How Much Do Solar Panels Cost? (2023) - Anhui PV Mounting System Co.,Ltd

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.

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

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.

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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.

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.

There are three common financing options for solar panels: a cash purchase, solar loans and solar leasing.

In most cases, you’ll see the most return on investment if you buy your solar panel system in cash upfront. However, most homeowners cannot afford to pay tens of thousands of dollars for solar panels out-of-pocket. If you finance your solar panels with a loan, you’ll still see a substantial return on your investment, but the interest that accrues on your monthly payments will set back your solar savings slightly.

Another payment option is a solar lease. As the total cost to install solar panels has declined by over 50% in the last 10 years, leasing has fallen out of favor among many homeowners looking to go solar, and many solar companies no longer offer it. Another major downside of leasing your panels instead of owning them is that you won't be eligible for the 30% solar tax credit.

However, you can still see some savings when you lease your solar panels. With this option, you rent your solar panels through your solar provider for a fixed rate each month. You’ll likely still see some savings but won't own your solar panel system in the long run.

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.

Provider

Avg. Cost of a 10-kW System

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SunPower

$15,000–$20,000+

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Sunrun

$15,000–$20,000

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ADT Solar

$15,000–$20,000

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Blue Raven Solar

$15,000–$20,000+

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Elevation

$10,000–$15,000+

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Freedom Solar

$25,000–$30,000

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Green Home Systems

$20,000–$25,000

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Palmetto Solar

$15,000–$20,000

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Momentum Solar

$20,000–$25,000

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Solar Energy World

$25,000

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Tesla Energy

$25,000–$30,000

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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, 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.

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.

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.

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.

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.

If you’re tired of paying a high electric bill to your local utility every month, solar may be a good option to go green and save money over the lifetime of your panels. Ultimately, how much you can save with solar depends on where you live, what panels you choose and your energy usage.

We strongly recommend speaking with a solar professional about your unique solar needs to determine if solar is viable for you.

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 around $20,000 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.

The cost of solar consistently trended down over the past decade, but ongoing supply chain disruptions and inflation from 2020 to 2022 caused solar prices to increase slightly. However, as these issues slowly resolve, the cost of solar is expected to continue trending down in 2023 and beyond. Plus, as traditional electricity rates climb, homeowners stand to save more by switching to renewable energy.

We conducted in-depth research and analyzed several factors when determining our cost data, including:

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 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.

$15,000 and $20,000 SunPower Get Quote Sunrun Get Quote ADT Solar Get Quote Blue Raven Solar Get Quote Elevation Get Quote Freedom Solar Get Quote Green Home Systems Get Quote Palmetto Solar Get Quote Momentum Solar Get Quote Solar Energy World Get Quote Tesla Energy See More 8.5 years Conducting surveys: Researching reliable sources: Consulting experts: Faith Wakefield Tori Addison