Cost of solar panels
The average cost of solar panels in 2021 after tax credits is between $11,700 – 19,500. Thankfully, the cost of solar panels in 2021 has decreased, making it a better option for energy consumers.
In the last decade, solar panel prices have dropped by more than 70 percent. With solar costs at an all-time low, many residential energy consumers have made the switch to power their homes with clean solar energy.
As solar panel costs have gone down, residential solar energy has grown in popularity across the country. According to the EIA, in the last decade solar has seen an annual growth rate of about 32 percent.
So, how much do solar panels cost in 2021? And what’s the best way to pay for home solar panels? SaveOnEnergy® is here to help you answer these questions and more.
Average price of home solar panels
The cost of solar panels can change depending on the size of the system, installation costs, incentives, and more. The average residential solar system size is 5-kilowatts (kW). Based on the average price per watt ranging from $3 – $5, a 5-kW residential system costs between $15,000 – $25,000. But keep in mind this is before adding in tax credits or incentives.
The federal investment tax credit can help reduce the costs of solar panels for your home. The tax credit is based on the solar system’s total cost and is currently set at 22 percent.
Here’s how the federal tax credit can impact your total cost of solar panels:
|Solar System Cost||5-kW (5,000 watts) x $4.00/watt||= $20,000|
|Federal Tax Credit||22% x $20,000||= $4,400|
|Total Cost after Tax Credit||$20,000 - $4,400||= $15,600|
Solar panel prices by state
Home solar panel costs can vary based on where you live. This is mainly because the average size of solar systems changes by state.
Essentially, states with a hotter climate tend to have larger residential solar systems, which brings up the price. But some solar installers charge less per kW if you invest in a larger system, which can even out the total cost of solar panels. All told, no matter what state you live in, the price you are charged for solar panels will come down to how large your system is.
Solar incentives by state
Here are some of the top states offering solar panel incentives:
- California solar incentives – This state offers a net metering program, which provides a credit on solar panel owners’ bills for any excess electricity they generate.
- Texas solar incentives – Several Texas utilities and local governments offer incentives for solar panel owners, including CPS Energy, Austin Energy, and the City of Sunset Valley.
- Florida solar incentives – Florida exempts solar panels from sales tax and offers a net metering program.
- Virginia solar incentives – Several cities in Virginia offer rebates for solar panels and there is also a state-wide net metering program.
- North Carolina solar incentives – This state offers low-interest loans for energy upgrades such as solar panels.
How much is a home solar panel system?
There are several factors that impact the cost of solar panels for homes. The main influencer is the size of your solar system. The larger the system, the higher the price. Following are a few other contributors to solar cost.
- Installation cost. The rate your solar installer charges to set up your solar system can vary. Be sure to research different solar installation companies in your area to find the right fit for you.
- Roof age and condition. The age and condition of your roof can greatly affect how much electricity your solar panels generate. If your roof is older or in poor condition, you may need to factor in the cost to repair or replace it.
- Manufacturer brand. There are many different brands of solar panels. The cost of solar panels by brand can impact your bottom line. Like solar installers, be sure to research different solar panel brands to find the right price before committing to one.
Price of solar panels per square foot
The average solar panel costs about 15 watts per square foot. Most solar panel installers measure the cost by watt instead of square foot. This means that the amount of electricity a solar system generates is what determines how much it will cost. The average home solar system is 5-kW, which equals 5,000 watts. Most solar systems end up costing between $3 – $5 per watt.
How to pay for solar panels
The cost of solar panels can seem daunting, but there are ways to pay for solar without breaking the bank. Consider how much you currently pay each month for electricity. If your electricity bill is high, you may consider the upfront cost of solar panels, which will generate power at a much lower rate.
|National Average (Traditional Energy)||National Average (Solar Energy)|
Federal and state solar incentives
The federal tax credit will pay back 22 percent of the total cost of your solar panels. What’s more, Several states also offer incentives and rebates to help homeowners pay for solar panels. For example, California offers rebate programs that pay solar panel owners anywhere between a single payment of $500 to $0.95 per watt of installed solar capacity. Research in your area to find the best solar panel incentives in your state.
Solar shoppers can also take out a loan to pay for solar panels. According to the Office of Energy Efficiency & Renewable Energy, taking out a solar loan can save you between 40-70 percent of total cost over the lifetime of your panels. Fannie Mae’s HomeStyle® Energy mortgage is available for up to 15 percent of the appraised property value of the home after a clean energy upgrade such as solar panels.
Leasing solar panels
Finally, there are options to lease solar panels if the upfront cost of buying is too high or you are unable to secure a loan. But it’s important to remember that if you lease solar panels, you will not see the same cost benefits compared to owning them. Solar renters cannot take advantage of the federal tax credit or many other state-wide incentives. And the solar panels will belong to the installers, so you will not see an increase to your property value. Solar leases typically charge a monthly payment based on how much energy they will produce. So, while leasing solar panels might be enticing, the lower starting price could end up costing more in the long run.
Are solar panels worth the investment?
This all comes down to one question – Are solar panels worth it? The answer is a resounding yes as long as they will work well for your home and energy needs.
While the upfront cost of solar panels is high, the average payback period is between 6 – 9 years depending on the system size and electric bills. What’s more, the cost of solar panels is offset at least partially because they will increase your home’s property value by about $15,000.
You might also be wondering how much you can save on your energy bills by investing in solar. Your electric bill savings will depend on the size of your solar system and how much energy it generates. A recent study from NC State University showed homeowners who purchased solar panels saved an average of $44 – $187 each month on utility bills.
Think solar panels might be right for you? SaveOnEnergy is here with resources and guides to help you navigate the solar energy industry. Visit our solar hub to learn more.