How Much Do Solar Panels Cost? (2024) (2024)

Based on our survey of 1,000 homeowners with installed solar systems, solar panels cost between $15,000 and $20,000 per home. However, according to the Solar Energy Industries Association (SEIA), a residential solar system can cost upward of $25,000 per installation.

We at the Guides Home Team have researched and reviewed the top solar companies to help you better understand the cost of solar and determine if it’s a worthwhile investment for your home. Read on to learn how factors like where you live, your household’s energy usage and the type of solar panels you install can impact the final cost of your solar system.

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Your location, energy needs and equipment selection are the top three factors that contribute to solar panel cost.

Location

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, how much sunlight you receive also plays an important role in determining how many solar panels you’ll need (and thus how much you’ll pay for your system). 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.

Energy Needs

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.

Solar providers typically want to install a system that generates just enough electricity to support your typical energy usage — so your panels aren’t producing too much or too little energy. When designing your solar system, you’ll typically speak with a solar expert to determine your current and future needs and decide what size system is right for you.

Solar System Size

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.

Purchasing Options

The 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.

Or, you can lease your solar panels. Instead of owning your panels, you will pay your solar company a fixed monthly rate to “rent” your system. You may see some energy savings with a lease, but you likely won’t save as much as other financing options. You also won’t be eligible for incentives like the 30% federal tax credit and will likely become locked into a lengthy solar lease contract.

Solar Panel Type

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. Beyond those options, each solar panel manufacturer offers a selection of products with different wattages, durability and technologies that affect energy production and overall cost.

Your solar installer will walk you through choosing the right kind of panel for your home. However, it doesn’t hurt to research the best solar panel brands and manufacturers on your own.

Solar Installation Company

Another factor that can greatly affect the ultimate cost of your solar system is the installation company that you choose. Use the chart below to help you find a provider with an installation cost within your budget and request a free quote.

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:

The demand to expand renewable energy infrastructure in the U.S. shows no signs of slowing. As a result, the federal government and many states are incentivizing residents to install solar panels on their homes.

There are plenty of programs that can help you save money on solar panels. Your solar installer can help you apply for the federal solar tax credit and any state and local incentives for which you’re eligible.

Federal Solar Incentives

The Federal 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 significant savings.

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 is currently set to decrease to 26% in 2033, then to 22% in 2034 before expiring entirely in 2035.

State Solar Incentives

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.

Installing efficient panels and maintaining basic system upkeep can help maximize your solar panel output, helping you save more money in the long run.

Purchase Efficient Panels

Efficient solar panels maximize your system’s energy production while requiring fewer solar panels and less roof space. SunPower currently offers some of the most efficient solar panels on the market, at 22.8% efficiency.

Monitor Your System

Most solar installers offer a solar monitoring app that allows you to easily see when your panels are underperforming. Keeping tabs on your system’s energy production helps you identify and resolve issues quickly.

Clear Debris and Obstructions

Routine cleaning helps keep your panels running efficiently. Depending on the climate and conditions where you live, you will need to clean your solar panels once or twice a year. You should also clear out any debris caught underneath your panels. Additionally, trimming trees that are casting shade onto your panels can maximize your system’s productivity.

Although going solar is a large upfront cost, solar panels are usually worth it because you won’t be paying energy bills over the 25+ year lifespan of your system. If your solar panels are offsetting most or all of your energy consumption, you will recoup the cost of your system through energy savings long before your panels stop working.

So, in what situation might solar panels not be worth it? If your payback period is longer than the lifespan of your solar panel system, you will not be saving money in the long run. However, it’s very uncommon for that to be the case, especially considering the drastic decrease in the cost of solar over the past decade.

How Long Does It Take to Break Even With Solar?

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.

The National Renewable Energy Laboratory estimates that solar payback periods are even shorter than that, at just four years for a standard monocrystalline solar panel system. So if your solar panels generate energy for 25 years, you’d be enjoying 21 years of free, clean energy after you break even.

We conducted in-depth research and analyzed several factors to determine our solar cost data, which is based on the following resources:

• Conducting surveys: We have conducted two surveys to gather solar cost data for homeowners across the country. Both launched in 2023, each survey polled 1,000 homeowners who have installed residential solar systems. We compared the results of each survey to determine average pricing based on solar system size, location and installer.
• Researching reliable sources: We gathered information from reliable solar sources like the Solar Energy Industries Administration (SEIA), the National Renewable Energy Laboratory (NREL) and the Energy Information Administration (EIA) to assess the national average cost of solar panels. We also used these sources to determine the cost of electricity and solar power systems by state.
• Consulting industry experts: We spoke with industry experts, including Jesse Solomon, the co-founder of NCSolarNow, to understand the costs of going solar for both customers and installation companies. We also researched solar products in today’s market, including the cost of solar panels and accessories like solar batteries.

Faith Wakefield Author

Faith Wakefield is a writer based in North Carolina. She holds economics and English degrees from UNC Chapel Hill, and her work has been featured on EcoWatch, The World Economic Forum and Today’s Homeowner. In her free time, she loves to binge-watch personal finance videos on YouTube, collect books and spend time in nature.

Tori Addison Editor

Tori Addison is an editor who has worked in the digital marketing industry for over five years. Her experience includes communications and marketing work in the nonprofit, governmental and academic sectors. A journalist by trade, she started her career covering politics and news in New York’s Hudson Valley. Her work included coverage of local and state budgets, federal financial regulations and health care legislation.

Karsten Neumeister Solar Expert

Karsten Neumeister is an experienced energy professional with subject-matter expertise in energy policy and the solar and retail energy industries. He is currently the Communications Manager for the Retail Energy Advancement League and has prior experience writing and editing content for EcoWatch. Before EcoWatch, Karsten worked for Solar Alternatives, curating content, advocating for local renewable energy policy and assisting the solar engineering and installation teams. Throughout his career, his work has been featured on various outlets including NPR, SEIA, Bankrate, PV Mag and the World Economic Forum.