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How Much Do Solar Panels Cost?

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Breaking Down the Cost of Solar

How Much Do Solar Panels Cost?

What is the average cost to install solar panels? It’s perhaps the most frequent question homeowners have when considering a solar energy system. It’s also one of the most important. There are many reasons to go solar, but one of the primary benefits is the long-term cost savings. Of course, how much you can save with solar depends on your solar panel installation cost. So, How Much Do Solar Panels Cost? Fortunately, we’re here to help you understand what factors go into your solar system installation price and what you can expect to pay.

What Factors Affect Solar Panel Installation Costs?

There’s a lot to consider if you’re thinking about installing a new solar energy system.

How much do solar panels cost per watt?

What factors go into the final price?

The reality is there are many things that can influence the solar quote you receive. No two installations are exactly the same, so it’s important to understand the reasons your solar panel costs may vary.

One major factor is the equipment you choose.

The most common options are monocrystalline and polycrystalline solar panels. Polycrystalline panels are the more affordable choice while monocrystalline cells offer better efficiency.

A related consideration is the characteristics of your home. The size, angle, and positioning of your roof will determine the maximum size and generating capacity of the system you can install. Some roof configurations may also require additional mounting hardware or added labor costs during installation.

What Is the Average Cost to Install Solar Panels?

It’s not as precise as a personalized quote from an installer, but calculating the average cost of solar panels is a good way to estimate your expenses and potential savings. This can become tricky because, in addition to the factors discussed above, regional and local variations can also affect solar panels for a home cost. The size of your solar energy system can also influence prices since larger systems require more equipment and greater labor costs.

You can calculate your total system cost by multiplying the size of your system by the cost per kilowatt.

Let’s use the national average figures as an example. The average solar panel system size in the U.S. is about 6.0 kilowatts. The national average price per watt for solar panels is $3.14, which equals $3,140 per kilowatt. Multiplying these two figures, we arrive at a total installation cost of about $18,840.

Please note that this is before the 30 percent tax credit and other incentives. The 30 percent federal credit would lower this figure to $13,188, but more on that in a moment.

 Average Cost to Install Solar Panels

  • The average solar panel system size in the U.S. is about 6.0 kilowatts.
  • The national average price per watt for solar panels is $3.14, which equals $3,140 per kilowatt.
  • the total installation cost is about $18,840
  • AFTER 30 % federal credit the cost of installation would be $13,188

For a more accurate estimate, you can use our Home Solar Panel Cost Index to see the average costs for solar in your area.

This index shows what homeowners are paying in your area for average-sized systems with typical electricity consumption.

If your home is significantly smaller or larger than average, you can adjust your estimate for a better fit. Check your utility bill to see how many kilowatt-hours you used last month. Divide this figure by 30 and again by 7 to represent the average 30-day month and seven hours per day of equivalent sunlight. This represents the approximate size of the system your home requires. You can then multiply this number by the average price per kilowatt in your area to see an estimated total system cost.

The average solar panel system size in the U.S. is about

6.0 (kW)

kilowatts.

The national average price

$3.14

per watt for solar panels.

The total installation cost is about

$ 18,840

BEFORE 30% federal tax credit.

The total cost of the installation

$13,188

AFTER 30% federal tax credit.

Understanding Solar Tax Rebates and Incentives

In the previous section, we mentioned typical costs before and after incentives are applied. This distinction is essential.

Your total cost of solar installation may vary significantly depending on which solar tax credits and incentives are available in your area. It’s important to understand the different ways you can save in order to get the best solar system installation price and maximize your long-term savings.

By far the most important tax credit is the Investment Tax Credit (ITC), commonly known as the federal solar tax credit. This credit is offered by the federal government and it’s available to anyone who installs a residential or commercial solar energy system. The ITC provides a federal income tax credit equal to 30 percent of the price of your system.

Some states also make tax credits available to help offset the cost of solar installation. Similar to the federal ITC, state-level credits reduce your state tax burden when you purchase and install a solar panel system. Credit availability and amount of savings vary from state to state. In some cases, you may also be eligible to receive cash incentives. These rebates are typically offered for a short period of time by state or local governments, utility companies or other organizations in order to encourage the adoption of solar energy.

Exploring Your Solar Financing Options

The average cost of solar panels depends partly on the financing option you choose. How you finance your system is an important decision. It will determine how and when you pay for your solar energy, who will own the system and whether or not you’re eligible for tax credits and incentives to help defray the cost.

There are four main options available:

  • solar loans: A solar loans are much the same as any other application-specific loan. A bank, credit union or solar energy company provides a loan for the cost of the system and you repay the balance in monthly installments. It requires no money down and allows you to take advantage of any available credits and incentives. You will own the system and be responsible for all maintenance and repairs.
  • solar leases: There’s no down payment, but you’ll pay a monthly fee for the system. This fee typically increases once per year by a set percentage rate. Since you don’t own the system yourself, you aren’t eligible for rebates and incentives when you opt for a lease.
  • solar power purchase agreements (PPAs): Solar power purchase agreements, also known as solar PPAs, are very similar to solar leases. The difference is that a PPA allows you to pay only for the energy your solar panels produce. This means you have a variable monthly payment rather than the set fees that come with leases. Like a lease, a PPA doesn’t grant ownership of the system and doesn’t allow you to take advantage of incentives.
  • solar cash purchase:  A solar cash purchase is the most straightforward financing option available. You simply pay for the solar panel installation cost outright. This gives you immediate ownership of the system, allows you to qualify for all available incentives and eliminates the need for ongoing monthly payments. However, it does require a significant cash outlay.

Choosing a Solar Panel Cost Calculator

Now that you have a better understanding of the factors involved, it’s time to answer the important questions.

How much does solar PV cost?

How much can you expect to save?

Is solar power the right option for your home?

The best way to find answers to all of these questions is to use a solar cost calculator. Solar panel calculators consider a variety of details in order to show you how much you can expect to save, how much you’ll pay up-front and what your monthly payments will be for each available financing option.

There are three types of solar panel calculators available.

  1. One option is a calculator from a private company. These can be good sources, but be wary of any private calculator that requests personal information besides your address.
  2. Another option is a calculator from a utility company. However, these calculators aren’t always the most accurate and are often limited only to current customers.
  3. Finally, there are solar power calculators available through the National Renewable Energy Laboratory (NREL) and other government agencies. These are typically accurate, updated and reliable options.

Taking a Look at Solar Savings

It may not directly impact how much you pay, but your savings potential is an integral part of the equation when it comes to understanding the true cost of solar. Installing a new solar energy system is an investment that pays off in several ways. You can immediately start saving money by reducing – or even completely eliminating – your monthly utility costs. Of course, the magnitude of your savings depends on your average energy costs and the amount of energy consumption your system offsets.

Even better, these savings may increase over time. The cost of electricity has been rising sharply in many areas of the country, but solar energy owners are insulated from these future increases. You can save even more if you live in an area where net metering is available.

So, how much do solar panels cost? As you can see, this deceptively simple question is more complicated than it looks. No matter your situation, however, solar energy is undoubtedly an investment worth considering. To help you make a more informed decision, check out our solar panel cost calculator to determine the cost of solar and the potential for savings in your home.

Discover how much you can save today


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