Solar Panel Cost: Is Solar Worth It?

How much do solar panels cost?

The average cost of solar panels ranges from $17,350–$38,000. This price range includes hardware, installation, and soft costs, but it does not account for additional components like solar batteries. Tax credits, rebates, and incentives can offset or lower the total cost of solar panels.

This page covers everything you need to know about the costs associated with home solar panels, including the average system size, cost factors, and solar incentives. For a free estimate of how much solar could cost you, enter your information in the form below or call the number on this page.

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Average cost of solar panels

The average cost of solar panels in 2024 is $3.67 per watt, totaling $31,558 for a typical 8.6-kilowatt (kW) system. Solar panel cost is measured in dollars per watt, but system size is shown in kW. One kW is equal to 1,000 watts. To estimate the cost of a solar panel system, multiply the price per watt by the size of the system.

Here’s how we calculated the average solar panel cost in the U.S. using data from the Lawrence Berkeley National Laboratory:

($3.67 per watt X 8.6 kW) X 1,000 = $31,558 (rounded up)

While there is a nationwide average cost of solar panels, several factors influence each customer’s individual price. Some of the biggest factors determining the cost include:

• The number of panels you need (i.e., the system size) 
• Your electricity consumption
• The type of panels you choose
• Soft costs, like installation, permitting, and inspection fees

Solar tax credits and incentives can make solar panels more affordable for many households. Perhaps the most important solar incentive to remember is the Residential Clean Energy Credit. This federal incentive recovers 30% of the total cost of your solar system. After you apply for the federal tax credit, you’ll receive the savings in credit when you file your annual tax return.

You can combine the federal tax credit with state and local incentives to help lower the upfront cost of solar panels. Some states offer net metering programs, which let you send solar power to the grid in exchange for bill credits. The Database of State Incentives for Renewables & Efficiency (DSIRE) offers a comprehensive list of solar incentives. You can also find your state listed in the following table for more information about solar incentives in your area.

Find the average system size and price of solar panels in your state, according to data from Find Energy.

Solar panel installation cost

Solar installation cost is a key component of the soft costs associated with solar panels. The Solar Energy Industries Association (SEIA) estimates that soft costs accounted for about 63% of the price of a solar array in 2022. Data from the National Renewable Energy Laboratory (NREL) shows solar installation makes up about 7% of a system’s total cost. Solar panel installation costs approximately $2,209 using these metrics.

Cost of solar panels by square foot

The size — and therefore cost — of your solar array will depend more on energy usage than the square footage of your home. The amount of electricity you use each month determines the system size you’ll need, which is why solar installers typically offer quotes using the price per watt instead of the price by square foot. Some sources estimate the average cost of solar is between $4 and $10 per square foot, although the price per watt is a more accurate way to measure solar cost.

The following table shows a solar panel cost range using the $4–$10 per square foot average. Keep in mind that these are just estimates, and the price per watt is typically a more accurate measurement for solar panels. Contact a solar installer directly or fill out the form on this page to receive a quote for solar panel costs for your home.

Solar panel return on investment

Solar panels can be worth the initial investment, providing long-term savings on energy bills while lowering your carbon footprint. That being said, there are a few factors that will impact just how lucrative solar panels are for your home, including your current energy costs and how long you’re planning to live in your home. 

A return on investment — also called a payback period — is the amount of time it takes to recover the initial solar panel cost. Solar panels can help you save on your energy bills — within a certain number of years, the amount you save will be greater than the amount you paid. After recouping your initial investment, every dollar you save on electricity bills with solar power goes straight into your pocket.

The 2022 average residential energy bill in the U.S. was $134 per month, based on electricity ratesand usage data from the Energy Information Administration (EIA). Over the course of a year, that equals approximately $1,608. Investing in a solar panel system that completely covers your energy usage could almost entirely eliminate your electricity bills. However, if your system is grid-tied, you will still incur some minor utility connection fees. Most residents keep their solar panels tied to the power grid to pull electricity from the grid when their panels aren’t generating power.

Based on the average cost of solar panels and energy bills in the U.S., you can expect to experience a return on your investment in less than 14 years. Solar panels have a lifespan of between 25 and 30 years, and improvements in panel technology could extend the lifespan further. Your savings could continue for years after you reach your payback period. Here’s how we calculated the return on investment:

(Total system cost – 30% tax credit savings) ÷ Annual electricity bill costs = Payback period

$22,091 ÷ $1,608 = 13.7 years

Breakdown of solar panel prices

The average solar panel cost has decreased by more than 40% in the last 10 years, according to the Solar Energy Industries Association (SEIA). However, supply chain issues and shipping constraints have led to some solar panel price increases in the last two years. 

According to the SEIA, “the biggest cost-decline opportunity in residential and small commercial solar exists in soft costs,” which include permitting, inspection, interconnection, marketing, and more. You won’t find most types of soft costs on an itemized bill or outlined in a contract, but they are baked into the total price of a solar panel system. 

While soft costs make up approximately 63% of the total cost of a solar system today, they accounted for 58% of the total system cost in 2014. The SEIA points to permitting and inspection fees as the primary reason for the increase.

Motivations to go solar vary from person to person. Between December 2021 and January 2022, SaveOnEnergy.com® partnered with CNET to survey 258 people interested in solar panels. The study found that financial savings are the main reason people switch to solar. 

In March 2022, SaveOnEnergy commissioned a YouGov survey of 655 American adult homeowners to gauge their understanding of solar panel costs and government incentives. The survey found almost half (45%) of homeowners were unsure of solar panel costs for a single-family home. Over half (57%) of homeowners didn’t feel they knew enough about available solar incentives.

Factors that affect solar panel cost

Several factors impact how much solar panels cost. While these factors can vary by state and household, it’s important to consider how they will affect the final cost of solar panels before signing a contract with an installer. 

Solar companies

The cost to install solar panels will depend on the solar installation company you choose. The reason solar panel prices vary by installer is mainly due to soft costs like installation, overhead, and supply chain expenses. Some states, like California, tend to have a large amount of solar installers operating in the area, which can drive down solar prices through competition. However, that isn’t always the case. States like New Mexico have a smaller pool of solar installers and lower average solar panel costs. When searching for a solar installer, be sure to research and compare companies operating in your state.

Solar system size

The size of your solar system is a huge factor when determining cost. System size refers to the number of panels you buy. This is where energy usage comes into play. The more electricity you use each month, the more solar panels you’ll need to power your home. The size of your roof plays a role in how many solar panels you can include in your system. If you have a smaller roof, you may not be able to install enough panels to cover your energy usage. Your solar installer can provide an estimated system size when designing your system.

Tax credits and incentives

Solar incentives and tax credits can lower the cost of solar panels. The federal tax credit, for example, offers 30% of the cost of a solar panel system in tax credits the following year. Depending on where you live, you may also qualify for other state or local incentives. You can combine most solar incentives with the federal tax credit, bringing down your total net cost.

As solar panels have become more popular, many websites and solar companies advertise extremely low solar panel prices. You should be aware that these systems may already have tax credits and rebates baked into the advertised prices, so the actual amount you pay could be much higher.

Types of panels

The following table shows the typical amount you can expect to pay for each type of solar panel based on information from Find Energy.

Panel specifications

In addition to the type of panel you choose, a panel’s specifications can impact the price. For example, solar panel efficiency measures how well a panel converts sunlight into electricity. A more efficient solar panel will often be more expensive than one with lower efficiency but can generate more electricity for your home.

The condition of your roof

The condition of your roof is another important factor to consider. If your roof is older or needs maintenance, you may need to repair or replace it. You will also need to remove any obstructions to direct sunlight, like overgrown trees, before installation. While repair costs are not included in your total solar energy panel cost, they are important expenses to consider ahead of time.

Should you consider used solar panels?

Solar panels are a large upfront investment, which may lead some consumers to wonder whether they should consider used or pre-owned solar panels. In general, we recommend purchasing new solar panels through a licensed installer to ensure you’re receiving quality products and everything is installed correctly.

Some sites sell used, pre-owned, or refurbished solar panels at cheaper prices. Before purchasing used solar panels, consider the following:

• Are the panels damaged? Many used solar panels are damaged or have already experienced significant degradation to their power output. You won’t have to worry about damage or degradation with new solar panels.
• What are the warranty terms? If you purchase pre-owned solar panels, the warranty terms can vary. Most likely, you won’t be able to claim a warranty from the manufacturer if you purchase the panels second-hand. Some second-hand sites offer their own warranties on the products they sell, but you should be sure to read the terms of coverage carefully.
• Who will install the panels? Depending on where you buy used solar panels, you may be on the hook for installation yourself. Incorrect installation can lead to significant structural or electrical damage to your home. For this reason, we don’t recommend DIY solar panel installation.
• Will you qualify for incentives? You’ll only qualify for most solar incentives and tax credits if you purchase new solar panels. The federal solar tax credit, for example, requires a new solar system and will apply only to the “original installation” of solar equipment, according to the Department of Energy. 

Best solar panel companies

There are thousands of solar installation companies operating throughout the country. While this can give you a variety of options, it may also make the search feel overwhelming. Our solar companies guide can help you understand the criteria to compare some of the best solar companies in the U.S. 

The following table breaks down important factors to consider for several national solar installers.

Installer	BBB Rating	Serviceable States	Solar Services + Finance Options	Years of Experience	Best For…
	BBB A+ and 1.56/5 stars from customers	23 states	Residential solar systems & batteries, cash purchase, loan, or lease	2	Well-established brand support
	BBB A- and 3/5 stars from customers	11 states	Custom solar systems; handles permitting & approval processes. Purchase, loan, lease, or PPA	7	Expedited install in some markets
	BBB A+ and 3.3/5 stars from customers	11 states	Home solar systems, system monitoring, & microinverters, Purchase, loans, lease, or PPA	13	Concierge service with dedicated point of contact
	BBB A+ and 3.9/5 stars from customers	24 states	Residential, system monitoring, solar inverters and batteries, cash purchase, loan, and independent financing	13	Long-lasting customer support
	BBB A+ and 4/5 stars from customers	50 states	Fully-integrated solar + storage system; their Equinox panels have a record for highest efficiency rating; Purchase, loan, or lease	31	System with highest rated efficiency
	BBB A+ and 3.74/5 stars from customers	22 states + Puerto Rico	Home solar panels, solar batteries, EV chargers, system monitoring, purchase, loan, or lease	16	Those who do not qualify for financing, but still want solar
	BBB A+ and 5/5 from customers. Not accredited by the BBB	50 states	Batteries, system monitoring, inverters, panels, solar roof energy-monitoring app	7	Competitive prices
	BBB A+ and 3.74/5 stars from customers. Not accredited by the BBB.	22 states + Puerto Rico	Home security, smart home tech, 24/7 monitoring; purchase, lease, PPA, loan	15	Smart home integration with no solar maintenance

Solar panel financing options

Solar panels are a big investment, even though the cost of solar has decreased in the last decade. There are a few ways to pay for solar panels. Ultimately, an upfront solar purchase tends to lead to the highest long-term savings.

Are solar panels worth it?

Many residents want to know whether solar panels will offer enough savings to outweigh the cost of the investment. The answer is a resounding yes, as long as they work well for your home and energy usage.

Before signing a contract, consider how much you currently pay on traditional energy bills. Your energy bills will depend on the electricity rate you’re paying and how much energy you use each month. Understanding your typical energy bill can help you estimate the payback period for solar panels. Based on the average electric bill and solar panel cost, most residents who buy solar panels will experience a return on investment within 14 years.

The financing option you choose can also impact how quickly you recoup your investment. Residents who purchase solar panels up front won’t have to pay interest fees or monthly payments, and they will likely reach that payback period sooner than those who finance with a loan.

Are you looking to connect with a local installer or understand more about your potential solar savings? SaveOnEnergy’s experts can help you reach your solar goals. Call us to speak directly with an expert or fill out the estimator form on this page to receive an instant solar cost and savings quote.