ago, and most experts suggest the price will continue to drop over the next decade."

Alfredo Fernandez-Gonzalez

Professor at the University of Nevada Las Vegas School of Architecture

How Much Can I Save With Solar?

On average, homeowners who install a complete solar system can expect to save $1,530 per year on electricity bills. To estimate these savings, we used average annual electricity rates from the U.S. Energy Information Administration (EIA), the specific photovoltaic power output (PVOUT) from the Global Solar Atlas and the average cost of installing a 6kW after using the federal solar tax credit of around $12,000.

The sun is a renewable resource that shines during the day when energy use and electricity prices tend to be highest,&#; said Joe Kantenbacher, PhD, an assistant professor of sustainability at the University of South Dakota. &#;Solar panels can reduce dependence on the utility grid and over their lifetime, provide a net reduction in energy bills.

Solar Panel Savings by State

Homeowners in California have the highest estimated yearly savings of around $2,840 while Washingtonians are expected to have the lowest opportunity at $865 per year. Use the map below to find out how much you can expect to save in your home state.

Frequently Asked Questions About Solar Panel Costs

Yes, solar can increase the value of your house by improving your home&#;s energy savings and boosting appeal if you want to sell. Reports by Zillow and the U.S. Department of Energy&#;s Berkeley Lab concluded that the majority of home buyers are willing to pay more for a home with solar.

Although the amount of energy a household uses will influence how many solar panels it needs, it will likely cost between $15,000-$22,500 to install solar panels on a 2,000-square-foot home.

Monocrystalline solar panels, which are most common for residential solar installations, typically last between 25 and 40 years, with most solar companies offering a 25-year panel warranty.

In most cases, solar panels are worth it for your home. Many homeowners save thousands of dollars in energy bills over the lifespan of their solar panels, plus you are generating clean energy to power your home.

A 6 kW solar system can save homeowners an average of $1,346 each year on energy bills, or around $112 monthly. Exact savings will vary depending on your system, location and local electricity rates.

How We Gathered Our Cost Data

We conducted in-depth research and analyzed several factors to determine our solar cost data, which is based on the following resources:

Conducting surveys: We have conducted two surveys to gather solar cost data for homeowners across the country. Both launched in , each survey polled 1,000 homeowners who have installed residential solar systems. We compared the results of each survey to determine average pricing based on solar system size, location and installer.
Researching reliable sources: We gathered information from reliable solar sources like the Solar Energy Industries Administration (SEIA), the National Renewable Energy Laboratory (NREL) and the Energy Information Administration (EIA) to assess the national average cost of solar panels. We also used these sources to determine the cost of electricity and solar power systems by state.
Consulting industry experts: We spoke with industry experts, including Jesse Solomon, the co-founder of NCSolarNow, to understand the costs of going solar for both customers and installation companies. We also researched solar products in today&#;s market, including the cost of solar panels and accessories like solar batteries.

Expert Tips and Insights

ASK THE EXPERTS: Why is residential solar gaining popularity, and what are the benefits?

"First and foremost, [solar] is...

getting cheaper. Residential solar prices have fallen dramatically over the past decade, making it a better deal for households.

It's also popular because it has no emissions, allowing households to contribute to reducing climate change and local air pollution. And, especially when paired with [energy] storage, solar can serve as backup power for households, allowing access to electricity even when there's a power outage."

Michael Craig

Assistant Professor in Energy Systems at the University of Michigan

"Several factors explain the increase in...

residential solar power installations in recent years. One of the main reasons is the federal tax credit for home solar panels, which previously covered up to 26% of the installation costs, and now, due to a recent change of the law, will cover up to 30% through ."

Alfredo Fernandez-Gonzalez

Professor at the University of Nevada Las Vegas School of Architecture

"For most people, the key upside...

of solar energy is they can save money on their electric bills. Many people think of it as an investment."

Matthew Aldeman

Associate Dean of the College of Engineering at Illinois State University

ASK THE EXPERTS: How do solar panels impact the environment?

"Solar power does not produce...

carbon emissions during the operation of the system. This is a cost-effective way to mitigate climate change."

Alfredo Fernandez-Gonzalez

Professor at the University of Nevada Las Vegas School of Architecture

"Solar technology produces electricity with...