How much do solar panels cost?
A residential system is $10,000 to $30,000 or more
Solar panels generate “free” electricity, but there are still costs associated with installing them. On average, solar panels cost $17,430 to $23,870 after federal tax credits.
Supply chain constraints led to solar photovoltaics (PV) price increases in 2021, but we saw costs go back down in 2022.
- In 2023, the average cost for a residential system is currently $3 to $5 per watt.
- It typically takes five to 15 years to break even on installation costs.
- Solar leases and PPAs can reduce the cost but aren’t eligible for the federal tax credit.
Average solar panel cost by state
You can get a better sense of how much you can expect to pay for a solar installation in your area with a state-by-state comparison. The data in this table is based on average installation costs for a 6-kW solar panel system, a common size for a residential installation.
» COMPARE: Best solar energy companies of 2023
|State||Cost for 6-kW system (before tax credit)*||Cost per watt (before tax credit)||2022-2032 federal tax credit value (30%)||Cost for 6-kW system (after tax credit)|
How much does it cost to install solar panels?
The average cost to install solar panels in the U.S. is $20,650 after federal tax incentives, according to EnergySage. Depending on the size of your home and your energy needs, however, your costs could range from $10,000 to $30,000 or more.
Most installers set the price according to the system's wattage, with the average around $3 to $5 per watt. The cost per watt is the price you pay for each “unit” of energy the solar panel system can produce.
The difference between $3 and $4 per watt can add up to thousands of dollars.
For example, if a solar panel system has a cost of $3 per watt, it costs $3 for every watt of energy it can produce. If the solar panel system can produce 5,000 watts of power, then the system's total cost would be $15,000 (5,000 watts x $3 per watt).
If you just need a few panels for a small do-it-yourself project, prices start at around $200 to $350 per panel (between 80 cents to $1.40 per watt).
Regardless of the size of your system, it’s worth it to get a few quotes — even the difference between $3 and $4 per watt can add up to thousands of dollars.
For example, a ConsumerAffairs reviewer in California was quoted almost $26,000 for a 5-kW system (14 355-watt panels and an inverter), which works out to $5.20 per watt.
“For a 4.97-kW system … it should be priced between $13,071 and $17,047. I personally would have expected a price of $13,668 for a 4.97-kW system ($2.75 per watt),” the reviewer told us.
» FIND: Best cheap solar panels
Solar panel installation cost breakdown
Local climate and the availability of sunlight in your area all play a role in how much you end up paying.
- Your energy needs
- Your energy needs determine how many panels you need, which affects the overall price of your solar system installation.
To eliminate your electric bill entirely, you must generate 100% of the electricity your home needs. Most American homes end up needing 15 to 30 panels to meet their electrical demands. The standard size for solar panels is about 5½ feet long by 3 feet wide, so consider the size of your roof.
Larger systems require more materials and labor to install, so they generally cost more than smaller systems. If you have limited roof space, you might need to get more efficient (and more expensive) panels.
» DO YOU KNOW: How do solar panels work?
- Type and quality of panels
- Not all solar panels are created equal. Here are the top three things to look for as you compare options:
- Durability: Solar panels are designed to last decades, so they should withstand harsh weather conditions and extreme temperatures. Look for panels with a strong frame and tempered glass.
- Efficiency: Higher-efficiency panels convert more sunlight into electricity, meaning you can generate more power with fewer panels. Look for panels with a high efficiency rating — typically above 18%.
- Warranty: Panels typically come with a warranty ranging from 10 to 25 years. A longer warranty indicates that the panel manufacturer is confident in the quality of its product.
Of the three types of panels available, monocrystalline and polycrystalline are most commonly used to power homes. In general, monocrystalline panels are more efficient, but they’re also more expensive compared with polycrystalline panels.
» FIND: Best solar panels in 2023
- Hard and soft costs
- Installing a solar panel system has two main expenses: hard and soft costs. Hard costs are the materials needed for the design, such as the panels, wiring and inverter. Soft costs are associated with labor, permits, deposits and administrative expenses.
Solar panels — the main component of a system — usually make up the largest portion of the cost, but other hardware (for example, you might also want to buy a solar battery for energy storage), plus labor and permits, factor into the overall price.
- Inverter: This device converts the generated DC electricity into AC electricity that can be used to power your home. The cost of an inverter depends on its size and efficiency, but on average, it can cost between $1,000 and $3,000.
- Mounting system: This is what holds the panels in place on your roof. Costs vary depending on the type of installation, but it generally costs between 7 cents and 20 cents per watt.
- Electrical wiring and hardware: This includes the wiring, switches and circuit breakers required to connect the solar panel system to your home's electrical system. Electrical wiring and hardware costs typically range from 10 cents to 20 cents per watt.
- Labor: The cost to install also includes an electrician, who handles wiring, hooking it up to your house and setting up various electronics to convert the power from the panels to the same AC voltage as you have in your home. Labor costs usually range from 50 cents to $1 per watt but can vary greatly depending on where you live and the complexity of the installation.
- Permits: Permits ensure the solar panel installation is safe, follows regulations and can qualify for incentives and rebates. Fees vary based on location, but residential solar permits typically cost a few hundred dollars.
Some state regulations cap permitting fees (Colorado caps them at $500 for residential projects and $1,000 for commercial projects; California caps residential fees at $450).
» MORE: Greenest states in the U.S.
- The condition of your roof
- Get a thorough inspection of your roof now, and make sure you get pictures. If your roof needs repairs, it’s better to take care of that before installing solar panels — it’s more cost-effective than removing the panels and reinstalling them later.
A reviewer in California told us they discovered leaks in their roof a year after installing panels. They said the solar company charged $5,000 “to take the panels down and reinstall them after the roof was replaced” and said “if I had known the roof was in such bad shape, I would've replaced the roof before installing the panels.”
» MORE: Solar shingles vs. panels
- Federal and state incentives
- 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 PPAs do not qualify for the tax credit.
State incentives also help reduce the initial cost, but not everyone can take full advantage of them. Look for policies and incentives by state through the Database of State Incentives for Renewables & Efficiency (DSIRE). Some states, like Massachusetts, offer additional discounts or even free systems for low- and moderate-income households.
It’s usually in your best interest to take advantage of state clean energy programs when you can — it lowers your upfront costs and shortens your payback period.
» FIND OUT: Where your solar savings go the furthest
How much do solar panels save?
Switching to a solar energy system could cut your energy bill by 75% or more. The savings you see will depend on where you live, what the climate is like and your particular energy needs.
Like a lot of solar energy customers we talk to, a reviewer in Pennsylvania said they went solar to “help [the] environment while saving money. During the summer when the central air is going full blast, my electric bills are either $0 or less than $10.”
The average U.S. electric bill is $80 to $178 per month, according to the U.S. Energy Information Administration.
The average American electric bill is currently between $80 and $178 per month, totaling around $1,500 each year, according to the U.S. Energy Information Administration. Depending on how much you pay out of pocket for a solar energy system, it could take seven years or longer to break even, according to Wayne Turett, the founder of The Turett Collaborative, an architectural firm that specializes in sustainable designs.
» EXPLORE: Most efficient solar panels
Another reviewer in Texas was able to take 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.”
But some people see their electricity bills go back up if they run into a problem with their system — a reviewer in Nevada didn't realize their inverter needed to be replaced, leading to an unexpected increase in their utility costs.
“Everything had been going well and my energy bill had averaged $13 to $15 a month,” said one reviewer in Nevada. “Until I received a bill at the end of September 2022 in the amount of $429 from NV Energy.”
So, keep in mind there’s some maintenance after installation, like panel cleaning and occasional repairs, which adds to the overall cost. Most solar energy companies offer monitoring apps that help you see how much energy your system is producing and when maintenance may be required.
» COMPARE: Solar energy pros and cons
How can I pay for solar panels?
Like buying a new car, you can pay for solar panels outright — but most people don’t.
Homeowners and business owners often use loans, solar leases or power purchase agreements (PPAs) to pay for the upfront costs. You might also consider a cash-out refinance or HELOC.
If you can pay cash, it’s usually cheaper in the long run. For example, consider this review from a customer in California:
“Financing it was $18,000. 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.”
» MORE: Are solar panels worth it?
In general, 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. Whether or not it makes sense for you comes down to your terms and break-even point.
A solar customer in California “did the math,” 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,” they said. “But only for six years, and then after that, the panels will be mine and I don't have to pay anymore.”
Just remember to pay attention to the interest rate. Another reviewer in California said they're “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.”
» MORE: Best solar financing companies
With a solar lease, you don’t own the equipment; instead, you make monthly payments to use them for the duration of the lease term. Your leasing company is responsible for maintaining and repairing the solar panel system during this time.
Another customer in California said they “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.
» LEARN: How does a solar lease work?
Power purchase agreement
A power purchase agreement (PPA) is another way to get solar panels installed on your property without paying for them upfront.
An energy service company (ESCO) installs the panels for you but owns and maintains them. You then purchase the electricity generated by the solar panels from the ESCO at a fixed price.
You can still save money on your electricity bills with a PPA, but some reviewers describe feeling “stuck” with a company.
» WHAT’S THE DIFFERENCE? Solar lease vs. solar PPA
Do solar panels increase the value of your home?
In general, installing solar panels is a good investment. Studies show that homes with solar panels sell for more than homes without them, and that increase in value can be significant.
- A study by the Department of Energy’s Lawrence Berkeley Laboratory found homes with solar panels sold for about $15,000 more, on average, than comparable homes without solar panels.
- A National Bureau of Economic Research study found that solar panels added an average of $20,194 to the sale price of homes in the San Diego and Sacramento areas.
- Zillow found that, on average, homes with solar panels sold for 4.1% more than comparable homes without solar panels.
How much value the solar panels add depends on your system's quality, location and other factors.
» EXPERT TIPS: How to save energy at home
How many solar panels do I need?
The number of 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.
- Energy usage: To estimate the amount of energy you’ll need, you need to know your average kilowatt-hours (kWh). This number should be on your utility bill as “kWh used.” To get your monthly average, look at bills for the past year, add up the stated kWh used and divide by 12.
- Panel efficiency: Next, you need to find the solar panel efficiency, which is the amount of energy the panel can produce per hour of sunlight it receives.
» CALCULATE: How many solar panels do I need for my house?
How does net metering work?
Sometimes, you might make more electricity than you need, especially on sunny or windy days.
Net metering is a system that lets you send any 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 means that when your solar panels aren't generating enough electricity, such as at night or 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. My contract ended and I had to renew it."
They continued: “Now, I'm paying 21 cents a kilowatt-hour for usage, and I'm only getting back 10 cents a kilowatt-hour for anything I push back to the grid. There's another $40 a month service fee from the utility company as well. So the incentive isn't quite what it was a year ago. Still, it's a good value.”
It’s a win-win situation: You save money on your bill, and the power grid gets more electricity to distribute to people who need it.
»LEARN MORE: What is net metering?
How are solar panels installed?
Actually installing solar panels takes only a few days at most. Wiring is installed to connect the panels to an inverter, which converts the DC power generated by the panels into AC power for use in your home.
“One of the most common misconceptions is that going solar is a complicated process that involves a lot of work and expensive equipment,” said Alan Duncan, founder of Solar Panels Network USA. “In reality, 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.”
Once the 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.
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.
» READ: Solar panel installation guide
Buying solar panels can get expensive. Prices vary based on efficiency, capacity and location, but a residential solar panel system generally costs anywhere from $10,000 to $30,000. This includes the cost of the panels themselves, installation and any additional equipment needed.
The good news is we expect to see solar hardware continue to get cheaper, thanks to advancements in technology and increased competition in the market.
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, solar panel cars and passive solar home design.
» NEXT: 7 steps to going solar
- Article sources
- ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. To learn more about the content on our site, visit our FAQ page. Specific sources for this article include:
- EnergySage, “How much do solar panels cost in 2023?” Accessed April 13, 2023.
- Center for Sustainable Energy, “How much does a typical residential solar electric system cost?” Accessed April 11, 2023.
- Solar Energy Industries Association, “Low-Moderate Income Solar Principles.” Accessed April 10, 2023.
- U.S. Energy Information Administration, “2021 Average Monthly Bill- Residential.” Accessed April 10, 2023.
- Lawrence Berkeley National Laboratory, “Berkeley Lab Illuminates Price Premiums for U.S. Solar Home Sales.” Accessed April 10, 2023.
- National Bureau of Economic Research, “UNDERSTANDING THE SOLAR HOME PRICE PREMIUM: ELECTRICITY GENERATION AND “GREEN” SOCIAL STATUS.” Accessed April 10, 2023.
- Zillow, “Homes With Solar Panels Sell for 4.1% More.” Accessed April 3, 2023.
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