How Much Do Solar Panels Cost in 2019?
In 2019, a typical residential solar system may set you back between 11,200 to 14,400 to install after tax credits and rebates.
Solar energy is a long-term investment. To budget correctly, you must look at costs and savings over 20 years and determine the payback period and payback amount. The right calculation includes:
- The cost of photovoltaic panels and other components
- What your solar installer charges
- Your current and electricity bills
- Any applicable federal, local, or state tax credits
- Projected savings on your energy bills
Put it all together and you can calculate the actual solar panel cost for your home. If you want to skip all the math, we advise getting a free quote from a solar power professional. If you’d like to figure out the costs yourself, then keep reading and learn how the math works.
Breaking Down the Cost of Solar Panels
The standard way to evaluate a solar panel system cost is cost-per-watt or dollars-per-watt. This measurement is calculated by taking the total cost to install the system (parts and labor) and dividing by how much power it produces in kilowatts (electrical output). For reference, the average U.S. home would use a 4kW-7kW solar system.
Solar panel price will also vary based on the state you live in, the installation company, and any rebates and incentives you collect. In 2019, someone in California can expect their cost-per-watt to range anywhere from 4.39 for a small system to 3.56 for a vast system.
At the time of this writing, solar panel installation costs range between 7-9 per watt. So a 5kW system would cost around 25,000-35,000 before rebates. While that cost is a stiff pill for many households to swallow, it’s common for utility companies to offer incentives or subsidies to offset solar system costs.
For example, a system that costs 18,000 has a payback period of about 20 years. The cost of a solar panel today is around 3 per watt, and the extra cost of installation brings expenses up to 5- 6 per watt. Installation costs for PV systems include both labor and the electronics needed to tie the solar array into your existing electrical system.
Homeowners interested in solar roofs should note solar shingle systems are more expensive than the traditional roof installation. Energysage estimates solar roofs can range from 4.15 cost per watt to as much as 8.14 for the more advanced offering from Tesla’s Solar City.
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Estimated Savings with Solar
The rule of thumb is that the average U.S. household consumes electricity at the rate of one kilowatt per hour (kWh). There are about 730 hours in each month, and the national average price of a kWh of electricity is 0.10. So an average monthly bill would be around 73 for 730 kWh of electricity.
The average electricity bill can vary considerably if you have non-standard items, such as a hot tub, or some electrical appliances running continuously. Extended computer use, plasma screen TVs and video games consoles can also make an impact. Your usage will also increase significantly in months when you run an air conditioning unit or heater. Finally, the cost of electricity varies widely across the USA, from as low as 0.07/kWh in West Virginia to as much as 0.24/kWh in Hawaii. To get a precise estimate, you’ll want to adjust our estimated calculations to fit your electricity usage patterns.
A conservative value to use as a solar panel’s generating capacity is 10 watts/sq. ft. This value represents a panel conversion efficiency of about 12 percent, which is typical. This means that for every kW you generate, you need about 100 sq. ft. of home solar panels. If the sun shone 24 hours a day, you could put up 100 sq. ft. of panels and have enough energy to power the average home.
The average sunshine across the country varies. In Seattle, Chicago, and Pittsburgh you’ll likely get up to three hours of direct sunlight. In states like Colorado and California, you’ll probably absorb five or six hours of sunlight. Homes in sunny Arizona can get nearly 7 hours of sunlight per day.
The amount of average sunshine means that the size of the panel array required can vary, anywhere from 400 sq. ft. to 800 sq. ft. (i.e., 4 kW to 8 kW), depending on where you live. You’ll need more panels if you live in a location that gets less sunshine per day, and fewer panels if you live in a location that gets more sunshine.
How Utility Companies Affect Solar Power Costs
If your utility company allows you to have net metering — that is, they supply you with a special meter that will spin backward when you generate more electricity than you use — your annual bill can average out at zero. Because of shorter days in the winter, you’ll likely be a net purchaser of electricity in that season and a net producer in the summer months. A grid-tied system like this is different than off-grid systems used in remote locations with no electrical service; those require batteries, which can significantly increase overall system costs.
Standard Solar System Components
As we mentioned earlier, equipment is another factor to consider when calculating how much it costs to install solar panels. Each standard residential solar array uses four components:
Solar panels – captures the sun’s energy and converts it to electricity Controller – protects batteries by regulating the flow of electricity Batteries – store electricity for later use Inverter – converts energy stored in a battery to voltage needed to run standard electrical equipment
The entire system, plus installation, is what drives solar panel costs. Plus, equipment like batteries sometimes need to be replaced over time.
The good news is that the costs for solar panels are expected to continue to drop as thin film panels from companies like First Solar, Nanosolar, and AVA Solar become available to the residential market, which could drop to 1-2 per watt — and at volumes that are several times today’s total output.
Assuming that installation and auxiliary equipment costs can be reduced to around 1 per watt, then a 5 kW system in upcoming years may cost as little as 10,000, with a payback period of about 10 years. This makes the future of PV solar installations much more attractive.
How much solar panels cost vary across a multitude of factors. Want to get an idea for how much you can save? Try our solar savings calculator or give us a call to find out!
Are Solar Panels Worth It?
Lexie came from HomeAdvisor and Angi (formerly Angie’s list) and is responsible for writing and editing articles over a wide variety of home-related topics. She has almost four years’ experience in the home improvement space.
We earn a commission from partner links on Forbes Home. Commissions do not affect our editors’ opinions or evaluations.
Table of Contents
It seems like solar panels are popping up on everyone’s roofs these days. Even neighbors you might never expect are taking the solar plunge. With this burst of interest (and government incentives), many folks are wondering, “are solar panels worth it?”
That’s just what we’ll take a look at in this article. We’ll discuss some of the most important points to consider when deciding if solar is the right choice for your home, or if it’s just an expensive trend. Keep reading to find out if solar panels are worth it for you.
THIS IS AN ADVERTISEMENT AND NOT EDITORIAL CONTENT. Please note that we do receive compensation for any products you buy or sign up to via this advertisement, and that compensation impacts the ranking and placement of any offers listed herein. We do not present information about every offer available. The information and savings numbers depicted above are for demonstration purposes only, and your results may vary.
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How Do Solar Panels Work?
Solar panels aren’t new technology, but they still have a Cloud of mystery surrounding how they work. The good news is that they aren’t all that complicated.
Solar panels contain photovoltaic cells. When faced toward sunlight, these cells collect the sun’s energy and transform it into electrical charges. During this process, photons (the light particles) knock electrons off of atoms, creating an electric flow.
The electricity produced by this process is direct current, or “DC.” The problem is that our electrical systems use alternating current, or “AC.” For this reason, solar systems require inverters to turn DC into usable AC electricity. This inverter is installed between the solar panels and the home’s electrical system.
In some cases, the solar system may feed a bank of batteries, allowing the home to store electricity overnight or when cloudy conditions prevent effective electric production. In other cases, the system may wire directly into the home’s grid, allowing the user to back feed energy to the utility company, often for a profit.
Depending on the size of the system, a solar system like the one described above can significantly lower a homeowner’s utility bill. In some cases, the system’s production may even offset the bill completely. This depends on many factors, however, and these factors may determine whether solar is worth it or not.
Which Homes Benefit the Most From Solar Panels?
Certain homes benefit from solar more than others. When making a large upfront investment (up to 25,000 in some cases), it’s important to know if the home in question will be able to take full advantage of solar. Much of this has to do with the alignment of their roof in relation to the southern sky.
Speaking specifically for homes in North America, homes with a south-facing roof section are much better candidates for solar than those with east- and west-facing roofs. Also, homes without tall trees or buildings blocking the sky to their south will benefit more from solar than those next to tall buildings or butted up against forests on their southern side.
When Are Solar Panels Worth It?
There are certainly times when solar panels are worth it. It does depend on a few factors, however.
Location
The location matters. The closer a home is to the equator, the stronger the sun’s intensity will be, and the more potential energy the solar system can create. These homes will see a greater benefit in terms of energy production than homes in the more northern latitudes.
Also, consider the utility company. Homes in states where electricity is more expensive (California, Connecticut, Massachusetts and New York, for example) will benefit more from solar panels than those where electricity is relatively cheap (Louisiana, Washington, Oregon and North Carolina).
Federal, Local and State-Level Tax Incentives
Certain incentive programs may make installing solar panels worth the investment. For instance, folks who install solar panels between 2022 and 2032 may be able to take advantage of a dollar-for-dollar solar tax credit of up to 30% of the system’s overall cost. Depending on the cost of the system and the taxpayer’s finances, this could be reason enough to consider it.
Second, many states and counties are offering similar credits, rebates or exemptions. For instance, New York (one of the most expensive states in which to purchase electricity) offers dollar-per-watt rebates, up to 5,000 in a tax deduction, sales tax exemptions and credits back on utility bills for producing more wattage than consumed.
Energy Bills and Consumption
The two main points of a solar system are to reduce the homeowner’s dependence on non-renewable electricity and lower their energy bills. In most cases, a solar panel system can reduce the homeowner’s electricity usage, reducing their energy bill.
But, in ideal conditions, the best solar panel system may actually make the homeowner money. As the system produces more electricity than the home uses, the homeowners may be able to sell the extra wattage to the utility company for a few dollars each month. While it’s unlikely to completely offset the cost of the bill and the installation, it’s money coming into the home that wasn’t before.
Property Value
Solar panels will make your home more affordable to maintain over time and energy efficient, and they can positively impact your property’s value. Depending on your location, the quality of the installation and local market conditions, the impact solar panels will have on property value will vary. However, you’ll also want to consider that the impact on property value may not be immediate. The long-term savings on electricity bills can offset the initial solar panel installation cost, making them a wise investment for many homeowners.
Environmental Impact
It’s no secret that solar panels are great for the environment. Since solar panels generate electricity without emitting greenhouse gasses or requiring the extraction, transportation or combustion of fossil fuels, solar panels have the lowest environmental impact compared to other forms of energy production. Although the production and disposal of solar panels have some environmental impact, using solar power instead of fossil fuels or other forms of energy production will certainly lessen pollution and environmental degradation.
THIS IS AN ADVERTISEMENT AND NOT EDITORIAL CONTENT. Please note that we do receive compensation for any products you buy or sign up to via this advertisement, and that compensation impacts the ranking and placement of any offers listed herein. We do not present information about every offer available. The information and savings numbers depicted above are for demonstration purposes only, and your results may vary.
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How Much Do Solar Panels Cost?
There are a few factors that affect the cost of solar panel s, such as the type and model, the size of your installation and where you live. Therefore, the national average is around 16,000. but it can range anywhere from 3,500 to 35,000. However, it’s important to note that solar panels can save you money over time by generating your own electricity. These savings typically offset the solar panel’s initial installation costs. It’s also worth noting that there are often government incentives and tax credits available for homeowners who install solar panels.
Potential Benefits of a Solar Panel System
There are quite a few potential benefits of a solar panel system that may make the decision easier for some folks.
Increased Home Value
Solar panel systems can increase a home’s value, boosting profit during resale or allowing the homeowner to borrow a bit more in a refinance. How much the system increases the value will depend on the system’s size, but some experts believe that the home’s value increases by 20 for every 1 saved in yearly utility bills.
Decreased Pricing Fluctuation
Utility companies are famous for adjusting their pricing. And, since solar panel systems reduce the homeowner’s dependence on the electric company’s supply, the homeowner will be less susceptible to price fluctuations. Even if the solar panel system does take the home off the grid completely, a more predictable energy bill is a significant benefit.
Preparedness
In systems designed for energy storage (such as those with battery banks), homes with solar panel systems may be better prepared for natural disasters and grid outages. For instance, if the grid’s power goes out in a storm, the residents can use the stored energy from the batteries until the supply comes back on. And, as soon as the sun comes back out, the batteries will recharge.
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Potential Drawbacks of a Solar Panel System
It’s not all butterflies and daisies, though. There are certain potential drawbacks that could send some homeowners running from a solar panel installation.
Upfront Costs
While the tax benefits abound, homeowners will still have to pay the upfront costs for installing their solar panel system. can range from just a few thousand dollars to up to 25,000 or more for a system. This obviously depends on size and complexity, but those are costs that the homeowner will have to come up with themselves.
For those interested in leasing solar panels to lessen the upfront costs, this may be a solid plan. Just note that leasing often means not being able to take advantage of tax benefits.
Maintenance
Many solar panel systems are designed to last 20 years or more without a reduction in function, but there are certain maintenance items that the homeowner will need to consider. For instance, the panels may need annual or semi-annual cleaning to preserve their efficiency. Also, if the roof underneath the panels needs care or replacement, the panels can significantly add to the cost.
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Appearance
While solar panels are becoming more popular and less noticeable, they’re still not some homeowners’ cup of tea. Many folks don’t like the way solar panels look, and for historical preservation societies, they could be against bylaws.
There could be a solution for both of these scenarios, however. Installing an off-roof system on a set of racks or mounts away from the home is an option, just note that this will add to the cost of the project in terms of hardware, cables and design.
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THIS IS AN ADVERTISEMENT AND NOT EDITORIAL CONTENT. Please note that we do receive compensation for any products you buy or sign up to via this advertisement, and that compensation impacts the ranking and placement of any offers listed herein. We do not present information about every offer available. The information and savings numbers depicted above are for demonstration purposes only, and your results may vary.
Frequently Asked Questions (FAQs)
Can I install my own solar panels?
Most of the components involved in installing solar panels are relatively simple. Prefabricated parts that simply need assembly make up the majority of the system, and most of the wiring on the roof is plug-and-play. However, tying the panel wiring into the home is a bit more complicated, so DIYers should do their research before attempting their installation. Alternatively the best solar companies usually offer quick, professional, fuss-free installation if you don’t want to DIY.
Do solar panels increase property taxes?
Solar panel systems can increase a home’s value, which would appear to increase property taxes. However, since many local lawmakers allow for tax credits or deductions, they’ll have help offsetting or reducing the tax bill.
Can a house run on solar power alone?
Depending on the size of your house, how much energy it consumes and how much power your solar panels can generate, you would be able to run your home on solar powers alone. However, the right battery storage system is also necessary to ensure a constant supply of electricity, especially during periods of low sunlight.
How long do solar panels last?
Solar panels can last for 25 to 30 years. With proper installation, maintenance and timely repairs, you can help to extend their lifespan.
How many solar panels do I need?
The size of your home and the amount of energy you’ll need to power your home will determine how many solar panels you’ll need to install. For example, let’s say your home is roughly 1500 square feet. You’ll probably need between 15 and 18 solar panels to cover the energy needs of that space.
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How Much Do Industrial Solar Panels Cost?
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The cost of industrial solar power is essential in determining its economic viability. For any business or industry, evaluating the costs and benefits of switching to solar power is crucial. If the cost of industrial solar power is too high, it may not be feasible for businesses to adopt it.
By determining the cost of industrial solar power, businesses can assess the potential savings they can achieve by switching to solar power. In some cases, the cost of solar power may be lower than that of traditional electricity, resulting in significant cost savings over the long term.
In addition, governments often provide subsidies for the installation of solar power systems, and the cost of solar power can impact the level of government support businesses may be eligible for. By determining the cost of solar power, businesses can evaluate the potential subsidies and tax incentives they may receive.
Typically, before tax subsidies and rebates, the cost of commercial solar panels is approximately 2.87 per watt, with costs varying from 2.50 to 3.22 per watt. However, this cost depends on certain factors and can be increased and decreased.
How much does Industrial Solar Panels Save On Energy Cost?
The cost we mentioned above is exceptionally steep, and you may wonder if investing in an industrial solar panel is a wise decision or not. The answer to this question depends on your current energy bill and whether you need to reduce the cost.
Industrial solar panels always make a good idea if your company pays a high price for electricity bill every month. A solar panel system is projected to enable commercial settings to reduce energy costs by about 75%.
An industrial solar panel system will undoubtedly be beneficial if you pay an average of 1,000 a month for electricity. Your monthly savings would be roughly 750, translating to a 250 reduction in energy costs.
You would save 9,000 in a year. That’s a substantial sum of money that can help you pay off the cost of your solar panels in three to seven years. But, if your monthly electric expenditure is less than 300, installing an industrial solar system may be worthwhile.
Your bill drops to 75, but you will only save around 2700 yearly. Even if you are still saving money, it will take you significantly longer to pay off the cost of your solar panels.
Cost of Installing an Industrial Solar Power System
Nationwide average for industrial solar panels are predicted to range between 1.45 to 1.56 per watt in 2021 by the SEIA (Solar Energy Industries Association) and the National Renewable Energy Laboratory (NREL).
The actual cost of an industrial solar system per watt often varies, and these figures represent national averages. The price is expressed in kilowatts of direct current and includes what a solar contractor costs for installation, inverters, solar modules, design, etc. (kWdc).
Commercial solar investment is less expensive than residential solar in dollars per watt. This is due to economies of scale, which occur when solar energy is purchased for larger commercial installations.
The project’s size significantly impacts how much it will cost to install an industrial solar system. Greentech Media gave this estimate for commercial and utility-scale installations in 2019:
- Commercial solar system costs between 1.54 and 1.56 per watt.
- Utility-scale solar costs range from 0.99 to 1.03 per watt.
The “all-in” cost of solar power per watt for an industrial solar system is around 1.75. The typical price of an industrial solar system depends on how many kilowatts you require to meet your energy needs. Commercial solar panels typically cost about 325,000, with average costs in the US ranging between 50,000 and 600,000.
Also, remember that the larger your commercial solar power system is, the higher the cost will be. But there are many ways you can keep this cost down. One way is to choose a reputable solar power installing company that is experienced with large-scale industrial installations.
Purchasing pre-assembled solar panels is an additional option. They are less expensive than purchasing the components separately and putting them together yourself.
The solar panels type you select for your business will also significantly impact how much your solar panels will cost. Solar panels come in two basic varieties: monocrystalline and polycrystalline.
Although monocrystalline panels are substantially more expensive than polycrystalline panels, they produce more energy. Whatever solar power system you opt for, the installation costs now are considerably lower than ever.
Industrial Solar Power Cost Factors
Because of real estate considerations and tax advantages like the ITC, every industrial solar power project has a unique upfront cost and lifetime cost. As shown below, you can calculate the price of your industrial solar power using a free program called PV Watts.
Your industrial solar power is calculated by 4 PV Watts using a cost factor that takes the following into account:
- Geographic location
- Efficiency and loss parameters for solar panels
- The azimuth of the roof,
- The number of hours of sunlight each day
- The amount of power used annually.
- The price per kWh of electricity you pay
You should also consider your tax preferences and the building’s ownership or lease structure. You can benefit from community solar without owning a system if you rent a building or area.
Determining Commercial Solar Cost Using PV Watts
The size and location of your solar system greatly influence the cost of commercial solar panels. PV Watts makes it simple to calculate how much sunlight your building receives. NREL created PV Watts to calculate the energy output and cost of PV (photovoltaic) energy installations around the globe.
To determine how much sunlight your commercial building gets every day, PV Watts uses the address of your facility and weather information. Type your building’s address into PV Watts’ “Input a house or business address” area and follow the instructions to determine the cost of your industrial solar power system.
Efficiency Factors of Commercial Solar Power System
Most solar panels have an efficiency of 15% to 20%. If the day is clear and it is at high noon, the sun’s energy strikes the Earth’s surface at approximately 1,000 watts per square meter. PV Watt defaults to using these 1,000 watts per square meter criterion.
So, at 15-20% efficiency, a 1 square meter commercial solar panel will generate 150-200W of electric power per square meter under ideal circumstances. The solar panel array drawn using PV Watts on your roof will be square meters.
As previously mentioned, PV Watts offers three different kinds of solar panels, each with a different efficiency rating.
- Standard: 15% efficiency (crystalline silicon/glass)
- High-end (crystalline silicon with an anti-reflective coating): 19% effectiveness
- Thin Film: 10% efficiency (thin film/glass).
Industries Can Pay Off Solar Power System Cost Fast With Tax Credits
Thanks to fantastic tax benefits and incentives, the cost of an industrial solar power system pays you back more quickly than ever before.
Federal Tax Credit
The general tax credit will reduce the price of industrial solar power system installation by up to 30% for new installers.
State Tax Credit
A 10% credit is also available in some jurisdictions to aid with the cost of business solar panels.
Accelerated Deprecation
Owners of commercial buildings are permitted to deduct from their business taxes up to 85% of the entire cost of their solar system. This offers a significant means of offsetting the high price of industrial solar panels.
Solar Power Benefits for Business and Industries
- Dependable and maintenance-free
- Instant return on investment
- Lower carbon footprint
- Lock-in power cost for years
- Reduce electricity expenses
- Companies can receive significant tax rebates
- Reduce reliance on utility power
- Give back to the community
- Save thousands per month on electricity costs
- Attract more clients by demonstrating their commitment to sustainability.
- Low monthly payments and no-money-down financing are available
Industrial Solar Power System– How Coldwell Solar Can Help?
A reputed solar power provider such as Coldwell Solar can help your business with the installation of commercial solar panels in several ways. The solar power provider has been in the industry for years and can help you conduct a thorough site assessment to determine the best location for solar panels and evaluate the available space, shading, and orientation.
Based on the site assessment, the provider can also design a solar power system that meets the specific energy needs of the business. Coldwell Solar has become the first choice of many businesses for procuring high-quality solar panels and other necessary components at a competitive price.
They can also handle the installation of the solar panel system, ensuring that it is installed safely and efficiently. If you need ongoing maintenance and support, the solar power provider can ensure that your solar panel operates efficiently and generates maximum.
They also offer additional energy management services to help your company optimize energy usage and reduce energy costs. These services may include energy audits, energy-efficient lighting upgrades, and energy management software.
How Much Do Solar Panels Cost?
In this article, we attempt to answer that question to the best of our ability, but it’s important to remember that each solar system is a custom solution. The price can vary drastically from system to system.
It’s also important to understand what goes into determining the cost of a solar energy system. We dive into those components first, then provide the average installation cost for commercial and residential solar panels.
Factors that Impact the Cost of a Solar Panel Installation
Type of Installation
There are two main installation methods for solar: roof mounts and ground mounts. Roof mounts are attached to existing structures. Ground mounts and carports require additional posts that must be anchored into the ground. This often results in higher labor and component costs.
Type of Equipment
Solar Panels:
There are two basic variables with solar panels: power density and color. Power density is the amount of power that a solar panel can produce per unit of size. For example, a solar panel that is the same size may produce between 300-400 watts, depending on the power density. Generally speaking, the more power-dense the panel, the higher cost per watt. Color is the other variable with solar panels. The basic panel has a blue cell, white back sheet, and silver frame. Modules with a black frame, black back sheet, or black cell are generally more expensive.
Solar Inverters:
There are three types of solar inverters: String, Micro, and Power Optimizers.
String Inverters link p anels together in one or more groups. Each group feeds into one string inverter, feeding several panels into one inverter. String inverters tend to be more cost-effective than other types of inverters.
Microinverters are installed on each individual panel. Although this type of inverter has its benefits, they tend to be the most expensive type of inverter.
Power optimizers have many of the benefits of micro-inverters. They are generally more expensive than string inverters but less expensive than micro-inverters.
Solar can be installed on metal, shingle, and flat roofs. Each one requires different components and varying levels of labor. Shingle roofs require a specific flashing piece to attach the panel racking to the roof. For a ribbed or standing seam metal roof, the racking is attached directly to the metal. Panels are installed on a flat roof using a ballast mount. a tray held in place by a concrete block.
Energy Consumption
Most solar systems are designed to offset as much energy consumption as makes sense financially. The more energy production needed, the more panels and equipment the system will require.
Depending on how much shading a system will be exposed to will impact the amount and location of the panels. If a system is installed in an area with shading, it may require additional panels to meet the customer’s energy coverage requirements. On the contrary, a system in full sun could produce the same amount of energy with fewer panels.
Weather Patterns
Weather patterns in each region are different. Some locations receive more sun than others. Other regions receive more snow. Our systems are designed with this data in mind, impacting the system size and the necessary equipment.
Interconnection Cost
Interconnection is the process of connecting the solar system to the power grid. Each local utility has specific requirements that must be followed. Some of these requirements could impact the type of meter you need or whether transformer upgrades are required. The interconnection cost is different for each project, depending on how much solar is already in your area, the age and strength of the equipment on your line, and the size of the solar array itself.
Distance from the Solar Array to the Interconnection Point
Since the power produced by the solar array must be transported to the utility meter, the farther the solar array is from the interconnection point with the utility, the higher the installation cost will be. This is due to the conduit installation or trenching required, as well as the size of the wire required (the farther the distance the larger the wire is required to be).
Incentives available for solar panel installations
There are many incentives available for solar owners. These need to be considered when examining the cost of a solar system.
- Reduced monthly electric bills
- Protection from rising energy rates and independence from your utility company. You’re in control
- The 30% federal tax credit can be used to recover taxes from the prior three years and also carried forward 22 years for businesses and 12 years for homeowners
- Businesses and farms can quickly recover their investment through accelerated depreciation. Those who qualify can apply for a USDA Reap Grant and other local grants
- There are many local government and utility incentives
- It’s sustainable and good for the environment
With that in mind, we’ve listed below the average installation cost for commercial and residential solar energy systems.
The cost of solar panels for a business
The average size of a commercial solar system is between 50 kW (600/mo. electric bill) and 200 kW (1,200/mo. electric bill). Solar systems of this size will typically cost between 145,000 and 500,000 before incentives are utilized.
With the available incentives, most commercial solar owners could receive 60-90% of the system’s cost back within the first few years of installing the solar system.
The average agricultural and commercial solar owner can expect to save 150,000 to 375,000 over the 30 years of the solar system’s life.
Without solar, the average business and farmer will spend 240,000 to 715,000 on electricity over 30 years.
| Average MonthlyElectric Bill | Solar System Size | Total Installed Cost (Before Incentives) | Federal Tax Credit | Depreciation | Cost After the Tax Incentives |
| 600 | 50 kW | 147,500 | 38,350 | 37,304 | 71,846 |
| 1,200 | 100 kW | 268,800 | 69,888 | 67,982 | 130,930 |
| 2,400 | 200 kW | 494,400 | 128,544 | 125,038 | 240,818 |
The cost of solar panels for homeowners
The average size of a residential solar system is between 5 kW (60/mo. electric bill) and 10 kW (120/mo. electric bill). These solar systems will cost between 25,000 and 40,000 before incentives are utilized. Solar owners could receive 30% of the system’s cost back with the available incentives almost immediately after installation.
The average residential solar owner can expect to save 4,000 to 25,000 over the 30 years of a solar system’s life.
The average homeowner will spend 30,000 to 60,000 in electricity over 30 years without solar.
| Average MonthlyElectric Bill | Solar System Size | Total Installed Cost (Before Incentives) | Federal Tax Credit | Cost After Incentives |
| 60 | 5 kW | 26,480 | 6,885 | 19,595 |
| 120 | 10 kW | 38,960 | 10,130 | 28,830 |
| 180 | 15 kW | 53,285 | 13,854 | 39,431 |
Keep in mind these are average costs and system sizes for roof-mounted solar systems (Here’s what it costs to install a ground-mounted solar system). The cost will vary depending on your specific requirements. We provide free estimates that will provide you with the exact cost and available incentives to help you decide if solar is the right investment for your business, farm, and home.
Get the exact cost for a solar panel system that fits your needs
The best way to determine the cost of your solar system is to request a free custom quote. With a custom quote, you’ll see the complete installation cost, all available incentives, and the payback and ROI.
Not ready for a quote? Use our Solar Savings Calculator to get an instant estimate of how much money solar will save you.
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Last updated on February 16, 2023.
The Cost of Solar Panels: Is It Worth It?
Do the benefits of solar panels outweigh their costs?
Nathaniel Riley brings 28 years of experience in financial services, including merger-arbitrage trading, hedge funds, and alternative investments.
Somer G. Anderson is CPA, doctor of accounting, and an accounting and finance professor who has been working in the accounting and finance industries for more than 20 years. Her expertise covers a wide range of accounting, corporate finance, taxes, lending, and personal finance areas.
Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies.
What Is Solar Power for the Home?
Homeowners who install solar power systems can receive numerous benefits: lower electric bills, lower carbon footprints, and potentially higher home values. But these benefits typically come with significant installation and maintenance costs and the magnitude of the gains can vary widely from one house to another.
This article will help homeowners make the financial calculations required to determine the viability of solar power in their homes.
Key Takeaways
- Those seeking to go green may want to consider equipping their home with solar panels.
- Not only is solar power good for the environment, but you can earn money selling back excess power to the grid.
- While costs have come down over the past years, installation and maintenance of solar panels can be quite expensive.
- Solar panels are best suited for homes that receive ample sun exposure throughout the year.
- Before committing to solar power, be sure to understand both the social and economic factors.
Understanding Solar Power
In principle, working out whether it makes financial sense to install solar power for your home is simple. You will need to calculate:
- The cost of a solar power system
- How much energy it will produce
- What you would otherwise pay for the same amount of energy
- How many years it will take for your upfront investment to pay for itself in saved energy costs
- Whether the system will pay for itself in five years
If it does and you have the upfront capital, it’s probably a great idea. If you’ll have to wait longer for savings or take out a loan to afford the system, you’ll need to think the decision through carefully.
In practice, however, things are not this simple. There is a large variation in each of these factors, and that can make the costs and benefits of installing solar power for two homes—even if they are neighbors—radically different.
There are some tools that can help, though. Solar Reviews offer a calculator that will quickly provide you with representative costs and savings for a solar power system in every part of the U.S. Calculators like this are a good place to start if you are new to solar energy and want to understand the basic cost model.
In the rest of this article, we’ll take you through each of the key factors you should consider when calculating the costs and potential savings of solar power for your home.
Before getting solar panels, get quotes from several reputable installers to compare.
The Cost of Solar Power for Homeowners
First, let’s look at the cost of installing a solar power system for your home. The average, upfront cost of a residential solar power system is between 3,500 and 16,000.
Why the huge range of costs? Well, a lot of the variation depends on the size of the system you’d like to install and the type of panels you want to use. Whatever system you use, keep in mind that solar power is capital intensive and the main cost of owning a system comes upfront when buying the equipment. The solar module will almost certainly represent the largest single component of the overall expense.
There are some additional costs, as well. Other equipment necessary for installation includes an inverter (to turn the direct current produced by the panel into the alternating current used by household appliances), metering equipment (if it is necessary to see how much power is produced), and various housing components along with cables and wiring gear. Some homeowners also consider battery storage. Historically, batteries have been prohibitively expensive and unnecessary if the utility pays for excess electricity that is fed into the grid (see below). The installation labor cost must also be factored in.
In addition to installation costs, there are some further costs associated with operating and maintaining a PV solar array. Aside from cleaning the panels regularly, inverters and batteries (if installed) generally need replacement after several years of use.
Subsidies
While the above costs are relatively straightforward—often a solar installation company can quote a price for these for a homeowner—determining subsidies available from the government and/or your local utility can prove more of a challenge. Government incentives change often, but historically, the U.S. government has allowed a tax credit of up to 30% of the system’s cost.
details on incentive programs in the U.S., including programs within each state, can be found on the Database of State Incentives for Renewables Efficiency (DSIRE) website. In other countries, such information is often available on government or solar advocacy websites. Homeowners should also check with their local utility company to see whether it offers financial incentives for solar installation and to determine what its policy is for grid interconnection and for selling excess power into the grid.
97.7 gigawatts
The U.S. installed 19.2 gigawatts of solar PV capacity in 2020 to reach 97.7 GWdc of total installed capacity, enough to power 17.7 million American homes.
Calculating Your Energy Production
The second factor you’ll need to consider in your calculations is the amount of energy your system will produce and when it will do that. This can be a very complicated calculation to make, even for experienced solar engineers. However, let’s run through the basics.
One of the most important considerations is the solar irradiation levels available in the home’s geographical location; in other words, how sunny it is where you live. When it comes to using solar panels, being closer to the equator is generally better, but other factors must be considered. The National Renewable Energy Laboratory (NREL) produces maps for the U.S. showing solar irradiation levels and the tools on its website provide detailed solar information for specific locations within the U.S.
Equally important is your home’s orientation: For rooftop arrays, a south-facing roof without trees or other objects obstructing sunlight maximizes the available solar energy. If this is not available, panels can be mounted on external supports and installed away from the house, incurring additional costs for the extra hardware and cables.
And then you must factor in the size of your system. Solar panel size is quoted in terms of the theoretical electrical output potential in watts. However, the typical output realized for installed PV systems—known as the capacity factor—is between 15% and 30% of the theoretical output. A 3 kilowatt-hour (kWh) household system running at a 15% capacity factor would produce 3 kWh x 15% x 24 hr/day x 365 days/year = 3,942 kWh/year or roughly one-third of the typical electricity consumption of a U.S. household.
How Much Will You Save?
Once you know how much a solar power system will cost upfront, and how much energy it will produce, you can (theoretically) predict how much you can save in energy costs per year.
This is another tricky calculation, however, because a lot depends on how you pay for electricity at the moment. Utilities often charge residential consumers a flat rate for electricity, regardless of the time of consumption. This means that instead of offsetting the expensive cost of peak electricity production, homeowners’ solar power systems merely offset the price they are charged for electricity, which is much closer to the average cost of power production.
However, many utility companies in the U.S. have introduced pricing schemes that allow homeowners to be charged at different rates throughout the day in an attempt to mirror the actual cost of electricity production at different times: This means higher rates in the afternoon and lower rates at night. A PV solar array may be very beneficial in areas where this sort of time-varying rate is used since the solar power produced would offset the most costly electricity.
Exactly how beneficial this is for a given homeowner depends on the exact timing and magnitude of the rate changes under such a plan. Similarly, utilities in some locations have pricing schemes that vary over different times of the year due to regular seasonal demand fluctuations. Those with higher rates during the summer make solar power more valuable.
Some utilities have tiered pricing plans in which the marginal price of electricity changes as consumption rises. Under this type of plan, the benefit from a solar system can depend on the electricity use of the home; in certain areas subject to rates that increase dramatically as consumption increases, large homes (with large energy needs) may benefit most from solar arrays that offset high-cost marginal consumption.
For some homes, it might even be possible to make money by selling solar power back to the grid. In the U.S., this is done through net metering plans, in which residential consumers use the power that they put into the grid (when the rate of electricity generation from the solar array is greater than the rate of household electricity consumption) to offset the power consumed at other times; the monthly electric bill reflects net energy consumption. The specific net metering regulations and policies vary across regions. Homeowners can refer to the DSIRE database and should also contact their local utilities to find more specific information.
Calculating Solar Power Costs
At this point, you will be in a position to make a final calculation, and an assessment of whether solar power makes sense for you.
The overall cost and benefit of a solar system can theoretically be evaluated using the discounted cash flow (DCF) method. Outflows at the beginning of the project would consist of installation costs (net of subsidies) and inflows would arrive later in the form of offset electricity costs (both directly and through net metering).
However, rather than using DCF, the viability of solar power is usually evaluated by calculating the levelized cost of electricity (LCOE), then comparing it to the cost of electricity charged by the local utility. The LCOE for household solar will typically be calculated as cost/kilowatt-hour (/kWh or ¢/kWh)—the same format commonly used on electricity bills. To approximate the LCOE, one can use the following equation:
LCOE (/kWh) = Net Present Value (NPV) of the Lifetime Cost of Ownership / Lifetime Energy Output (kWh)
The useful life of a PV solar module is generally assumed to be 25 to 40 years. The cost of ownership includes the maintenance costs, which must be discounted to find the NPV. The LCOE can then be compared to the cost of electricity from a utility; remember, the relevant price is that which occurs during times at or near peak PV solar production.
Is Solar Power Worth It?
Once you’ve worked through all of these calculations, you’ll likely end up with a single number—the number of years it will take for a solar system to pay for itself in savings from your energy bills. If you live in a sunny part of the country and have high utility bills at the moment, you could be looking at a system that will reach this point in five years. Other homeowners may have to wait 10 or 20 years to reach this point.
In other words, most homeowners will eventually see a benefit from a solar power system; it might just take decades for this to be realized. Whether it is worth installing such a system therefore often comes down to a number of much less technical factors than those we’ve listed above: how long you are going to stay in your home, the subsidies available in your area, and simply whether you want to do your bit for the environment.
Pros and Cons of Solar Panels for Your Home
Like most things, solar power has its benefits and drawbacks. At the same time, some economic costs may be defrayed by the social benefits to the environment and lowering your carbon footprint, which may be more important to you than a purely monetary evaluation.
- Green energy that lowers your carbon footprint
- Net metering allows you to sell back excess energy produced
- You may be eligible for certain tax breaks
- Installation and maintenance costs are still high
- Solar only works when the sun is out
- Parts of the system need to be replaced every few years
- Some tax breaks may have expired or will be expiring
Can a House Run on Solar Power Alone?
Practically, it is not often possible. This is because solar only works when the sun is shining—when it is cloudy or nighttime, they do not generate electricity. There are some battery solutions to provide power during these times, but they still tend to be quite expensive. Most homes with solar panels still rely on the grid from time to time.
Do You Really Save Money With Solar Panels?
Depending on where you live, it is possible that the system can pay itself back and more over time. This is because you won’t be spending as much money buying electricity from your utility. If net metering is in place, you could reduce your bills even further.
How Much Does a Solar Panel Cost?
have been coming down steadily over the years. The total cost will depend on how many kilowatts of power your array will generate. According to consumer reports, after solar tax credits are accounted for, the cost for a solar panel system on an average-sized house in the U.S. in 2021 ranges from 11,000 to 15,000.
How Long Will It Take To Recoup the Initial Cost?
Depending on where you live and the size of your system it can take, on average, anywhere from 10 to 20 years to break even on a solar installation.
The Bottom Line
Determining whether to install a PV solar system may seem like a daunting task, but it is important to remember that such a system is a long-term investment. In many locations, solar power is a good choice from a financial perspective.
Even if the cost of solar power is found to be marginally more expensive than electricity purchased from a utility, homeowners may wish to install solar power to avoid future potential fluctuations in energy costs, or may simply wish to look beyond their personal financial motivations and use solar for green living.