For most people, installing a solar energy system is a smart financial decision that will pay off over time. But if you’re considering adding solar panels to your home, you’ll still want to spend some time researching solar energy costs and benefits before committing to doing so.
That’s why we’ve put together the following article. It contains a complete overview of solar panel costs so that you can figure out what you might pay for one. Keep reading to find:
- The average price of a solar energy system
- A look at the factors that can impact the price of your solar system
- How your costs could be influenced by tax incentives
- And much more useful information about solar panel costs and benefits
An overview of solar energy costs and benefits
The cost of your solar panels can vary quite a bit based on the factors discussed later in this article. But for now, let’s just look at some broad-level solar pricing information to give you a better sense of the general range that you should expect to pay.
The average solar panel cost for the United States is $15,500 - $20,000. This does not include the additional cost of solar batteries.
People sometimes also compare solar panel costs based on the price per watt. The average price per watt for a solar energy system is $3.00.
As points of reference, anything around $2.60 per watt and below is considered low and anything around $3.35 per watt and above is considered high.
Solar panel costs by system size
One of the biggest factors that can influence how much you pay for solar panels is the size of the system that you want to install. The bigger your system is, the more it’s likely to cost you. Here’s a breakdown of the average cost for a solar system of varying sizes in the United States.
|System Size||Cost (Before Tax Incentives)|
|2 kW||$5,060 - $6,300|
|4 kW||$10,120 - $12,600|
|6 kW||$15,180 - $18,900|
|8 kW||$20,240 - $25,200|
|10 kW||$25,300 - $31,500|
|12 kW||$30,360 - $37,800|
|15 kW||$37,950 - $47,250|
|20 kW||$50,600 - $63,000|
Prices with tax incentives
Tax incentives are one of the main financial benefits of purchasing solar panels. The federal government currently offers a solar investment tax credit, which offers 26% credit for residential solar systems. That number will scale down every year until 2023 when it’s currently set to expire.
So if you want to figure out how much you will save with the federal tax credit for solar, you can multiply the cost of the solar system that you intend on purchasing from the table above by 0.26.
The result of that calculation will give you the amount of money that the tax credit will save you. It’s also possible that you will be able to save even more money with a state tax credit for solar.
Solar panel costs vary by state
The state that you live in can also play a huge role in how much you’ll pay for a solar energy system. To provide some insight into what you might pay, here’s a table that shows the starting price of a 6kW solar system in each state.
|State||Starting cost for 6kW system|
|District of Columbia||$15,720|
Other factors that can impact your solar panel costs
The solar panel manufacturer that you buy from can have a big impact on the price you pay. Brands that have built a strong reputation in the industry for quality and consistency are able to charge more for their products than newer companies.
The same is true of the company that you use to install your solar panels. If you choose to hire the most respected installer in your area, you should anticipate having to pay more in installation costs because of that reputation.
The solar installation requirements of your solar system can also play a role in determining the price you pay for it. For example, you might need to purchase customized mounting if you have an unusual roof shape. Or your installers may need to spend more time on the installation if there are other complicating factors, which will also increase your price.
Unless you plan on taking your home off the grid entirely, your installer will likely end up connecting your solar system to your local utility grid. This can be a very simple, straightforward procedure or it can be quite complicated.
For example, some utility companies have certain requirements that you need to meet before you can connect solar panels to the grid. You may have to do something like install a new meter or apply for permits, which can add to your costs.
Maintenance costs and repairs
It’s also worth thinking about the potential maintenance costs and repair requirements of the solar equipment before buying.
Generally, residential solar systems are easy to maintain and don’t require very many repairs. But there are quality differences from brand to brand that are worth keeping in mind.
Cheaper brands may require more maintenance and repairs costs over the lifespan of the system. You’ll want to weigh that risk against the potential upfront savings that you could get by choosing a cheaper system to see what makes the most sense for you.
Historical prices for solar panels
The cost of residential solar panel systems has gone down considerably over the past 50 years. In 1975, homeowners who wanted to install solar energy systems had to pay an average of $105.7 per watt to do so. But by 1979, the average price per watt had come down to $36.30.
Since then, we’ve seen a consistent, year-over-year decline in the average per-watt price of residential solar systems. As of 2021, we’ve come all the way down to an average of $3.00 per watt in the United States.
The reason for this is that solar panel technology has consistently gotten better and cheaper to produce. All signs point to this trend continuing in the years to come. So it’s reasonable to expect solar panel systems to continue getting cheaper for the foreseeable future, though the yearly per-watt saving increases are starting to level out considerably.
Understanding your solar payback period
When you think about solar panel costs and benefits, what you’re really doing is trying to figure out how long it will take for the benefits that you get from solar to eclipse the costs of adding a system to your home. This is called a solar payback period.
The average solar payback period is 8 years in the United States. That number is based on purchasing a $20,000 system that saves you $2,500 on electricity each year.
Your solar payback period will depend on how much you pay for your system and how much it reduces your electricity bill.
Keep in mind, solar panels last an average of 25-30 years. So there will be more than enough time for the vast majority of people to break even (and go well beyond even) on their initial solar investment.