How Does Solar Power Work on a House? Your Questions Answered. Full solar powered house * KYOKUSHO.COM

How Does Solar Power Work on a House? Your Questions Answered

How does solar power work? A simple explanation is that solar panels convert sunlight into electricity that can be used immediately or stored in batteries.

The sun essentially provides an endless supply of energy. In fact, with the amount of sunlight that hits the earth in 90 minutes, we could supply the entire world with electricity for a year — all we have to do is catch it!

That’s where solar panels come in.

How solar panels power a home

Solar power has many applications, from powering calculators to cars to entire communities. It even powers space stations like the Webb Space Telescope.

But most people are concerned about how solar panels can power their house and reduce their electricity bill.

Here’s a step-by-step overview of how home solar power works:

When sunlight hits a solar panel, an electric charge is created through the photovoltaic effect or PV effect (more on that below)
The solar panel feeds this electric charge into inverters, which change it from direct current (DC) into alternate current (AC) electricity
The AC electricity runs through your electrical panel and is distributed throughout your home — just like grid energy
Excess solar energy is stored in batteries or pushed onto the grid to power local systems (like your neighbor’s house!)

Through net metering, solar owners get credit for the excess energy they put on the grid to offset the grid energy they pull off the grid when their panels aren’t producing
With battery storage, solar owners can store excess production to power their homes at night

Now that we’ve covered the basics, let’s break down how solar panels work in more detail.

How does solar power work? The photovoltaic effect explained

Solar panels turn sunlight into elctricity through the photovoltaic (PV) effect, which is why they’re often referred to as PV panels.

The photovoltaic effect occurs when photons from the sun’s rays hit the semiconductive material (typically silicon) in the cell of the solar module. The photons activate electrons, causing them to free themselves from the semiconductive material.

Photons hit the solar panel causing electrons to be freed during the photovoltaic effect.

The free electrons flow through the solar cells, down wires along the edge of the panel, and into a junction box as direct current (DC).

This current travels from the solar panel to an inverter, where it is changed into alternative current (AC) that can be used to power homes and buildings.

How is solar energy used to power your home?

Most home solar systems are “grid-tied” meaning that the solar system, home electrical system, and local utility grid are all interconnected, typically through the main electrical service panel.

Connecting these systems means you can power your home with solar electricity during the day and grid electricity at night. It also means your solar system can push excess electricity onto the local grid to power surrounding systems, like your neighbor’s house.

Through net metering, you earn credit for excess solar production that can be used to offset the grid electricity you use at night.

Home solar with battery storage

Home solar with battery storage works similarly to the process above, but intsead of pushing excess solar production onto the grid, it’s first stored in batteries in your home or garage.

Pairing solar and battery is especially handy for:

Off-grid solar systems
Backup electricity during power outages
Areas without net metering policies
Powering your home on 100% clean and renewable energy

What types of material are used in solar panels?

The most common residential solar panels contain monocrystalline or polycrystalline (also called multicrystalline) solar cells.

Both types of cells produce electricity when exposed to sunlight, however there are some key differences between the two:

Monocrystalline solar cells	Polycristalline solar cells
Tend to appear darker in color, often black or dark grey	Often appear a dark blue when exposed to light
Performs better in high temperatures and shady conditions	Less efficient at higher temperatures
Tend to be more expensive	Tend to be less expensive

If space is limited on your roof or project site, a higher-efficiency, monocrystalline panel may be preferred, and could result in a better return on investment. Alternatively, a lower-cost, slightly less efficient, polycrystalline panel may do the job just as well if you have ample roof space on your home.

Many panel manufacturers also build panels containing both mono and polycrystalline wafers to form solar cells, capable of harvesting energy from a wider spectrum of light.

Be sure to ask what type of cell (“mono or poly”) your home solar system design contains, This distinction may affect the aesthetics and economics of your project.

How does sun exposure affect solar panel efficiency?

It is important that your solar panels receive good insolation (sun exposure) throughout the day and are free from as much shading from trees or neighboring obstructions as possible.

There are a number of factors that influence solar panel efficiency. They include:

Temperature — Solar panels operate best in temperatures between 59 and 95 degrees Fahrenheit
Type of solar panel — Solar panels typically range from 15-20% efficient, with the best panels pushing 23%.
Shading — Solar panels perform best in wide-open sun. Even partial shading can substantially reduce the efficiency of a panel
Orientation and angle — Solar panels perform best when they are directly facing the sun and are often tilted to increase efficiency

Solar engineers use satellite imagery to determine which panels and placement will provide optimum solar panel efficiency for you home.

How does solar power work FAQs

How does home solar power work?

Solar power works by converting sunlight into electricity through the photovoltaic (PV) effect. The PV effect is when photons from the sun’s rays knock electrons from their atomic orbit and channel them into an electrical current.

Using PV solar panels, sunlight can be used to power everything from calculators to homes to space stations.

How does solar power work at night?

Solar panels require sunlight to generate electricity, so they do not generate electricity during the day.

However, home solar systems typically generate excess electricity during the day, which can be stored in batteries or sent to the local grid in exchange for net metering credits. This is how solar owners maintain power when the sun isn’t shining.

Do solar panels work on cloudy days?

Yes, solar panels still generate electricity on cloudy days, although not as effectively as sunny days. Solar panels can capture both direct and indirect light (light that shines through clouds), but perform at around 10-25% of their normal efficiency when it’s cloudy.

Cloudy days can be beneficial, however, as rain washes the panels and increases their overall efficiency.

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How Much Energy Does a Solar Panel Produce?

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How Do Solar Panels Produce Electricity?

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How Many Solar Panels Do I Need To Power a House?

The goal for any solar project should be 100% electricity offset and maximum savings — not necessarily to cram as many panels on a roof as possible. So, the number of panels you need to power a house varies based on three main factors:

In this article, we’ll show you how to manually calculate how many panels you’ll need to power your home. Once you have an estimate for the number of panels, you’re one step close to figuring out how much solar costs for your home, and how much you can save on electricity bills

How many solar panels do you need to power a house?

While it varies from home to home, the US households typically need between 10 and 20 solar panels to entirely offset their average annual electricity consumption.

The goal of most solar projects is to offset your electric bill 100%, so your solar system is sized to fit your average electricity use. Here’s a basic equation you can use to get an estimate of how many solar panels you need to power your home:

Solar panel wattage x peak sun hours x number of panels = daily electricity use

Obviously, electricity use, peak sun hours, and panel wattage will be different for everyone. And since you didn’t come here to do algebra, we’ll go through how to figure out each variable and run through an example scenario based on national averages.

First, find how many kilowatt-hours you use to run your house

According to the US Energy Information Administration (EIA), the average US household in 2021 used 10,632 kilowatt-hours (kWh) of electricity per year. That’s equal to:

It’s important to note that this usage varies quite a bit from state to state. For example, the average daily usage was ~18 kWh in Hawaii and 40 kWh in Louisiana, which is quite a spread. But we’ll use the national average 30 kWh per day as the figure for our example.

The easiest way to find your daily electricity usage is to dig up some recent utility bills. Your bill should show your usage for 30 days (or whatever your payment period is) and you can use this to get a sense of your daily electricity consumption. Just take the total usage during the period, and divide it by the number of days.

Electricity usage varies from month to month, so the more bills you can average together, the more accurate your calculation will be.

Once you have your daily electricity usage, the next step is to figure out how many peak sun hours your system will get per day!

Next, determine how many peak sun hours your location gets

A big factor in determining how many solar panels you need to power your home is the amount of sunlight you get, known as peak sun hours.

A peak sun hour is when the intensity of sunlight (known as solar irradiance) averages 1,000 watts per square meter or 1 kW/m 2.

In the US, the average peak sun hours range from over 5.75 hours per day in the Southwest to less than 4 hours per day in the northernmost parts of the country.

Use the map above to estimate the average peak sun hours for your area, or use this peak sun hours calculator to get a precise figure for your location.

Here are some tips for using the peak sun hours calculator:

The average roof pitch is between 14 and 27 degrees
Use the compass on your phone to determine the Azimuth Angle of the roof face you’d put solar panels on (closest to 180 degrees is best)

Based on the map, about half the US gets less than 4.5 peak sun hours and half gets more, so we’ll use 4.5 peak sun hours as the figure for our example.

Finally, pick a solar panel power rating

The final variable is how much electricity each solar panel can produce per peak sun hour. This is called power rating and it’s measured in Watts.

Solar panel power ratings range from 250W to 450W. Based on solar.com sales data, 400W is by far the most popular power rating and provides a great balance of output and Price Per Watt (PPW).

If you have limited roof space, you may consider a higher power rating to use less panels. If you want to spend less per panel, you may consider a lower wattage. Everybody has different goals, and you should feel free to choose the panels that best suit your needs.

For the purposes of our example scenario, we’ll use 400W panels.

Calculate how many solar panels it takes to power a house

Now that we have our three variables, we can calculate how many solar panels it takes to power a house.

Daily electricity consumption: 30 kWh (30,000 Watt-hours)
Average peak sun hours: 4.5 hours per day
Average panel wattage: 400W

To solve for the number of solar panels, we can rewrite the equation above like this:

Daily electricity consumption / peak sun hours / panel wattage = number of solar panels

Now let’s plug in our example figures:

30,000 Watt-hours / 4.5 peak sun hours / 400W = 16.66 panels

If we round up, it takes 17 solar panels to power the average American household and meet the goal of 100% electricity offset.

Now since we’re talking national averages, the national average electricity price in the US was 16.5 cents per kilowatt-hour in May 2023. Meanwhile, the average price of electricity from solar systems purchased on solar.com is between 6 and 8 cents per kilowatt-hour.

I’ll let you do the math there.

The easy way to find out how many solar panels you need

Now that we’ve gone through the manual calculations of finding out how many solar panels you need to power a house, we’ll show you the easy way. (I know, it’s middle school math class all over again).

Modern home solar projects are planned using satellite technology, and you can start planning your own project using our solar calculator. Simply punch in your address and set your average energy bill to calculate how big your solar system needs to be and how much you can save by switching to solar.

Under the average energy bill slider, the calculator will give you an estimated system size in kW. You can use this number to figure out how many panels you would need.

First, convert kW into Watts by multiplying by 1,000. So 5.2 kW would be 5,200 W.

Next divide the total system size in Watts by the power rating of the panels you’d prefer. If we use 400W, that would mean you need 13 solar panels.

System size (5,200 Watts) / Panel power rating (400 Watts) = 13 panels

Of course, the easiest way to know how many solar panels you need is to team up with an Energy Advisor to design a custom system.

Frequently asked questions

How many solar panels does it take to power a house?

Based on average electricity consumption and peak sun hours, it takes around 17 400-Watt solar panels to power a home. However, this number will vary between 13-19 based on how much sun the panels get and how much electricity the home uses.

Use the equation below to get an estimate of how many solar panels you need to power a house.

Daily electricity consumption / peak sun hours / panel wattage = number of solar panels

Can I run my house on solar only?

Absolutely. By pairing solar panels with battery storage, it is very possible to run a house on solar power alone. And in many areas it’s cheaper than paying for electricity through a local utility.

Without battery storage, you can still offset your grid electricity use with solar panels through net metering and eliminate your electricity bill. You will still be using grid electricity when solar generation is down, but you will only pay for your solar equipment.

Is 10 kW enough to run a house?

Yes, in many cases a 10 kW solar system is more than enough to power a house. The average US household uses around 30 kWh of electricity per day, which would require 5 kW to 8.5 kW solar system (depending on sun exposure) to offset 100%.

How Much Do Solar Panels Cost? (2023 Guide)

If you’re looking to invest in solar power, we break down the costs and factors that will contribute to the final price of your solar energy system.

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Faith Wakefield is a writer based in North Carolina. She holds economics and English degrees from UNC Chapel Hill, and her work has been featured on EcoWatch, The World Economic Forum and Today’s Homeowner. In her free time, she loves to binge-watch personal finance videos on YouTube, collect books and spend time in nature.

Tori Addison is an editor who has worked in the digital marketing industry for over five years. Her experience includes communications and marketing work in the nonprofit, governmental and academic sectors. A journalist by trade, she started her career covering politics and news in New York’s Hudson Valley. Her work included coverage of local and state budgets, federal financial regulations and health care legislation.

Karsten Neumeister is an experienced energy professional with subject-matter expertise in energy policy and the solar and retail energy industries. He is currently the Communications Manager for the Retail Energy Advancement League and has prior experience writing and editing content for EcoWatch. Before EcoWatch, Karsten worked for Solar Alternatives, curating content, advocating for local renewable energy policy and assisting the solar engineering and installation teams. Throughout his career, his work has been featured on various outlets including NPR, SEIA, Bankrate, PV Mag and the World Economic Forum.

Based on our survey of 1,000 homeowners with installed solar systems, solar panels cost between 15,000 and 20,000 per home. However, according to the Solar Energy Industries Association (SEIA), a residential solar system can cost upward of 25,000 per installation.

We at the Guides Home Team have researched and reviewed the top solar companies to help you better understand the cost of solar and determine if it’s a worthwhile investment for your home. Read on to learn how factors like where you live, your household’s energy usage and the type of solar panels you install can impact the final cost of your solar system.

Cost Factors
Cost Breakdown
How To Save Money
Are Solar Panels Worth It?
The Bottom Line

Offers a range of financing options 24/7 customer service line Panel insurance protects against theft and damage

Packages include 24/7 system monitoring 25-year warranty guarantees power production, product performance and workmanship Installation process is handled 100% in-house

Solar Panel Cost Factors

Your location, energy needs and equipment selection are the top three factors that contribute to solar panel cost.

Location

Two significant location-based factors will determine your total cost and savings of going solar: the cost of energy where you live and how much sunlight you receive. In states where traditional energy is more expensive, like California, Hawaii and New York, you stand to save more on energy bills when you switch to solar. However, how much sunlight you receive also plays an important role in determining how many solar panels you’ll need (and thus how much you’ll pay for your system). If you live in a super sunny state like Arizona or New Mexico, you’ll have more daily peak sunlight hours, requiring fewer panels to meet your energy needs. That’s not to say solar isn’t worth it if you don’t live in a state with high energy costs and abundant sunlight. See how energy costs compare in your state using the map below, and learn more about how you can determine how many solar panels you need.

Top Solar Companies By State

Energy Needs

The typical U.S. household uses 10,632 kilowatt-hours (kWh) of electricity each year or around 886 kWh monthly. However, several factors can affect your energy needs, including the size of your home, how many people are in your household and if you have an electric vehicle (EV). The higher your household’s energy consumption, the larger the solar panel system necessary to offset your usage. For example, based on our average cost of a solar panel at 3 per watt with installation, a 6 kW system would run you around 18,000, while a 12 kW system would double the cost. Solar providers typically want to install a system that generates just enough electricity to support your typical energy usage — so your panels aren’t producing too much or too little energy. When designing your solar system, you’ll typically speak with a solar expert to determine your current and future needs and decide what size system is right for you.

Solar Panel Selection

The cost of your panels and equipment is by far the largest expense you’ll pay during your solar installation. There are many solar panel options available, and the manufacturer, installer and type of panels you choose will affect the final cost of your system. There are three common types of solar panels: thin-film, monocrystalline and polycrystalline. Beyond those options, each solar panel manufacturer offers a selection of products with different wattages, durability and technologies that affect energy production and overall cost. Your solar installer will walk you through choosing the right kind of panel for your home. However, it doesn’t hurt to research the best solar panel brands and manufacturers on your own.

Purchasing Options

There are three common financing options for solar panels: a cash purchase, solar loans and solar leasing. In most cases, you’ll see the most return on investment if you buy your solar panel system in cash upfront. However, most homeowners cannot afford to pay tens of thousands of dollars for solar panels out-of-. If you finance your solar panels with a loan, you’ll still see a substantial return on your investment, but the interest that accrues on your monthly payments will set back your solar savings slightly. Another payment option is a solar lease. As the total cost to install solar panels has declined by over 50% in the last 10 years, leasing has fallen out of favor among many homeowners looking to go solar, and many solar companies no longer offer it. Another major downside of leasing your panels instead of owning them is that you won’t be eligible for the 30% solar tax credit. However, you can still see some savings when you lease your solar panels. With this option, you rent your solar panels through your solar provider for a fixed rate each month. You’ll likely still see some savings but won’t own your solar panel system in the long run.

Solar Installation Company

Another factor that can greatly affect the ultimate cost of your solar system is the installation company that you choose. Use the chart below to help you find a provider with an installation cost within your budget and request a free quote.

Provider Avg. Cost of a 10-kW System Compare Quotes

SunPower	15,000–20,000	Get Quote
Sunrun	15,000–20,000	Get Quote
ADT Solar	15,000–20,000	Get Quote
Blue Raven Solar	15,000–20,000	Get Quote
Elevation	10,000–15,000	Get Quote
Freedom Solar	25,000–30,000	Get Quote
Green Home Systems	20,000–25,000	Get Quote
Palmetto Solar	15,000–20,000	Get Quote
Momentum Solar	20,000–25,000	Get Quote
Solar Energy World	25,000	Get Quote
Tesla Energy	25,000–30,000	See

Solar Panel Installation Cost Breakdown

Although the exact cost of your solar panel installation will vary depending on the company and type of panels you choose, you can expect your equipment (panels, inverters, racking or mounting hardware, etc.) to make up nearly half of your total cost. Labor costs, administration fees, taxes, building permits and electrical permits comprise the rest of your expenses. Jesse Solomon, the co-founder of NCSolarNow, explained the cost breakdown of a typical solar panel installation as follows:

How To Save Money on Solar Panels

The demand to expand renewable energy infrastructure in the U.S. shows no signs of slowing. As a result, the federal government and many states are incentivizing residents to install solar panels on their homes. There are plenty of programs that can help you save money on solar panels. Your solar installer can help you apply for the federal solar tax credit and any state and local incentives for which you’re eligible.

Federal Solar Incentives

The Federal Solar Investment Tax Credit (ITC) is a tax incentive worth 30% of the total cost of your solar panel system. All U.S. homeowners who install solar panels are eligible for this credit, and it reduces what you owe in federal income taxes. For most solar systems, this credit is worth several thousand dollars, which is significant savings. However, if you choose to lease your panels, you will not be eligible for this tax credit. You can only claim this tax credit if you own your panels. The credit is currently set to decrease to 26% in 2033, then to 22% in 2034 before expiring entirely in 2035.

State Solar Incentives

In addition to federal incentives, many states offer other incentives to go solar, including tax breaks, credits and rebates. If you’re interested in the solar incentives available in your state, you can browse the Database of State Incentives for Renewables Efficiency (DSIRE) or visit your local government website to learn more. Additionally, net metering is a program that allows you to sell the excess electricity your solar panels generate to your utility company for billing credits. Forty-one states and Washington D.C. have a state-mandated net metering policy, though some policies are better than others. States without a mandated net metering policy, like Texas and Idaho, may have utility companies that offer the program. Many states also offer solar rebate programs for low- and moderate-income households or community solar programs that aim to make clean energy more accessible.

Solar Incentives by State

How much do solar panels cost?

Solar panels generate “free” electricity, but there are still costs associated with installing them. On average, solar panels cost 17,430 to 23,870 after federal tax credits.

Supply chain constraints led to solar photovoltaics (PV) price increases in 2021, but we saw costs go back down in 2022.

Key insights

In 2023, the average cost for a residential system is currently 3 to 5 per watt.
It typically takes five to 15 years to break even on installation costs.
Solar leases and PPAs can reduce the cost but aren’t eligible for the federal tax credit.

Average solar panel cost by state

You can get a better sense of how much you can expect to pay for a solar installation in your area with a state-by-state comparison. The data in this table is based on average installation costs for a 6-kW solar panel system, a common size for a residential installation.

State Cost for 6-kW system (before tax credit) Cost per watt (before tax credit) 2022-2032 federal tax credit value (30%) Cost for 6-kW system (after tax credit)

How much does it cost to install solar panels?

The average cost to install solar panels in the U.S. is 20,650 after federal tax incentives, according to EnergySage. Depending on the size of your home and your energy needs, however, your costs could range from 10,000 to 30,000 or more.

Most installers set the price according to the system’s wattage, with the average around 3 to 5 per watt. The cost per watt is the price you pay for each “unit” of energy the solar panel system can produce.

For example, if a solar panel system has a cost of 3 per watt, it costs 3 for every watt of energy it can produce. If the solar panel system can produce 5,000 watts of power, then the system’s total cost would be 15,000 (5,000 watts x 3 per watt).

If you just need a few panels for a small do-it-yourself project, start at around 200 to 350 per panel (between 80 cents to 1.40 per watt).

Regardless of the size of your system, it’s worth it to get a few quotes — even the difference between 3 and 4 per watt can add up to thousands of dollars.

For example, a ConsumerAffairs reviewer in California was quoted almost 26,000 for a 5-kW system (14 355-watt panels and an inverter), which works out to 5.20 per watt.

“For a 4.97-kW system … it should be priced between 13,071 and 17,047. I personally would have expected a price of 13,668 for a 4.97-kW system (2.75 per watt),” the reviewer told us.

Solar panel installation cost breakdown

Local climate and the availability of sunlight in your area all play a role in how much you end up paying.

Your energy needs Your energy needs determine how many panels you need, which affects the overall price of your solar system installation.

To eliminate your electric bill entirely, you must generate 100% of the electricity your home needs. Most American homes end up needing 15 to 30 panels to meet their electrical demands. The standard size for solar panels is about 5½ feet long by 3 feet wide, so consider the size of your roof.

Larger systems require more materials and labor to install, so they generally cost more than smaller systems. If you have limited roof space, you might need to get more efficient (and more expensive) panels.

Durability: Solar panels are designed to last decades, so they should withstand harsh weather conditions and extreme temperatures. Look for panels with a strong frame and tempered glass.
Efficiency: Higher-efficiency panels convert more sunlight into electricity, meaning you can generate more power with fewer panels. Look for panels with a high efficiency rating — typically above 18%.
Warranty: Panels typically come with a warranty ranging from 10 to 25 years. A longer warranty indicates that the panel manufacturer is confident in the quality of its product.

Of the three types of panels available, monocrystalline and polycrystalline are most commonly used to power homes. In general, monocrystalline panels are more efficient, but they’re also more expensive compared with polycrystalline panels.

Hard and soft costs Installing a solar panel system has two main expenses: hard and soft costs. Hard costs are the materials needed for the design, such as the panels, wiring and inverter. Soft costs are associated with labor, permits, deposits and administrative expenses.

Solar panels — the main component of a system — usually make up the largest portion of the cost, but other hardware (for example, you might also want to buy a solar battery for energy storage), plus labor and permits, factor into the overall price.

Inverter: This device converts the generated DC electricity into AC electricity that can be used to power your home. The cost of an inverter depends on its size and efficiency, but on average, it can cost between 1,000 and 3,000.
Mounting system: This is what holds the panels in place on your roof. Costs vary depending on the type of installation, but it generally costs between 7 cents and 20 cents per watt.
Electrical wiring and hardware: This includes the wiring, switches and circuit breakers required to connect the solar panel system to your home’s electrical system. Electrical wiring and hardware costs typically range from 10 cents to 20 cents per watt.
Labor: The cost to install also includes an electrician, who handles wiring, hooking it up to your house and setting up various electronics to convert the power from the panels to the same AC voltage as you have in your home. Labor costs usually range from 50 cents to 1 per watt but can vary greatly depending on where you live and the complexity of the installation.
Permits: Permits ensure the solar panel installation is safe, follows regulations and can qualify for incentives and rebates. Fees vary based on location, but residential solar permits typically cost a few hundred dollars. Some state regulations cap permitting fees (Colorado caps them at 500 for residential projects and 1,000 for commercial projects; California caps residential fees at 450).

The condition of your roof Get a thorough inspection of your roof now, and make sure you get pictures. If your roof needs repairs, it’s better to take care of that before installing solar panels — it’s more cost-effective than removing the panels and reinstalling them later.

A reviewer in California told us they discovered leaks in their roof a year after installing panels. They said the solar company charged 5,000 “to take the panels down and reinstall them after the roof was replaced” and said “if I had known the roof was in such bad shape, I would’ve replaced the roof before installing the panels.”

Federal and state incentives The federal solar tax credit, also known as the Investment Tax Credit (ITC), is a tax credit for 30% of the total cost of a new solar PV system. Homeowners, businesses and nonprofits can qualify, but there are some limitations. For example, you must own the panels — solar leases and PPAs do not qualify for the tax credit.

State incentives also help reduce the initial cost, but not everyone can take full advantage of them. Look for policies and incentives by state through the Database of State Incentives for Renewables Efficiency (DSIRE). Some states, like Massachusetts, offer additional discounts or even free systems for low- and moderate-income households.

It’s usually in your best interest to take advantage of state clean energy programs when you can — it lowers your upfront costs and shortens your payback period.

How much do solar panels save?

Switching to a solar energy system could cut your energy bill by 75% or more. The savings you see will depend on where you live, what the climate is like and your particular energy needs.

Like a lot of solar energy customers we talk to, a reviewer in Pennsylvania said they went solar to “help [the] environment while saving money. During the summer when the central air is going full blast, my electric bills are either 0 or less than 10.”

The average U.S. electric bill is 80 to 178 per month, according to the U.S. Energy Information Administration.

The average American electric bill is currently between 80 and 178 per month, totaling around 1,500 each year, according to the U.S. Energy Information Administration. Depending on how much you pay out of for a solar energy system, it could take seven years or longer to break even, according to Wayne Turett, the founder of The Turett Collaborative, an architectural firm that specializes in sustainable designs.

Another reviewer in Texas was able to take their “electricity bill down significantly, so even with the price we’re paying for the solar panels and the amount of electricity we’re using … it’s still much cheaper than what we were paying before we had them.”

But some people see their electricity bills go back up if they run into a problem with their system — a reviewer in Nevada didn’t realize their inverter needed to be replaced, leading to an unexpected increase in their utility costs.

“Everything had been going well and my energy bill had averaged 13 to 15 a month,” said one reviewer in Nevada. “Until I received a bill at the end of September 2022 in the amount of 429 from NV Energy.”

So, keep in mind there’s some maintenance after installation, like panel cleaning and occasional repairs, which adds to the overall cost. Most solar energy companies offer monitoring apps that help you see how much energy your system is producing and when maintenance may be required.

How can I pay for solar panels?

Like buying a new car, you can pay for solar panels outright — but most people don’t.

Homeowners and business owners often use loans, solar leases or power purchase agreements (PPAs) to pay for the upfront costs. You might also consider a cash-out refinance or HELOC.

Cash

If you can pay cash, it’s usually cheaper in the long run. For example, consider this review from a customer in California:

“Financing it was 18,000. But if I paid cash, it was 15,000 and they gave me a 1,000 debit card. It only cost me 14,000. I’m totally satisfied. I haven’t paid any electric bills in six months now. I’d recommend it to anybody.”

Solar loan

In general, solar loans work a lot like any other kind of loan: There’s an application and approval process, and you repay the loan amount in installments over time. Whether or not it makes sense for you comes down to your terms and break-even point.

A solar customer in California “did the math,” and everything worked out:

“Instead of paying 100 or 200 for the electric bill, if I use the same amount of energy or less, I will end up paying just the financing, which is 150,” they said. “But only for six years, and then after that, the panels will be mine and I don’t have to pay anymore.”

Just remember to pay attention to the interest rate. Another reviewer in California said they’re “paying more for the loan payment than I save from the utility. Interest payments alone are over 1,000 per year and this will continue for a long, long time.”

Lease

With a solar lease, you don’t own the equipment; instead, you make monthly payments to use them for the duration of the lease term. Your leasing company is responsible for maintaining and repairing the solar panel system during this time.

Another customer in California said they “opted for the lease approach instead of a purchase. So, we did not have to put any money upfront at all. Zero. I work in finance/accounting and generally feel that if it sounds too good to be true, it usually is. But in this case, it truly has turned out even better than we could have hoped for.”

At the end of the term, you typically have the option to renew the lease, purchase the system at “fair market value” or have the leasing company remove the system from your property.

Power purchase agreement

A power purchase agreement (PPA) is another way to get solar panels installed on your property without paying for them upfront.

An energy service company (ESCO) installs the panels for you but owns and maintains them. You then purchase the electricity generated by the solar panels from the ESCO at a fixed price.

You can still save money on your electricity bills with a PPA, but some reviewers describe feeling “stuck” with a company.

» WHAT’S THE DIFFERENCE? Solar lease vs. solar PPA

FAQ

In general, installing solar panels is a good investment. Studies show that homes with solar panels sell for more than homes without them, and that increase in value can be significant.

A study by the Department of Energy’s Lawrence Berkeley Laboratory found homes with solar panels sold for about 15,000 more, on average, than comparable homes without solar panels.
A National Bureau of Economic Research study found that solar panels added an average of 20,194 to the sale price of homes in the San Diego and Sacramento areas.
Zillow found that, on average, homes with solar panels sold for 4.1% more than comparable homes without solar panels.

How much value the solar panels add depends on your system’s quality, location and other factors.

The number of solar panels you need varies based on your energy usage, the efficiency of the panels and other factors.

The average household uses 886 kWh per month in electrical power, according to the Energy Information Administration.

A solar panel typically produces about 1.5 kilowatt-hours (kWh) per day, so if your daily kWh usage is 30, you would need 20 solar panels to generate all of your energy needs.

Energy usage: To estimate the amount of energy you’ll need, you need to know your average kilowatt-hours (kWh). This number should be on your utility bill as “kWh used.” To get your monthly average, look at bills for the past year, add up the stated kWh used and divide by 12.
Panel efficiency: Next, you need to find the solar panel efficiency, which is the amount of energy the panel can produce per hour of sunlight it receives.

Sometimes, you might make more electricity than you need, especially on sunny or windy days.

Net metering is a system that lets you send any extra power your panels produce back into the power grid (the big network of wires that carries electricity to everyone’s houses). In exchange, you get a credit on your electricity bill.

This means that when your solar panels aren’t generating enough electricity, such as at night or on cloudy days, you can still use electricity from the grid without paying for it because you’ve already earned credits through net metering.

A reviewer in Texas explains how it worked for them: “When I first signed up, my contract was a net metering, so I paid a certain cost of kilowatt-hours used, and the utility company purchased back from me at that same price. If I generated 200 and consumed 200, my net usage was zero, and my bill was essentially zero. My contract ended and I had to renew it.

They continued: “Now, I’m paying 21 cents a kilowatt-hour for usage, and I’m only getting back 10 cents a kilowatt-hour for anything I push back to the grid. There’s another 40 a month service fee from the utility company as well. So the incentive isn’t quite what it was a year ago. Still, it’s a good value.”

It’s a win-win situation: You save money on your bill, and the power grid gets more electricity to distribute to people who need it.

Actually installing solar panels takes only a few days at most. Wiring is installed to connect the panels to an inverter, which converts the DC power generated by the panels into AC power for use in your home.

“One of the most common misconceptions is that going solar is a complicated process that involves a lot of work and expensive equipment,” said Alan Duncan, founder of Solar Panels Network USA. “In reality, the process of buying and installing solar panels is relatively straightforward, and many companies offer turnkey solutions that take care of everything from the design to the installation of the system.”

Once the installation is complete, an inspector checks the system to ensure it meets local safety and building codes. The system is then connected to your utility’s power grid.

Once that’s done, your solar panel system is activated and ready to generate electricity. You can monitor the system’s performance and energy production using a monitoring system provided by the installer.

Bottom line

Buying solar panels can get expensive. vary based on efficiency, capacity and location, but a residential solar panel system generally costs anywhere from 10,000 to 30,000. This includes the cost of the panels themselves, installation and any additional equipment needed.

The good news is we expect to see solar hardware continue to get cheaper, thanks to advancements in technology and increased competition in the market.

If you aren’t financially ready to install solar panels yet, you still have options to incorporate solar technology into your life with solar phone chargers, solar panel cars and passive solar home design.

EnergySage, “How much do solar panels cost in 2023?” Accessed April 13, 2023.
Center for Sustainable Energy, “How much does a typical residential solar electric system cost?” Accessed April 11, 2023.
Solar Energy Industries Association, “Low-Moderate Income Solar Principles.” Accessed April 10, 2023.
U.S. Energy Information Administration, “2021 Average Monthly Bill- Residential.” Accessed April 10, 2023.
Lawrence Berkeley National Laboratory, “Berkeley Lab Illuminates Price Premiums for U.S. Solar Home Sales.” Accessed April 10, 2023.
National Bureau of Economic Research, “UNDERSTANDING THE SOLAR HOME PRICE PREMIUM: ELECTRICITY GENERATION AND “GREEN” SOCIAL STATUS.” Accessed April 10, 2023.
Zillow, “Homes With Solar Panels Sell for 4.1% ” Accessed April 3, 2023.

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ConsumerAffairs is not a government agency. Companies displayed may pay us to be Authorized or when you click a link, call a number or fill a form on our site. Our content is intended to be used for general information purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances and consult with your own investment, financial, tax and legal advisers.

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Sources:

https://www.solar.com/learn/how-do-solar-panels-work/
https://www.solar.com/learn/how-many-solar-panels-do-i-need-to-install/
https://www.marketwatch.com/guides/home-improvement/solar-panel-cost/
https://www.consumeraffairs.com/solar-energy/how-much-do-solar-panels-cost.html

How Does Solar Power Work on a House? Your Questions Answered. Full solar powered house