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*Based on a $31,460 11 kW system before incentives. These are averages for the whole U.S. Costs will always vary from installation to installation.
**Based on a 2021 study by the National Renewable Energy Laboratory (NREL).
The panels themselves are probably the first thing that comes to mind when you think about going solar, but solar panels represent less than a third of the total solar equipment costs. You can expect all required solar equipment, including supply chain costs and sales tax, to cost $14,500–about 46% of the total system price.
This price depends on the brand and quality of the equipment you select. Systems with SunPower panels, known for a strong warranty and high efficiency, see the highest average prices at about $26,900 after tax credits for an 11 kW system after the federal tax credit. Sometimes the bigger price tag is worth it: Investing in high-quality equipment can lead to better long-term savings. But reaching for the highest-priced panels often isn't the best choice. There are many high-quality options with varying price points.
The type of panel you install also directly impacts the quality of your installation. Monocrystalline solar panels offer the highest efficiency and power output and are used in most home systems today. They're often more expensive than polycrystalline solar panels, but you need to buy more polycrystalline panels for the same amount of power, so your overall installation costs may be similar. Thin-film solar panels are the cheapest type of panel but they aren’t often used for home installations due to their low production. They're a great option for RVs, campers, and DIY home setups.
Inverters can cost almost as much as solar panels depending on the type you select. They convert the direct current electricity your solar panels produce into alternating current that household appliances use. Microinverters and optimized inverters are similar in price but cost a few thousand dollars more than string inverters. If you have a complex roof with multiple planes or shading, it's usually worth it to select a pricier microinverter or an optimized inverter to maximize your system's production.
Racking and mounting equipment attaches solar panels to your roof, but it's a relatively low-cost portion of the installation. You'll also need wiring to connect your rooftop system to the grid and your electrical panel, which can add a few thousand dollars.
Another piece of the solar installation puzzle is the company performing the job. Solar installers charge varying amounts for their services. The final price they offer depends on their track record, warranty offerings, and internal operations. A well-regarded solar installer with premium warranty offerings will often charge more–and it will usually be worth the money.
Installer costs are about the same as equipment at around $14,500 or 46% of the total installation. Labor is only about 15% of installer costs and profit is generally around 20%. Your biggest installer costs go toward sales, marketing, and overhead.
Solar isn't a one-size-fits-all purchase, so you're going to have vastly different price tags between solar projects. Because solar panels are such a site-dependent purchase, it's hard to pinpoint an exact cost without doing an on-site inspection of your home.
One thing we do know is that going solar, no matter where you are, is very expensive.
The average 8-kilowatt residential solar panel system cost about $3 per watt in 2022, according to data from the energy consulting firm Wood Mackenzie. That's a drop of 29 cents per watt from the year before, but it still means the average system costs about $24,000 before tax credits and other incentives. And your home may not be "average."
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Many other factors influence the cost of installing solar panels, including less-than-obvious ones like the complexity of your roof, Rohit Kalyanpur, CEO of the Silicon Valley-based solar company Optivolt, told CNET.
You can get some help to pay for your panels. The Inflation Reduction Act, passed by Congress in 2022, provides a 30% tax credit for solar panel systems installed through 2032.
Here's what you need to know about the costs of going solar.
The cost of a solar system can vary wildly because so many factors are involved.
Cost varies, in part, because of the size of the system, said Neil Gallagher, vice president and co-founder of Brighterway Solar, a Tampa, Florida, solar installer. The solar industry doesn't have a standard pricing structure, so the cost by the customer is based on their energy consumption.
The cost of a solar system installation can vary widely when you compare the efficiency rate of the solar panels and other installation expenses. The best solar panels can set you back anywhere from $15,000 to $50,000.
The 30% tax credit provided by the federal government coupled with available state and municipal government tax credits, tax exemptions, rebates and other incentives can further reduce the cost of purchasing and installing solar systems.
Here's a look at the average nationwide cost of solar panels, according to data from the Lawrence Berkeley National Laboratory, FindEnergy and the energy consulting firm Wood Mackenzie.
Solar costs are also influenced by your solar system's components. Let's break down the components of a solar panel system and what you can expect to pay.
Here's the average total cash price, cost per watt and system size for a solar panel system in your state, according to data from FindEnergy.com. These prices don't factor in tax credits or state incentives. Certain states don't have any FindEnergy solar data and are grayed out on the map.
The table below includes estimated solar savings after the federal solar tax credit, average electricity rates and average annual electricity bills per state, calculated using data from the US Energy Information Administration.
There are three main types of solar panels: monocrystalline, polycrystalline and thin-film. Monocrystalline solar panels are the most popular choice for residential installation because they have the highest efficiency rates from 17% to 22%. The average cost for these panels is between $1 and $1.50 per watt, but prices may differ depending on location.
Polycrystalline panels are popular for homeowners on a budget. They have a moderate efficiency rate ranging from 15% to 17%. Their cost is between 90 cents and $1 per watt.
Thin-film solar panels, which have an efficiency rate ranging from 10% to 13%, are the least efficient solar panels on the market. They have a shorter life span and are rarely used for residential purposes.
Trying to get a solar estimate without an on-site inspection of your home is tricky business. Because the location, layout and energy needs of every home are different, solar pricing for each residence is different too. Your home might need only a small 5 kW solar array. Your neighbor down the street might need a larger 8 kW array, and they might choose to install a solar battery, which is going to push their price tag even higher.
Here are some of the biggest factors that affect the cost of going solar.
As you're likely aware by now, solar is not cheap, but did you know that the price of the solar panels themselves is actually one of the cheapest things you'll pay for during your solar journey? Only 35% of your total cost to install solar goes toward the actual purchase of the solar equipment, according to the US Department of Energy.
Where is the rest of your money going? Soft costs, also known as the hidden costs of installing solar, are nonhardware costs, and they make up 65% of your total solar costs, according to the DOE. Most of your soft cost expenses go toward things like sales and marketing, labor, paperwork and overhead profits.
Here are some of the most common soft costs you'll be charged for:
There are several factors such as the direction and angle of the panels, local weather conditions (such as annual irradiance, which refers to total sunlight hours per year), system size, shading, battery capacity and efficiency and more that must be considered before you can get an accurate estimate of your potential cost savings. If your home is suitable for a solar system, you can expect to reduce your monthly electricity bill by 50% to 100%.
By investing in a high-quality solar system, you're paying upfront to enjoy the long-term financial benefits of reduced or even eliminated electricity bills. It often takes six to 12 years for a solar panel system to pay for itself. Let's take a look at a quick example.
Let's say your current monthly electricity bill is $150 and the solar system you want to invest in costs $30,000. First, we want to calculate what your system will cost after the federal 30% tax credit. Here's how that looks:
Now we need to calculate the payback period to know how long it will take to recover your investment after installing the solar system.
Based on this calculation, a $21,000 investment in a solar system will take less than 12 years to recover your initial investment.
Your breakeven point, also known as the solar payback period, is the amount of time it takes for you to see a return on your investment. In other words, how long it will take for your solar panels to start paying for themselves. Just like the average cost of going solar, your payback period may vary.
Experts say an average payback period in the US is between six to 12 years. Factors affecting your solar payback period include system cost, tax credits and incentives, energy consumption, how much electricity your system generates and your electricity rates.
Using a quick math formula can help you get a general idea of your solar payback period, but you'll want to speak with an installer to get the most accurate estimate.
(Total solar system costs - rebates) / Electricity bill savings per year = Payback period in years
There are several factors to consider when assessing the benefits of solar panels, Kalyanpur said. First, consider the total energy produced over the system's lifetime and whether it can result in substantial savings. Other factors include state-level incentives that help to offset the costs of investing in solar panels.
Pros
Cons
There are various ways you can go about paying for solar panels. Here are a few of the most common:
Cash: If you can afford it, paying cash is your best option. You won't have to worry about high financing fees or interest rates, and you'll always be eligible for tax credits and incentives. Your solar payback period will likely be shorter, too.
Solar loan: Paying thousands of dollars upfront in cash isn't an option for everyone. If paying cash isn't in your budget, your installer might offer you a financing option called a solar loan. These loans are usually through a third party, so check for associated fees and interest rates.
Other loans: A solar loan isn't your only financing option. You could consider taking out a personal loan through your bank or opening a home equity line of credit. Just be aware of the risks that come with a HELOC. If you can't pay back what you owe, you could lose your home.
Lease or power purchase agreement: If you aren't interested in solar panel ownership, consider leasing a system or entering a power purchase agreement. When you lease a system, you pay for the use of solar equipment owned by a solar company. Entering a PPA means buying solar power generated by a company-owned system at a fixed rate. This fixed rate is usually cheaper than the retail electricity rate from your local power company. Ask your solar installer about all your options.
It can take six months or more to get solar panels installed. The actual "installation" of the panels on your roof by the installer is usually completed in three days or less.
What really slows down the process of solar installation is everything that needs to happen before installation day. The sale of the system itself, site assessments, system design, gathering permits and supply chain issues can all drag out the solar installation timeline. Most of your time will be spent waiting around for permits and paperwork to be approved, as well as dealing with supply chain delays.
Yes, it's possible they might increase your home's value. In most cases, solar panels are viewed as upgrades or home improvements. Installing solar panels could increase your home's resale value by about $15,000, according to the DOE.
Solar panels can last upwards of 25 years or more. The longevity of your solar panels depends on environmental conditions, the type of panels installed and the quality of installation. Many solar companies also offer 25-year panel warranties.
There isn't a definitive "best solar state," but there are states that make going solar more affordable and accessible by providing state-level tax incentives and rebates. States with net metering and a Solar Renewable Energy Credit, or SREC, market even make it possible to earn money by selling your excess solar energy to the power grid or utility companies. States that receive more peak sunlight hours are also more beneficial for solar.
Installing solar panels on your home can significantly lower your electricity bill, raise your property value and reduce your carbon footprint. The biggest downside to going solar is how much it's going to cost. Solar can have a lot of expensive upfront costs, and installing a battery with your solar panel system will likely cost you $10,000 or more.
Correction Aug. 18: This story originally presented some statements as direct quotations that were actually paraphrases of what the individual cited had said. Those passages have now been rendered appropriately as paraphrases.
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