Do Solar Panels Save Money?

How much do solar panels cost?

On average, solar panel systems cost about $19,873 in the United States before any state or local incentives, but range from $12,600 to $33,376. Prices vary by installation based on the size of the system, the seller, the labor involved, permitting and other factors. These costs also don’t include battery storage.

Even though solar panels can last 25 to 30 years, it’s a good idea to keep your loan term short to save on interest.

However, that’s just if you’re paying cash. To avoid paying the full price of their solar panels upfront, many homeowners choose to finance their systems through their installers or third-party companies. Financing often means you just replace your electricity bill with a different monthly payment until the solar panels are paid off, and the interest and fees on a solar loan can increase the overall cost of going solar.

For instance, a $20,000 solar loan with a 5.5% annual percentage rate (APR) over 20 years would require you to make an approximately $138 monthly payment. That increases the total cost of your loan to about $33,100. On the upside, if you shorten the loan term to 10 years, you’ll pay more each month (about $218) but less overall (around $26,100).

Leases and PPAs

The way you pay for a solar system has a major impact on your long-term savings. Cash purchases offer the greatest return on investment (ROI), but loans can also deliver savings depending on your rate and term length. Solar leases and power purchase agreements (PPAs) reduce or eliminate upfront costs, but have little long-term value.

• Solar lease: With a lease, you pay a fixed monthly fee to use the system, but you don’t own it. This usually means lower upfront costs but limited savings over time. You also won’t benefit from increases in home value tied to system ownership.
• Power purchase agreement (PPA): Instead of paying for the system, you pay for the electricity it produces, typically at a set rate per kilowatt-hour. Many PPAs include escalator clauses, meaning your rate increases over time. This can make long-term costs harder to predict.

Important cost comparison consideration

When comparing options, don’t mix pricing metrics. Cash purchases and loans are quoted in dollars per watt ($/W), while leases and PPAs are priced per kilowatt-hour ($/kWh). Because these measure different things, they aren’t directly comparable. Focus instead on total cost, monthly payments and long-term savings.

State and local incentives

While the federal solar investment tax credit (ITC) helped offset upfront costs for years, it expired on Dec. 31, 2025, making state and local incentives more important than ever for reducing the cost of going solar. Many states offer additional programs, including:

• Solar Renewable Energy Certificates (SRECs): These are credits you earn based on how much electricity your system produces. Utilities buy SRECs to meet renewable energy requirements, allowing you to earn ongoing income from your system.
• Performance-based incentives (PBIs): Similar to SRECs, these programs pay you for the actual energy your system generates over time, rather than offering a one-time rebate.
• State and local rebates: Some states, utilities and municipalities offer upfront rebates that directly reduce installation costs. Availability and amounts vary widely by location.
• Property and sales tax exemptions: In some areas, solar installations are exempt from added property taxes or sales tax, helping reduce both upfront and long-term costs.

Because these programs vary by state and can change frequently, it’s important to check local resources like the Database of State Incentives for Renewables & Efficiency (DSIRE) to see what’s currently available in your area.

» READ MORE: How much do solar panels cost?

How much can solar panels save you?

The amount you can save by going solar depends on how much you spend on electricity normally.

“If you’ve got net metering, your electricity bills are a balance of your solar production and your electricity consumption. This can mean low and zero-dollar utility bills, especially in the summer,” Scott Crunick, a solar advocate with Apollo Energy, explained to us in an interview.

Imagine that your solar panels generate a total of 900 kilowatt-hours (kWh) of electricity during April. If you were to use 1,000 kWh of electricity in the same time period, your April electricity bill would only be for 100 kWh of electricity and some unavoidable fees from your energy provider.

Now, let’s say you only use 800 kWh of electricity in May while generating 900 kWh of solar power. You won't have to pay for any utility energy that month, and the excess 100 kWh of power you generated may carry over to your next monthly bill in June.

Estimated solar savings by state: cash

Solar panel ROI differs depending on your situation and choice of system, but we’ve outlined some estimated solar costs by state below, along with a calculation of how much those systems could save you in the long term.

Bear in mind that these estimates are for those who pay in cash. If you finance your solar panels, interest and fees will eat into your long-term savings, though there’s a good chance you’ll still save money overall.

Example solar savings calculation: loan

According to J.D. Power, the average monthly electric bill in 2025 was $189. That’s between the two loan payments we mentioned earlier ($138 and $218), so you’d either be slightly reducing or slightly increasing your monthly energy costs until your loan is paid off. (This assumes that energy costs won’t go up and the average solar panel system is enough to completely neutralize the average electric bill.)

If we take the higher $218 monthly payment, you’d spend $29 per month more on your solar panels than you would on your electricity bills. That’s actually a loss of $3,480 over the first 10 years with your panels. However, once your system is paid off, you start to save $189 every month until your solar panels wear out around the 25-year mark. That would save you $34,020 over the next 15 years, bringing your net savings to $30,540.

What solar customers say

Christopher, a ConsumerAffairs reviewer from Missouri, told us: “I'm happy about going solar. I'm producing more electricity than I'm using. So it's working out well. I even got an electric bill for $0 this month.”

Likewise, Mark in Arizona said, “One of my neighbors told me about the savings with solar energy and I got interested. It was a combination of being a little more environmentally aware and really putting a dent in the electric bill. And now, I'm very satisfied that I went with it. I had a very good experience enrolling with Vivint and my electric bill has decreased significantly.”

On the other side of the coin, it’s important to remember that not every solar panel system is a match for every situation. James, another reviewer from Arizona, wrote, “My system is way too small to take away nearly any of my energy bill, and the price I paid I’ll never recoup.”

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Factors that affect solar savings

Several factors can either limit or increase your savings when you go solar. Here’s what makes the greatest impact.

Rising electricity rates

One of the biggest drivers of solar savings is utility rate inflation — the steady increase in electricity prices over time. Historically, U.S. electricity rates have risen by about 2% to 3% annually, according to the U.S. Energy Information Administration, though some regions see higher spikes. From 2022 to 2025, average retail electricity rates rose by 13% nationwide.

That difference adds up. For example, if rates rise 3% annually, your electric bill roughly doubles over 25 years. At 5%, it can more than triple. Solar helps hedge against these increases by locking in a portion of your energy costs at today’s prices.

The faster utility rates rise in your area, the more valuable your solar system becomes over time.

Physical factors

Your home’s physical characteristics directly impact how much energy your system produces and how much you save.

• Roof orientation: South-facing roofs typically generate the most electricity, though east- and west-facing systems can still perform well.
• Tilt angle: Panels work best at angles that match your latitude, but most roof pitches are close enough for strong performance.
• Shading: Trees, chimneys or nearby buildings can significantly reduce output, even if only part of the system is shaded.
• Roof age: If your roof needs replacement soon, you may face additional costs to remove and reinstall panels later.

Battery storage

Solar batteries allow you to store excess solar energy and use it later, including during peak utility pricing periods (a strategy called energy arbitrage). They also provide backup power during outages, which can be valuable in areas with unreliable grids.

While useful, they also raise upfront costs. Most residential battery systems cost between $7,000 and $18,000 or more, depending on capacity and installation.

In markets with time-of-use rates or limited net metering, batteries can play a key role in maximizing savings, but they don’t always improve financial returns. In areas with strong net metering policies, exporting excess energy to the grid may be more cost-effective than storing it.

Recurring costs

Solar systems have relatively low maintenance costs, but a few ongoing expenses can affect your long-term savings.

• Inverter replacement: Most string inverters need replacement around years 10 to 15, typically costing $1,000 to $3,000.
• Cleaning and maintenance: Occasional cleaning may be needed in dusty or pollen-heavy areas, though many systems require minimal upkeep.
• Insurance: Some homeowners see small increases in insurance premiums after installing solar panels.

Property ownership duration

How long you stay in your home plays a major role in whether solar pays off. Most systems take seven to 12 years to break even, depending on installation costs, incentives and local electricity rates. If you sell before reaching that point, your savings may be limited.

That said, solar can still add value. A 2019 study from Zillow suggest that homes with solar panels often sell for a premium (up to 4.1% more) compared to similar homes without them. To maximize ROI, your ownership timeline should ideally extend beyond your system’s break-even point, allowing you to benefit from years of reduced or eliminated electricity costs.

How to estimate your solar savings

If you want to know how much you personally can save by going solar, try estimating your solar savings with these four steps.

1. Calculate how much you spend on electricity

If you have been living in your home for at least a year, it should be easy to estimate your annual consumption by simply looking at your utility bills. Solar savings go the furthest in areas with high electricity rates and when homeowners use a lot of energy.

It’s also important to bear in mind that you may spend more on electricity in the future if utility prices go up or if your energy demands increase, but those increases are harder to calculate.

2. Design your system and calculate your savings potential

There are many online tools available (from both private companies and government organizations) designed to help calculate the solar power potential of your roof with varying degrees of accuracy. While we generally recommend working with a professional (or multiple professionals) for this step, the process is essentially as follows:

1. Determine how many panels can fit on your roof.
2. Estimate those solar panels’ annual production in kWh based on their total wattage, your location’s peak sun hours and other local factors, like shade.
3. Compare your solar power potential to your annual electricity consumption. For example, if your solar panels generate more energy than your property consumes, you can offset 100% of your utility power usage.
4. Calculate your potential yearly savings based on your energy offset and avoided costs. Let’s say your solar panels can offset 100% of your utility electricity use, which helps you avoid 11,000 kWh in annual energy spending. If electricity rates in your area average 17 cents per kWh, your solar panels could save you $1,870 per year (11,000 kWh x 17 cents).

3. Determine the final price, including incentives

Using estimates from installers, you can determine the final price of your solar panels by adding up all of the project expenses and deducting any applicable state or local tax credits, rebates or incentives you qualify for.

Before signing a contract, ask your installer whether there are any additional “hidden” costs for project expenses like taxes and permitting.

4. Subtract your cost from your potential savings

Finally, compare the total cost of your system to the annual savings it can provide on your energy bills. For example, if your system costs $16,000 after incentives and saves you $2,000 per year on electricity bills, your solar panels will “pay for themselves” in eight years. Assuming your solar panels produce energy at roughly the same rate over 25 years, you’d net $34,000 in savings over the long term.

» MORE: Are solar panels worth it?

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