Are solar panels worth it?
Going solar isn’t just a green move; it's often a smart money move
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Solar panels are cheaper than ever, but they can still be a big investment. The average home solar panel system costs $16,715 in 2023 ($23,879 before factoring in the federal solar tax credit). Over 25 years, the average estimated net savings range from $10,000 to $25,000.
Paying cash for your system helps recover your costs faster, but taking out a loan to get solar panels can make sense. Once you repay the loan, your house basically gets free energy.
- Buying solar equipment is expensive, especially if you need a battery for storage.
- Federal and state financial incentives help lessen your costs to install solar panels.
- The general consensus: Over time, solar investments tend to pay off.
What to consider before going solar
Solar panels are worth it if you like the idea of helping the environment, lowering your monthly utility bills and gaining more energy independence. But it doesn’t work out for everyone.
You might not want to switch if you don’t get enough sunlight, need a new roof, have a limited budget or plan to move soon. While houses with solar panels sell for 4.1% more on average, remodeling your bathroom or kitchen might be better if your focus is on resale value.
Whether it’s worth it for you comes down to your upfront costs, monthly savings and location. Here are the questions to ask yourself.
- Is my house a good candidate for solar panels?
- Not all households benefit from solar panels in the same way. Here’s what to think about before you commit:
- How old your appliances are: The first thing is to make sure your electrical loads are as small as can be, according to Robert Flores, a solar expert at the University of California, Irvine Clean Energy Institute. He said that if you have an old refrigerator, air conditioning unit or electric baseboard heating, it makes sense to upgrade those first. “If you reduce your electrical loan, it reduces how much solar energy you need also,” Flores said.
- How much sunlight you get: Solar panels need regular exposure to sunlight to produce the most energy possible. Even areas with relatively few peak sun hours see enough cost savings to make it worth it, but not if you have lots of shading — trees, tall buildings, etc. — above your roof.
- How old your roof is: Solar panels are designed to last 25 to 30 years, so you need your roof to last as long. If you have to replace your roof, do that before you install solar panels. Otherwise, you may have to spend thousands later, like Devin in California found out when a solar company charged them $5,000 to “take the panels down and reinstall them after the roof was replaced.”
- How much space you have: The size and angle of your roof play a big role in how effective your solar array is. We’re in the northern hemisphere, so solar panels perform best on south-facing roofs. The worst place to install would be on north-facing roofs, especially if those roofs have a high pitch, according to Flores. The dollar per unit of electricity gets a lot more expensive.
For example, if the only place you can install is a north-facing roof with a 30-degree pitch, your costs will go up by 30% to 40%. “The overall amount of electricity will be less, and you’ll be investing more for the same amount of production.”
- What is my current electric bill?
- Your electric bill is the starting point for assessing the financial benefits of transitioning to solar energy. It shows your average energy consumption and monthly costs, which is information you need to make an informed decision.
Knowing your average energy consumption helps determine the size and capacity of the solar system you need. Once you know this, you can figure out potential savings and how long it should take for your solar installation to pay for itself.
Essentially, your electric bill is the starting point for assessing the financial benefits of transitioning to solar energy.
» TIPS: How to save energy at home
- What incentives are available in my area?
- The federal solar tax credit lets homeowners who install solar claim a one-time credit for 30% of the purchase price of their systems through 2032, which helps offset the total costs.
Some states and city governments have financial incentives to encourage people to switch to solar. They may not make solar panels free, but they can dramatically reduce the cost of a new solar array installation.
- How will I pay for solar panel installation?
- If you can afford it, buying your solar energy system outright typically provides the highest return on investment. You own the system from day one and receive the benefits of available tax credits or incentives. Other common ways to pay for solar include:
- Solar loan: A solar loan works like any other type of loan. These have relatively low interest rates since the solar panels secure the loan. Once you pay it off, you own your solar panels outright.
- Home equity loans or lines of credit (HELOC): These let you borrow against equity in your home to finance a solar system. They often have variable interest rates, so your monthly payments could increase over time.
- Property Assessed Clean Energy (PACE) financing: Some regions offer PACE programs that let you finance solar panels and other energy improvements through your property tax bill. The cost of the solar system is spread out over many years and repaid as a line item on your property taxes.
- Solar panel leasing options: Leasing panels is one way to get the benefits of solar energy without the high upfront cost. A solar lease works like a car lease — you get to use the panels but don’t own them. It’s similar to a power purchase agreement (PPA).
Leasing can be good if you have limited savings. For example, Robert in New Hampshire said they opted for a solar leasing program: “I looked at some other ones and it was gonna cost me at least $20,000 upfront to buy these panels and get them put up on the house.”
» SOLAR PANELS: Lease vs. buy
- Will solar panels save me money?
- Your savings with solar depend on how much electricity your system can produce and the cost of electricity in your area. In general, going solar is a better deal if you have mostly electric utilities, like Julia in California. “I have a house with all electric utilities, including the water heater and central HVAC, and an electric car,” she said. “Going solar was a no-brainer for me.”
However, not everyone saves money before the loan is paid off. Another solar customer, Jessica in Georgia, said a sales rep “assured my husband that our power bill with panels would be $10 to $20 a month. … During peak usage in summer and winter months, I now have a $156 loan payment for these panels in addition to $150 to $170 electric bills.”
Overall, going solar is estimated to save people an average of $22,181 over 25 years.
» EXPLORE: Where your solar savings go the furthest
How much solar panels cost
Solar panel costs vary based on a range of factors. On the low end, you can install small 3-kilowatt (kW) to 5-kW systems for around $10,000 in some markets. On the high end, we’ve talked to solar customers who spent more than $100,000 going solar.
|Average cost per watt||Typical system size||Average cost after ITC||Payback period*||Estimated net savings|
|Alabama||$2.45||11.5 kW||$19,723||11 years||$28,590|
|Alaska||$2.41||6 kW||$10,122||7 years||$34,500|
|Arizona||$2.61||11.5 kW||$21,011||12 years||$23,891|
|Arkansas||$2.54||11 kW||$19,558||13 years||$15,567|
|California||$2.73||4.5 kW||$11,466||8 years||$30,000|
|Colorado||$2.69||7.5 kW||$14,123||12 years||$14,479|
|Connecticut||$2.80||7.5 kW||$14,700||8 years||$42,705|
|Delaware||$2.58||9.5 kW||$17,157||12 years||$29,016|
|Florida||$2.53||11.5 kW||$20,367||12 years||$21,500|
|Georgia||$2.55||11 kW||$19,635||12 years||$23,182|
|Hawaii||$2.67||5.5 kW||$10,280||6 years||$49,459|
|Idaho||$2.60||10 kW||$18,200||14 years||$11,478|
|Illinois||$2.73||7.5 kW||$14,333||12 years||$16,585|
|Indiana||$2.68||9.5 kW||$17,822||12 years||$21,994|
|Iowa||$2.77||9 kW||$17,451||12 years||$17,572|
|Kansas||$2.59||9 kW||$16,317||11 years||$21,455|
|Kentucky||$2.34||11 kW||$18,018||12 years||$20,247|
|Louisiana||$2.57||12.5 kW||$22,488||14 years||$13,646|
|Maine||$2.83||5.7 kW||$11,886||10 years||$25,880|
|Maryland||$2.77||10 kW||$19,390||12 years||$21,395|
|Massachusetts||$2.94||6.5 kW||$13,377||8 years||$33,013|
|Michigan||$2.81||7 kW||$13,769||10 years||$23,652|
|Minnesota||$2.84||8 kW||$15,904||12 years||$17,546|
|Mississippi||$2.64||11.5 kW||$21,252||13 years||$20,147|
|Missouri||$2.59||10.5 kW||$19,037||13 years||$18,292|
|Montana||$2.54||9 kW||$16,002||13 years||$15,189|
|Nebraska||$2.83||10.5 kW||$20,801||14 years||$13,421|
|Nevada||$2.52||10 kW||$17,640||12 years||$18,319|
|New Hampshire||$2.91||6.5 kW||$13,241||9 years||$28,409|
|New Jersey||$2.77||7 kW||$13,573||10 years||$23,806|
|New Mexico||$2.68||7 kW||$13,132||12 years||$15,413|
|New York||$2.94||6.5 kW||$13,423||10 years||$24,387|
|North Carolina||$2.54||6 kW||$13,815||13 years||$20,035|
|North Dakota||$2.42||11 kW||$18,634||13 years||$26,028|
|Ohio||$2.56||9.5 kW||$16,128||12 years||$19,272|
|Oklahoma||$2.62||11 kW||$20,174||14 years||$14,190|
|Oregon||$2.60||9.5 kW||$17,290||14 years||$23,058|
|Pennsylvania||$2.55||8.5 kW||$15,173||10 years||$23,634|
|Rhode Island||$2.84||6 kW||$11,928||8 years||$34,519|
|South Carolina||$2.72||11 kW||$20,944||12 years||$24,561|
|South Dakota||$2.39||10.5 kW||$17,566||12 years||$22,923|
|Tennessee||$2.49||12 kW||$20,916||13 years||$19,688|
|Texas||$2.69||8.5 kW||$21,654||13 years||$21,350|
|Utah||$2.68||8 kW||$15,008||14 years||$10,202|
|Vermont||$2.87||6 kW||$12,054||9 years||$26,468|
|Virginia||$2.75||11 kW||$21,175||12 years||$21,692|
|Washington||$2.69||10 kW||$18,830||16 years||$10,846|
|West Virginia||$2.64||11 kW||$20,328||13 years||$19,893|
|Wisconsin||$2.60||7 kW||$12,740||10 years||$21,005|
|Wyoming||$2.57||9 kW||$16,191||13 years||$14,959|
Solar costs are trending down
The average cost to install solar panels has gone down more than 40% over the last decade. “Ten years ago, I did not find it affordable, nor the technology — especially expected lifetime — acceptable,” a solar customer, Paul in Colorado, told us.
Now, with the federal solar tax credit, Paul says his “system can about pay for itself at the current price for electricity with my utility. If the cost for electricity goes up significantly in the future, there will be an actual savings as well.”
QUESTION: If solar panel prices keep going down, should I wait until they are even cheaper?
The short answer is “maybe,” according to Ed Hirs, an energy fellow and lecturer at the University of Houston. Newer solar panels are getting cheaper, more durable and more efficient.
However, installation and labor costs don’t seem to be going down any time soon. Hirs noted the cost of replacing roofs (which you might need to do before going solar) has also gone up.
At the same time, energy costs are trending up
You see more savings by switching to solar if you live in an area where utility rates for electricity tend to be high. For homeowners who never invest in solar power, the cost of utilities is unlikely ever to go away.
“Each consumer needs to make this decision and kind of weigh the cost and the benefits,” Hirs said. “If you’re going to live an average normal life and not have outages and not be in a situation where the price of power off the grid is rising, rising, rising — maybe it will make sense to put panels on for 25 years.”
Break-even points and return on investment (ROI)
A solar panel system generally pays for itself within eight to 12 years when you pay cash. If your break-even point is closer to 20 years, switching to solar energy might not be worth it.
Going solar isn’t a money-making investment. It’s more about saving over the long term. Its value also depends on your local energy commission and utility provider. Net metering can minimize costs, but most people don’t make a lot of money off of it. Don’t expect to get rich selling your unused energy.
» LEARN: What is a good investment?
One solar customer, Edward in California, said: “Going solar allowed me to save a little bit. But it's not a tremendous amount of savings like people think. You're producing excess during the day when it’s sunny and you're just taking it right back at night. Maybe you're saving 150 bucks a month.” Still, saving $150 each month is worth it for many people.
The estimated savings for going solar average $22,181 over 25 years after factoring in the cost of your system, incentives, benefits and electric bill reductions.
Benefits of solar panels
Solar panels are worth it for a lot of people for the financial benefits. It’s also the best way to gain energy independence while reducing your carbon footprint at the same time.
» COMPARE: Best solar energy companies
Lower electric bills
There are two main financial benefits of going solar: reduced monthly electric bills and the potential to earn from net metering credits.
- Monthly energy savings: Going solar lets homeowners “lock in the cost of their energy and avoid ever-increasing utility costs,” according to Tim Deters, who works at Green Ridge Solar, a solar company based near Portland, Oregon. With energy prices increasing around 5% each year, he said, savings add up significantly over time.
- Net metering and SRECs: Many utility companies offer net metering programs that let you sell excess energy back to the grid. In some regions, you can earn a Solar Renewable Energy Certificate (SREC) for each megawatt-hour (MWh) of solar electricity you produce, which is another source of revenue.
Solar panels can reduce your reliance on nonrenewable energy sources and help protect you from unpredictable rate spikes. For example, Jeff in California went solar to “reduce our reliance on the grid as much as possible.” Since making the switch, “we are generating a tremendous amount of energy each day, and our energy bill is now net negative — in a huge way!” Jeff said.
More energy independence
Embracing solar paves the path toward true energy independence. It especially works out for people in areas susceptible to power outages.
“I don’t think people are figuring in the cost of outages,” Hirs said. Hirs lives in Houston, where he loses power for at least a week every few years because of a hurricane.
With everything that a household or business runs on, a solar panel system can provide some useful backup, according to Hirs. It keeps your lights on. It keeps your food from spoiling.
“The tragedy of the situation is if the state and independent system operators (ISOs, RTOs) had been less focused on low prices and more focused on reliability, I don’t think home solar would have grown as much as it has,” Hirs said.
Hirs thinks everyone who can afford solar panels should be evaluating them against the cost of a home generator. Both are precautionary expenses.
Better for the environment
The ecological benefits of going solar are worth it to many people even if they aren’t saving a lot of money.
“Our primary motivation is sustainability, with a secondary goal of saving some money and avoiding occasional blackouts/brownouts to which our neighborhood has been affected,” said Glenn in California.
Solar energy is a clean way to make power. After they are installed, photovoltaic panels don’t emit greenhouse gases (GHGs) into the atmosphere like burning fossil fuels does. They also cut down on harmful pollutants such as sulfur dioxide (SO2) — a good thing for people, animals and the environment.
Over their typical 25- to 30-year life span, the emissions associated with their lifecycle are dwarfed by the emissions they offset by displacing fossil fuel-based electricity.
Tim in Florida put it this way: “Your home has ALREADY made its carbon footprint. What better place to put solar than on your home which already exists?”
» DOES YOUR STATE RANK? Greenest states in the U.S.
What to watch out for
Some people don’t get the deal they thought they were getting. Installation delays, bad local utility contracts or faulty equipment are often to blame for their dissatisfaction.
For example, Preston in Texas was “truly disappointed” by the performance of their solar panels and home battery system. “Unfortunately, I am now committed to using one of the least efficient and potentially hazardous systems in the market for the next three decades,” they said.
Preston might have been happier if they invested in higher-quality equipment. However, where you live can impact whether going solar is worth it, even if you buy the best solar panels.
- Solar panels are expensive: Even with rebates and other financial incentives, the price typically starts between $10,000 and $30,000. It’s even more expensive if you want a solar battery for energy storage. Plus, you might have to make loan payments even if the system isn’t operational, like Derreck in North Carolina.
- Efficiency and output vary: The best solar panels have an efficiency rating of 20% to 22%. However, your actual energy output depends on weather, location and panel orientation, which could affect your month-to-month savings.
- You have to look out for pushy sales reps: Like in any booming industry, some people just want to make a quick buck and might say anything to close a sale. For example, Mike in Florida told us a sales rep “said there's no upfront cost, which was true. I didn't have to pay any money out of pocket until it was installed. Then I had to pay $70,000, and I had to get a loan for it. So, that was very misleading.”
If you use financing to purchase your solar array, it’s important to read your contract carefully. Some solar companies put a lien on your house. If you’re not dealing with a reputable company, you could lose your home.
» MORE: Solar energy pros and cons
How do solar panels work?
Solar panels convert sunlight into electricity using photovoltaic cells. These cells produce direct current (DC) electricity, which is then converted into alternating current (AC) by an inverter.
Imagine a sunny day. The sun is beaming down, and you can feel its warmth on your skin. Solar power is all about capturing that sunlight and converting it into electricity we can use in our homes. It’s nature’s way of providing a clean, renewable energy source for our homes. Instead of relying on power plants that burn coal or gas, we harness the natural, abundant energy from the sun.
If you produce more electricity than you need, the extra goes back into the public grid. Some utility companies pay you or credit your future bills. When your panels don’t generate enough output — like on cloudy days — you can draw electricity from the grid and keep your lights on.
» MORE: What is a solar array?
What are the different types of solar panels?
There are three types of solar panels that are most common for residential systems.
- Monocrystalline: Monocrystalline solar panels are made with a single silicon crystal. They are generally the most efficient, so they tend to be the most expensive. If you can afford these panels, you may find them to be a good investment.
- Polycrystalline: Polycrystalline panels are not as efficient as monocrystalline panels, but they are more affordable. They are made by melting many silicon fragments together and tend to have a blue hue.
- Thin-film: Thin-film solar panels are constructed using noncrystalline silicon or nonsilicon materials. They’re usually only a few micrometers thick, unlike the thicker wafers used in traditional crystalline silicon panels. Thin-film panels are cheaper and don’t last as long, but they have the fastest payback time.
Not all solar panels are created equal. In general, higher-quality systems cost more, but they’re also more efficient and last longer. Purchasing a lower-quality solar panel may save money in the short run, but remember that solar panels are a long-term investment. The extra upfront expense is often worthwhile.
How do solar panels pay for themselves?
Solar panels pay for themselves by reducing monthly electricity bills, earning credits or payments through net metering and qualifying for tax incentives or rebates. Over time, these savings and earnings offset the initial investment made in the solar system.
How long do solar panels last?
Solar panels are designed to last 25 to 30 years.
Do solar panels require maintenance?
Can I go completely off-grid with solar panels?
You can go off-grid with solar panels, but it’s more expensive and more complicated. Off-grid systems usually need more panels than grid-tied systems, plus you need a battery for energy storage. You'll still save money by not purchasing electricity from the grid, but it can take longer to recoup the initial investment.
You also can’t take advantage of net metering with an off-grid system. Instead, you can store any extra energy in a solar battery. This way, you can still turn the lights on if your panels don’t generate enough power.
» EXPLORE: What are grid-tied solar systems?
- Article sources
- 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:
- EnergySage, “How much do solar panels cost in 2023?” Accessed Sept. 12, 2023.
- EcoWatch, “Solar Panel Cost In 2023 (Homeowner's Installation Savings Guide).” Accessed Sept. 12, 2023.
- EcoWatch, “Are Solar Panels Worth It for Your Home?” Accessed Sept. 12, 2023.
- Center for Sustainable Energy, “Solar Energy Adoption: Information for Homeowners and Small Businesses.” Accessed Sept. 12, 2023.
- Solar Energy Industries Association, “Solar Industry Research Data.” Accessed Sept. 12, 2023.
- U.S. Department of Energy, “Benefits of Residential Solar Electricity.” Accessed Sept. 12, 2023.
- Wood Mackenzie, “Is the end of high US solar system prices in sight?” Accessed Sept. 12, 2023.
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