The average cost of installing an average-size home solar system in is about $30,000 before federal tax credits and incentivesView all sources
EnergySage . Solar panel cost in . Accessed Aug 21, .
Link to Jiasheng
federal solar tax credit may reduce the net cost to about $21,000; local incentives can further lower the cost.You can determine whether solar panels are worth it for your home by considering various factors, such as local incentives and policies your electric bill, and how you finance the system.
Solar panel costs by state
The cost of installing residential solar systems has dropped by nearly $15,000 over the past two decades, according to the Solar Energy Industries AssociationView all sources
Solar Energy Industries Association . Solar Industry Research Data . Accessed Jul 23, .
However, costs vary among states. Here are the typical costs for installing residential solar panels by state according to EnergySage data.
See solar panel costs by state
State
Typical cost before federal tax credit
Typical cost after federal tax credit
Average cost per watt
Alabama
$39,250.
$27,475.
$3.37.
Arizona
$26,162.
$18,313.
$2.09.
Arkansas
$37,234.
$26,064.
$2.73.
California
$19,973.
$13,981.
$2.39.
Colorado
$28,374.
$19,862.
$3.05.
Connecticut
$32,598.
$22,819.
$3.07.
D.C.
$28,610.
$20,027.
$3.05.
Delaware
$31,305.
$21,914.
$2.50.
Florida
$37,234.
$21,409.
$2.22.
State
Typical cost before federal tax credit
Typical cost after federal tax credit
Median cost per watt
Georgia
$31,283.
$21,898.
$2.64.
Hawaii
$29,362.
$20,553.
$3.50.
Idaho
$33,927.
$23,749.
$2.82.
Illinois
$34,694.
$24,286.
$3.06.
Indiana
$38,486.
$26,940.
$3.14.
Iowa
$38,806.
$27,164.
$3.17.
Kansas
$34,784.
$24,349.
$2.97.
Kentucky
$42,233.
$29,563.
$2.91.
Louisiana
$34,558.
$24,191.
$2.95.
Maine
$33,080.
$23,156.
$3.26.
State
Typical cost before federal tax credit
Typical cost after federal tax credit
Median cost per watt
Maryland
$35,908.
$25,136.
$2.81.
Massachusetts
$33,186.
$23,230.
$3.37.
Michigan
$30,863.
$21,604.
$3.17.
Minnesota
$35,521.
$24,865.
$3.11.
Missouri
$34,832.
$24,382.
$2.79.
Mississippi
$40,267.
$28,187.
$3.11.
Montana
$29,692.
$20,784.
$2.56.
Nebraska
$30,456.
$21,319.
$2.24.
Nevada
$28,266.
$19,786.
$2.24.
New Hampshire
$32,298.
$22,609.
$3.27.
New Jersey
$31,564.
$22,095.
$2.75.
New Mexico
$28,210.
$19,747.
$3.12.
State
Typical cost before federal tax credit
Typical cost after federal tax credit
Median cost per watt
New York
$33,912.
$23,738.
$3.04.
North Carolina
$33,573.
$23,501.
$2.58.
Ohio
$30,940.
$21,658.
$2.67.
Oklahoma
$34,133.
$23,893.
$2.48.
Oregon
$30,090.
$21,063.
$2.64.
Pennsylvania
$34,856.
$24,399.
$2.85.
Rhode Island
$31,306.
$21,914.
$3.27.
South Carolina
$31,247.
$21,873.
$2.44.
Tennessee
$38,084.
$26,659.
$3.23.
State
Typical cost before federal tax credit
Typical cost after federal tax credit
Median cost per watt
Texas
$27,971.
$19,580.
$2.15.
Utah
$28,007.
$19,605.
$2.75.
Vermont
$29,570.
$20,699.
$2.86.
Virginia
$37,365.
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$26,156.
$2.94.
Washington
$34,196.
$23,937.
$2.69.
West Virginia
$43,778.
$30,645.
$3.10.
Wisconsin
$34,625.
$24,238.
$3.09.
Wyoming
$48,315.
$33,821.
$3.76.
Source: EnergySage. Data is accurate as of August 13, . Note: EnergySage does not have data for Alaska, North Dakota or South Dakota.
Five factors that affect solar panel cost
Tap to see a summary of the list below
The more efficient the solar panel and the higher the output capacity, the more expensive it&#;ll be &#; and some brands are just pricey compared to others. You&#;ll pay more upfront for a larger system but might save more in the long run on your electricity bill. Adding extra hardware such as batteries for storage will increase the cost of a new system, and each installation company has its own pricing structure for how much they charge for installation and such. (That&#;s why it&#;s good to get several quotes to compare them.) And if you choose to take out a solar loan instead of paying cash, you&#;ll pay more in the end than if you&#;d paid cash.
1. Panel choice
Several panel characteristics affect panel prices:
Brand. Solar panel brands vary in quality, warranties and pricing structures, making some brands more expensive than others.
Output rating. Panels that produce more watts of power in ideal conditions tend to cost more per panelView all sources
Maryland Energy Administration . A Maryland Consumer's Guide to Solar . Accessed Aug 20, .
Efficiency. The higher the efficiency, the more powerful the solar panel is for its size.
To understand how output rating and efficiency work together, imagine two 400-watt panels, one that has an efficiency rating of 18% and another that has an efficiency rating of 20%. If working in their ideal conditions, both will produce 400 watts of energy, but the one with the higher efficiency rating is physically smaller. Because space can be tight when loading solar panels on your roof, higher efficiency panels tend to be more expensive.
2. System size
The size of your solar energy system refers to how much solar energy it produces, usually measured in kilowatts. The more kilowatts your system produces, the more it may cost upfront because it either requires more panels, uses more efficient (and more expensive) panels or both. A higher kW system could save you more money over time, though, by producing more energy. Accessed Aug 16, .View all sources
EnergySage.com .. Accessed Aug 16, .
Did you know...
The average home needs around 11 kW of solar energy to cover its electricity consumption; however, homeowners in some states purchase larger systems on average.
Your system&#;s design can also affect the size you need. The shape of your roof, as well as how much direct sun it gets and for how long all factor into how an installer designs your system to maximize solar energy production. If your house requires a more complex or larger system to produce the energy you want, this can affect the total cost.
3. Additional hardware
4. Purchasing method
Paying for solar panels with cash is cheaper than financing the purchase. According to EnergySage, customers who take out a solar loan could pay as much as 47% more than the cash value of a solar system through the life of a loan. How much more you&#;d pay depends on your loan terms.
5. The installer
Each solar installer has its own way of pricing equipment and installations. Talk with several installers before deciding on which one to use. A more expensive installation doesn&#;t necessarily mean better quality, though, so be sure to research the companies before agreeing to anything.
Are solar panels worth it?
Here are four important things to consider if you're trying to decide whether solar panels are worth it.
1. Whether you have net metering
To encourage people to install solar panels, many states have adopted net metering, which is a billing method that credits you for the excess solar electricity that you export to the power grid. Essentially, these policies pay you for not using all of the solar energy your system producesView all sources
Solar Energy Industries Association . Net Metering . Accessed Aug 16, .
However, some states, including California and Arizona, are transitioning from net metering to net billing, which lowers the price utility companies pay customers for their excess solar energy. If your utility doesn't offer these incentives or pays a low rate for electricity sold back to the grid, solar panels likely won't bring your electricity bill to zero, unless you use a solar battery to store power to use later on.
2. Whether you qualify for tax incentives
Depending on your state, you may also have access to rebates, sales and property tax exemptions, waived fees and expedited permits. You can find details on incentives for your state at the Database of State Incentives for Renewables & Efficiency (DSIRE).
3. The size of your current electric bill
Solar panels can generate enough power to significantly lower your monthly electric bill &#; and if you&#;re very lucky, even eliminate it. The higher your bill and the more of your electricity use you can offset with your system, the more likely you are to benefit from solar.
You might save more with solar if electricity prices are high where you live. A solar system may provide a good hedge against rising electricity prices, which rose an average of 6.2% from to , according to the U.S. Energy Information Administration (EIA).
4. Your roof
To help you get the most out of your system, solar installers will inspect your roof, compare that to your electric bills and discuss your future electrification plans. They will also help you evaluate your home&#;s orientation toward the sun, the amount of sun it gets, and the roof type and condition.
5. The length of your payback period
How long it will take for your solar savings to equal your initial investment varies and depends on several factors, including how much you paid for your system and what tax incentives are available to you. The average payback period ranges from 3.7 to 17.9 years, depending on the homeowner&#;s stateView all sources
EnergySage.com . Solar payback period: How soon will it pay off? . Accessed Aug 16, .
NerdWallet writers Lauren Schwahn and Tommy Tindall contributed reporting to this article.
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Frequently asked questions
How much will I save on my electric bill with solar?
Your savings will depend on your specific situation. The average homeowner who goes solar can expect to save about $48,000 over 25 years, according to EnergySage.
Where can I find available incentives for my area?
You can search the Database of State Incentives for Renewables & Efficiency (DSIRE) to find incentives available in your state.
How much will I save on my electric bill with solar?
Your savings will depend on your specific situation. The average homeowner who goes solar can expect to save about $48,000 over 25 years, according to EnergySage.
Where can I find available incentives for my area?
You can search the
Database of State Incentives for Renewables & Efficiency (DSIRE)
to find incentives available in your state.
Based on our survey of 1,000 homeowners with installed solar systems, solar panels cost between $15,000 and $22,500 before incentives for an average 2,000 square foot home. The actual price you pay will depend on a number of factors including the system size you need, the installation company and equipment you choose and the financing option you select.
Compare installation quotes from the best solar companies
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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.
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.
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.
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.
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 $34,200Page
1
ofThe 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.
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&#;$0.60Page
1
of*Average cost calculations are based on wholesale pricing from Solar Electric Supply, Inc. and A1 Solar Store.
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$1,222.65Page
1
of
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.
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 .
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.
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.
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 .Page
1
ofJoe 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
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.
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.
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.
We conducted in-depth research and analyzed several factors to determine our solar cost data, which is based on the following resources:
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.Page
1
ofMichael 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...
much less pollution &#; especially greenhouse gasses like carbon dioxide &#; than traditional coal or natural gas generators."
Joe Kantenbacher
Assistant Professor of Sustainability at the University of South Dakota
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