2022 Cost of Solar Panels: Prices & Averages | SaveOnEnergy®

Cost of Solar Panels in 2022

home with solar panels on the roof

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Key Points

  • The cost for average residential solar panels in 2022 is $18,600 before incentives and rebates
  • The cost of residential solar panels can range from $11,160 to $46,500 depending on system size
  • Your location, energy usage, and the type of panels you want determine the total cost of solar
  • While the up-front costs of solar panels in the U.S. can still be high, federal and local incentive programs can help reduce them by at least 26%.

Rising prices of power generation sources, such as natural gas, coal, and heating oil, are driving up electricity rates. The good news is that solar panel prices are cheaper than ever before. Over the past decade, prices of solar panels have dropped by 90%. With solar costs at an all-time low, many residential energy consumers have switched to powering their homes with clean solar energy. 

Solar powered over 13.5 million homes in 2020 compared to 777,000 homes in 2010. Motivations to go solar vary from consumer to consumer. Between December 2021 and January 2022, SaveOnEnergy.com® partnered with CNET to survey 258 people interested in solar panels. As illustrated in the following graphic, the study found that financial savings are the main reason why people switch to solar. Environmental reasons were the second most popular reason for switching, and nearly 50% of respondents also cited tax incentives, net metering credits, increased home value, and reliability.

While many Americans are interested in solar panels, many do not know about the upfront cost of residential solar and ways to reduce them. On March 15 and 16, 2022, SaveOnEnergy commissioned a YouGov survey of 655 American adult homeowners to gauge their understanding of solar panel costs and government incentive programs. According to the survey’s findings, almost half (45%) of the homeowners overestimated or had no idea about the average cost of solar panels for a single-family home. More than half (57%) of American homeowners have heard of solar incentives, but they do not know much about them. 17% of surveyed homeowners reported they had heard of solar incentives, and they had a good grasp of them. 

How much do solar panels cost? What’s the best way to pay for home solar panels? What kinds of solar financing options exist? SaveOnEnergy can help answer these and other related questions.

Cost of residential solar panels

You can calculate the cost of solar by multiplying the per-watt cost of a solar panel by the size of a solar system. The Wood Mackenzie 2021 U.S. Solar Market Insight report benchmarks the average residential solar cost at $3.10 per watt. So, if a system costs $3.10 per watt and you need a system size of 3-kilowatts (kW) for your home, the gross system cost will be $9,300 before using any incentives. 

The 2022 average cost of solar panels in the U.S. is $18,600 for a 6kW system. The total cost of solar ranges between $11,160 and $46,500, depending on the system size. According to Riley B. Murphy, solar design engineer with Infinity Energy, system sizes in the U.S. typically range from 3.6kW to 15kW. 

The cost is before applying the 26% solar federal tax credit, also known as the Investment Tax Credit (ITC). The ITC will cut the total cost of your solar system and help you maximize your savings. Here is an example of how the ITC works.

Solar System Cost 26% Savings with ITC Cost after ITC
$18,600 $4,836 $13,764

The cost range varies because the exact amount will depend on the number of solar panels your home needs and the type of solar panels you want. The cost includes solar panels, installation, permitting, inspection, and interconnection. 

There are also state incentive programs that can help you reduce the up-front cost of installing solar. Local rebates and tax credits will vary from state to state, but all 50 states offer some form of solar energy incentives, such as state tax credits, corporate tax credits, grant programs, local cash rebates, performance-based incentives, and solar renewable energy certificates. Keep in mind that state-based solar incentive programs also have different expiration dates. For detailed information on state incentives, visit our solar incentives and rebates by state guide or click on your state in the map below.

Terms and conditions of solar financing and the return on investment can be more important than the overall up-front cost of a solar project. Local PV solar panel installers can be the best sources of information on the cost of solar systems for residential and commercial customers in your area.

Breakdown of Solar Costs

While the actual costs of solar panels and inverters have come down significantly in the past decade, the so-called “soft costs” remain high. Such costs include permitting, inspection, interconnection, marketing, sales tax, supply chain costs, and overhead. The costs of PV solar systems differ from state to state largely due to the red tape surrounding permitting, inspection, and interconnection. In addition, federal, state, and local financial incentive programs can also determine the final cost of a PV solar system.

Solar panel financing options

Cash payment

While you will face a higher upfront expense by paying cash to buy a solar system, it is the best option if you can afford it. Solar loans or leases can cost more over the life of the contract due to fees and interest on a loan. You don’t need a minimum credit score when you purchase outright, or go through a solar loan application and approval process. With a cash purchase, your system will pay for itself faster than if you financed it.

Solar loans

If you do not have enough capital to buy solar panels, a solar loan provides access to financing and allows you to enjoy all the energy savings afforded by solar panels. Solar loans work like a car or home improvement loan. As a homeowner, you apply for a solar loan with a financial institution, which either issues a line of credit or a lump sum. The terms and conditions of such loans, such as interest rates, collateral, and payback period, will differ from customer to customer. Typically, you pay back the loan in monthly installments. Think of it this way: as you save money on your electricity bill with solar generation, you pay it towards your loan as an investment to your home instead of your utility. After the loan is paid off, you will fully own the solar panels. On average, it can take 6-10 years for homeowners to pay off solar panels. Some customers choose to get a 25-year loan.

Leasing solar panels

If the cost of buying is too high or you cannot secure a loan, there is an option to lease solar panels. However, if you lease them, you will not see the same cost benefits compared to owning them. Solar renters cannot take advantage of the ITC or state-based incentives. In addition, solar panels will belong to the installer, so you will not see an increase in your property value. Solar leases typically charge a monthly payment based on how much energy they produce. 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?

So, are solar panels worth it? The answer is a resounding yes as long as they work well for your home and meet your energy needs. 

While the upfront cost is high, federal and local incentives, monthly energy bill savings, and the increase in property value will offset the long-term investment.

Interested in solar, but not sure where to start? We’ll help you take the first step. Fill out the form on this page to learn more.

Solar panel cost FAQs

Do the solar project size and electricity consumption impact the total cost of the solar system? Expand / Collapse Toggle

Yes. The larger the solar system, the higher the costs. In addition, your past electricity usage will determine the best system size and, therefore, how much solar panels will cost you. Your electricity consumption every month and the rate your utility charges you for the amount of kW/h used from the power grid determine your electricity bill. Your solar panels should generate enough electricity to meet your monthly needs. Often, panels produce excess power, which you can either store for later consumption or feedback into the grid and get credits if your state allows it.

What type of solar panels exist and how are their prices determined? Expand / Collapse Toggle

There are three major types of solar panels on the market: monocrystalline, polycrystalline, and thin-film. They have different characteristics that determine their prices. Monocrystalline is the most efficient and longest-lasting compared to other solar panels on the market, with the panel cost of $1 and $1.50 per watt. Polycrystalline is less efficient than mono panels and more efficient than thin-film, and their cost ranges between $0.90 and $1 per watt. Thin-film solar panels are cheap, lightweight, flexible, and portable, and they range between $0.70 and $1 per watt.

What are installation costs? Expand / Collapse Toggle

Solar panels and a solar inverter make up about 30%, or between $3,000 and $4,000, of the total price of a solar project. The rest of the installation costs include operational, labor, permitting and inspection, and system balance (i.e., wiring, mounting equipment, a battery bank and charger, and switches). If you install solar panels on ground mounts and carports instead of a roof, they can require additional labor and component costs. In general, labor costs for solar installation depend on your location, the experience of specific installers, and the solar system size. Be sure to research different solar installation companies in your area and get several quotes to find the right fit.

Does the roof type, condition, and position impact the total cost of solar installation? Expand / Collapse Toggle

Yes, the type, condition, and orientation of your roof can affect the cost of solar and how much electricity your solar panels will generate. Each roof type can require varying components and labor to install solar panels. A roof with limited space will accommodate fewer solar panels. A smaller-sized solar system will be cheaper to install than a larger one, but it will generate a lesser amount of electricity. The most optimal orientation for rooftop solar power generation in the U.S. is a south-facing position. A roof that is not south-faced or has too steep or too low of a pitch will be less efficient than a solar array of the same size but with the right orientation and pitch. If your roof is older or in poor condition, you may need to factor in the cost of repairing or replacing it before the installation of solar panels.

Does a solar panel brand matter? Expand / Collapse Toggle

Yes, solar panel brands and their quality can impact your bottom line. Research different solar panel manufacturer brands to compare specifications before committing to one.