Jacob Ammentorp Lund/iStock/Getty images
Written by Saltanat Berdikeeva
Edited by Hannah Hillson
Last updated 09/14/2022
Jacob Ammentorp Lund/iStock/Getty images
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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.
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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 solar panel cost 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 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.
The SaveOnEnergy marketplace helps you search, compare, sign up and save on the right energy fit for your home — all for free. If you’re interested in solar, answer a few questions to get an exact price quote from our solar advisors.
1. Complete the form below
2. Schedule an appointment with a solar advisor
3. Get an exact price quote for solar panels for your home
You can calculate the cost of solar by multiplying a solar panel’s price per-watt by the size of a solar system. The Tracking the Sun report by the Lawrence Berkeley Laboratory benchmarks the national median residential solar cost at $3.82 per watt. The same Berkeley Lab report puts the median price of solar panels in the U.S. at $24,742 based on a median system size of 6.48kW. The total cost of solar ranges between $12,286 and $45,013, depending on the system size. According to Riley B. Murphy, a 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 30% Residential Clean Energy Credit, the solar federal tax credit, formerly known as the Investment Tax Credit (ITC). The Residential Clean Energy Credit will cut the total cost of your solar system and help you maximize your savings. Here is an example of how the Clean Energy Credit works.
|Average Solar System Cost||30% Savings with Clean Energy Credit||Cost after Clean Energy Credit|
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.
State incentive programs can also 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 select your state on 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.
While the actual costs of solar panels and inverters have decreased 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, mainly 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.
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.
A solar loan provides access to financing if you do not have enough capital to buy solar panels in cash. It 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.
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 Residential Clean Energy Credit 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 cost more in the long run.
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.
Yes. The larger the solar system, the higher the costs. In addition, your past electricity usage will determine the best system size and, therefore, the cost of solar panels for your home. Your electricity bill is determined by your monthly electricity consumption and the rate your utility charges you for the number of kWh used from the power grid. 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.
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 price ranges between $0.90 and $1 per watt. Thin-film solar panels are cheap, lightweight, flexible, and portable and range between $0.70 and $1 per watt.
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). Installation of solar panels on ground mounts and carports instead of a roof 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.
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 less 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-facing or has too steep or too low of a pitch will be less efficient than a solar array of the same size but with a different orientation and angle. If your roof is older or in poor condition, you may need to factor in the cost of repairing or replacing it before installing solar panels.
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.