Solar Energy vs. Fossil Fuels

Cost of solar energy vs. fossil fuels

Electricity from fossil fuels costs between 5 and 17 cents per kilowatt-hour. Solar energy costs average between 3 cents and 6 cents per kilowatt-hour and are trending down, according to the National Renewable Energy Laboratory (NREL).

Going solar is a money-saver in the long term, even though startup costs are higher for the consumer. In fact, wind and solar power are now the most cost-effective ways to generate electricity in most regions (even without subsidies).

Upfront costs and long-term payback

The average residential solar panel system costs $28,241 in 2025. It typically takes about six to 12 years for a system to pay for itself through savings on traditional power bills. Homeowners might even be able to make money by selling excess energy from their solar panels to their local grid through net metering.

Average cost of solar panels by system size

Government incentives and financing options

Solar panels can lower your utility bills, but not everyone is in the financial position to absorb the initial cost of panels until it balances out. To help offset the upfront cost of solar panel installation, many solar energy companies have leasing options with minimal upfront costs, and solar financing companies offer loans with flexible terms and relatively low interest rates.

Federal solar tax credit expires soon

The federal solar tax credit was expected to drop gradually, then fully expire in 2035 — but those future step-downs have been eliminated under the One Big Beautiful Bill Act, signed in July of 2025. This means you have until Dec. 31, 2025, to install and pay for a system to qualify for the 30% credit.

» EXPLORE: Solar incentives by state

Environmental impact of solar vs. fossil fuels

There are some disadvantages to solar energy in terms of the environment: Some pollution is associated with solar energy production, and transporting solar panel systems contributes some to greenhouse gas emissions. Still, the environmental effects of solar energy are pretty insignificant, especially compared to fossil fuels.

Greenhouse gas emissions and air pollution

Solar wins hands down in operational cleanliness. Solar panels generate clean electricity with almost no emissions, while fossil fuels emit large amounts of carbon dioxide and harmful pollutants that drive climate change and damage public health. Solar’s emissions are only a fraction of those from fossil fuel power plants.

Land and water use

Solar can be land-intensive but flexible in placement and is water-efficient. Fossil fuels use more water, disrupt more land during extraction, and pose higher long-term environmental risks.

For instance, mining (coal) and drilling (oil and gas) disrupt large land areas, leading to habitat destruction, soil erosion and long-term ecological damage. Fossil fuel extraction, processing and power generation also require significant water resources for cooling, washing, and refining.

Energy density and efficiency rates

Oil, coal and natural gas have a higher energy density (the amount of stored energy per unit volume) than solar power. Solar energy has a lower energy density, meaning it produces less energy per unit of area.

Homeowners with solar panels can avoid $20,000 to $90,000 in total utility bills over 25 years.

“Lower energy density isn’t really a problem,” solar expert Bill Kaltenekker explained, “it just means more solar panels are necessary for a given energy output. Solar energy output is set by the physics of the panel, because only some frequencies of light hitting the panel can be converted to electrical energy.”

Solar panels are usually 15% to 22% efficient, while fossil fuel plants run closer to 30%. But fossil fuels also waste a lot of energy as heat and create pollution. Solar may be less dense and a bit less efficient, but it’s clean and getting better every year.

Reliability and energy efficiency comparison

Many prefer fossil fuels for perceived reliability. However, investing in a battery for solar storage lets you tap into energy even if the sun isn't out and helps provide predictability.

Storage and grid integration

Fossil fuels deliver steady, on-demand power and easily adjust to meet changing demand. They work seamlessly with older grids built around large, central power stations.

Solar energy produces clean power only when the sun is shining, so output can drop with clouds, nightfall or seasonal changes. To keep electricity flowing, solar relies on energy storage — batteries like lithium-ion or flow systems store excess daytime power for use later — and on smart grids that balance supply and demand without turning back to fossil fuels.

Real-world example

When Brian in New York installed a robust Tesla solar system, everything went smoothly — until it came time to add Powerwalls. Only then did he learn his home’s three-phase electrical system wasn’t compatible, something Tesla never flagged during sales or installation. This oversight left him without the battery backup he wanted. It also caused a wiring issue that disabled his propane generator during a 10-day outage.

“We would love to be off fossil fuels, and had high hopes, but Tesla let us down,” he told us. Brian’s experience shows that storage and grid integration aren’t afterthoughts: They’re critical to plan for from the start if you want reliable backup power and a seamless solar setup.

Fossil fuels

Despite their name, fossil fuels don't come from dinosaur or animal fossils. Instead, energy absorbed millions of years ago remained stored in organisms as they were slowly covered by earth. It takes hundreds of millions of years for buried organisms to decompose anaerobically, and these organisms eventually convert into what we know as fossil fuels.

The three main types of fossil fuels are petroleum (also known as crude oil), coal and natural gas. The formation of these fuels is a natural process, but it’s one that takes time.

These fossil fuels are found underground by mining or drilling, both of which have high operational costs. Burning fossil fuels breaks down the atom bonds that store the energy, which releases the energy for use.

Fossil fuel pros and cons

The most significant advantage of fossil fuels is our well-developed technology for turning them into energy. Historically, nonrenewable fossil fuel energy has been easy to find and reliably used across the globe. We've had centuries to perfect the way we use it.

Solar energy

The Earth absorbs enough energy from the sun in about an hour to power the world for a year. If you’ve ever had the sun come through your windows and heat your home, you’ve experienced passive solar heating. To use clean energy for your home, however, you have to convert the power into a usable form with solar panels.

How do solar panels work?

Solar panels are made of photovoltaic (PV) cells that convert solar energy into electricity. The electricity they produce is direct current (DC), which an inverter changes into alternating current (AC) for your home. You can use the power right away, store it in a battery or send extra back to the grid for credit. All of this happens without producing greenhouse gases during operation.

Solar energy pros and cons

Overall, the decision to go solar has been driven by a desire to save money, reduce reliance on fossil fuels and contribute to a cleaner environment.

FAQ

Bottom line

Though there are innumerable uses for fossil fuels in everyday life, it’s hard to ignore their disadvantages. Fossil fuels are a top contributor to global warming because of their high carbon output when burned. There's also the potential for dangerous accidents during the production and transportation of fossil fuels.

Given the consumption rate of fossil fuels, the world is reaching a point where we’ll have little choice in the matter — nonrenewable fossil fuels are extracted at a rate much faster than the rate of replenishment. Because of this, some fossil fuels, like coal, are on track to be more expensive than solar within the next decade.

Tips for going solar

Here is how to maximize your savings with solar. Read our guide on the best solar companies for more information.

1. Determine what size system you need. Calculate how many panels you need based on your home’s energy use. This step is key for getting the best performance.
2. Check your local utility’s buyback rates. See what they’ll pay for excess energy. Rates are often lower than what they charge for electricity.
3. Consider battery storage. Storing extra energy can be more cost-effective than selling it back and keeps power flowing during outages.
4. Look for incentives. Federal, state, and utility programs can cut your installation costs significantly.
5. Maximize your output. Keep panels clean, free of shade and properly angled. Some systems even track the sun or self-clean to boost performance.