It costs over $30,000 to install solar panels. That's a big number, but it can come down significantly with generous incentives from the federal government, as well as from many states.
The average household in the U.S. needs a 10.5-kilowatt (kW) solar panel system to cover its electricity usage. Based on thousands of quotes in the EnergySage Marketplace, you'll pay about $22,027 to install a 10.5 kW system in 2023 after federal tax credits. If you finance your system with a loan, this number will be higher due to interest rates. Either way, the economics of going solar in almost all cases result in electric bill savings that will pay for your system over time, sometimes a few times over.
We often reference the cost-per-watt ($/W) of solar to compare the value of a quote against the national average. According to the most recent data from the EnergySage Marketplace, the average cost-per-watt across the U.S. is around $3.01/W before incentives. Your state-level average cost-per-watt will be a more relevant benchmark, but those numbers vary widely. Even with that number, you'll still need to consider the shape of your roof, the incentives in your state or region, and the quality of your solar equipment before you can get a true cost estimate.
Fortunately, EnergySage can help you determine how much solar will cost you, and how you can lower that price to start saving sooner.
The average cost of a 10 kW solar panel installation on EnergySage is $21,070 after federal tax credits.
You'll probably save anywhere from $20,000-$90,000 over 25 years by going solar.
Solar panels are just 12% of the total cost of a solar panel installation.
Federal and state solar incentives significantly lower the cost of solar for most homeowners–the federal tax credit alone lowers it by 30%.
Average cost of a 10 kW solar panel installation in 2023
Cost Before Federal Tax Credit
Cost After Federal Tax Credit
Solar is worth it for most homeowners because it eliminates or significantly reduces your electric bill. It's most helpful to think about solar panels as an investment. It takes an average of 8.3 years to earn back the money you spend on installing solar panels. After that point, the electricity from your solar panels is free.
Most homeowners will save $20,000 to $90,000 over 25 years with solar. Your savings depend on a few factors, including your electricity rates and the cost of your system. You can calculate your break-even point, or solar payback period, by dividing the final cost (the total cost of your solar panel system minus any upfront incentives) by your annual financial benefit (the amount you save on electricity combined with annual incentives). The faster the cost of electricity increases, the shorter your payback period and the greater your savings will be.
Lower solar prices also drive shorter payback periods. Ten years ago, a home solar installation cost $4.09/W according to the National Renewable Energy Laboratory. That's 36% more than what we see on EnergySage right now. That said, solar prices have increased slightly in the last three years, primarily due to the pandemic-related equipment shortages felt in many industries. Solar panel prices have started to come down though, so we expect the prices you see in quotes to drop soon.
There’s a lot that goes into the sticker price a solar installer charges you. Panels are just one part of the equation. It’s also worth understanding the costs that come from the business operations an installer needs to account for to stay afloat.
Percentage Of Total Cost**
|Supply chain costs||$2,850||9%|
|Sales & marketing||$5,700||18%|
|Solar installer profit||$3,325||11%|
|Permitting & interconnection||$2,494||8%|
*Based on a $31,467 10.5 kW system before incentives. These are averages for the whole U.S. Costs will always vary from installation to installation.
**Based on a 2021 study by the National Renewable Energy Laboratory (NREL).
Solar equipment costs
The panels themselves are probably the first thing that comes to mind when you think about going solar, but solar panels represent less than a third of the total solar equipment costs. You can expect all required solar equipment, including supply chain costs and sales tax, to cost $14,500–about 46% of the total system price.
This price depends on the brand and quality of the equipment you select. Systems with SunPower panels, known for a strong warranty and high efficiency, see the highest average prices at about $27,400 after tax credits for a 10.5 kW system. Sometimes the bigger price tag is worth it: Investing in high-quality equipment can lead to better long-term savings. But reaching for the highest-priced panels often isn't the best choice. There are many high-quality options with varying price points.
The type of panel you install also directly impacts the quality of your installation. Monocrystalline solar panels offer the highest efficiency and power output and are used in most home systems today. They're often more expensive than polycrystalline solar panels, but you need to buy more polycrystalline panels for the same amount of power, so your overall installation costs may be similar. Thin-film solar panels are the cheapest type of panel but they aren’t often used for home installations due to their low production. They're a great option for RVs, campers, and DIY home setups.
Inverters can cost almost as much as solar panels depending on the type you select. They convert the direct current electricity your solar panels produce into alternating current that household appliances use. Microinverters and optimized inverters are similar in price but cost a few thousand dollars more than string inverters. If you have a complex roof with multiple planes or shading, it's usually worth it to select a pricier microinverter or an optimized inverter to maximize your system's production.
Racking and mounting equipment attaches solar panels to your roof, but it's a relatively low-cost portion of the installation. You'll also need wiring to connect your rooftop system to the grid and your electrical panel, which can add a few thousand dollars.
Another piece of the solar installation puzzle is the company performing the job. Solar installers charge varying amounts for their services. The final price they offer depends on their track record, warranty offerings, and internal operations. A well-regarded solar installer with premium warranty offerings will often charge more–and it will usually be worth the money.
Installer costs are about the same as equipment at around $14,500 or 46% of the total installation. Labor is only about 15% of installer costs and profit is generally around 20%. Your biggest installer costs go toward sales, marketing, and overhead.
Permitting and interconnection
Permits and fees can add a few thousand dollars to your installation, accounting for about 8% of the total cost. You'll usually need a few solar permit documents, which your installer should handle. You'll also have to pay a fee for interconnection, which is the process of connecting your solar energy system to the grid.
There’s some exciting work happening to lower the costs and the interconnection timeline. The Department of Energy’s SolarApp+ aims to make the interconnection process cheaper and quicker for everyone.
Besides the equipment and installer you select, the price you pay heavily depends on other factors related to your electricity use and property. The system size you need to cover your electricity usage, your roof's characteristics, and your location all significantly impact your cost of solar.
It's pretty simple: Bigger solar panel systems produce more electricity and cost more money. But there’s also a Costco-esque relationship between system size and price, where larger systems have a lower average $/W. It’s like buying food in bulk: The overall price is higher, but the per-unit price is lower.
Cost Before Federal Tax Credit
Cost After Federal Tax Credit
It's worth it to get a larger system that covers all your electricity use. You’ll cut your utility bill and save more money as a result. Zero-down, low-interest solar loans are also becoming common. They make it easier to buy a solar panel system that can fully offset your electricity bill so you can start saving immediately.
Roof and home characteristics
The complexity of your solar installation impacts the price you pay. The more direct sun exposure to your roof, the fewer panels you'll need to cover your electricity bill. If you have a south-facing roof that slopes at a 30-degree angle and has full sunlight exposure, installing solar on your home will be relatively easy and cost-effective.
If your roof has multiple planes, dormers, or skylights, solar will require more equipment and labor, driving up your costs. Big trees shading your roof will also set you back $300 to $1,500 to remove them or cut them back.
You probably don't think about your electrical panel too much, but it's another key component of a solar panel installation. Sometimes, you might need to upgrade or rewire your electrical panel to go solar, which can add a few thousand dollars to your bill. As a rule of thumb, your electrical panel should be at least 200 amps to go solar.
Solar installation costs can vary depending on where you live. Some areas require larger system sizes to produce the same amount of energy as those with more daily sunlight. Other areas have higher electricity needs due to extreme temperatures. And, in some areas, you'll have access to better incentives, like state rebates and tax credits that can significantly lower your costs.
If you live in a hot state and require a lot of air conditioning, you'll probably need a lot of solar panels. As we mentioned before, most solar installers charge less per watt for larger systems, so your "unit" price could be quite low.
We generally see this trend on EnergySage, with lower $/W pricing in warmer states and higher $/W pricing in colder states. Arizona has the lowest average cost of solar at $2.44/W, while Indiana has the highest price at $3.66/W. Because you probably need a larger system in sweltering Arizona than cooler Indiana, you may end up paying a similar price overall.
Average cost of solar by state
Cost Of 6 K W System Before Incentives
Cost Of 10 K W System Before Incentives
Tax Credit Value For A 10 K W System
Average Cost Per Watt
Note: These costs are based on EnergySage Marketplace data. EnergySage does not currently provide quotes in all 50 states.
Tax credits, cash rebates, net metering, performance-based incentives (PBIs), and solar renewable energy credits (SRECs) are all ways you can get money back on a solar installation. Your eligibility for these types of incentives depends on where you live. Utilities, cities, and states can all offer solar incentives to people living in their service areas.
States with the best solar incentives
These states offer some of the strongest solar incentives, lowering your upfront costs and/or increasing your long-term savings:
Solar's best incentive: The federal solar tax credit
The federal solar tax credit, or the investment tax credit (ITC) isn't location dependent. With the ITC, you'll get a credit worth 30% of your entire solar panel installation cost applied to your federal tax bill. There's no cap value. You just need to have a high enough tax bill to take advantage of it.
For example, with a 10 kW system that costs $30,100, you'd get a credit worth $9,030. If you don't have a big enough tax bill to take advantage of the full credit, you can roll over the remaining value to the next year.
How you pay for solar impacts your total cost and long-term savings. There are three main ways to pay for home solar:
Purchase it with cash. If you have a large enough tax bill to take advantage of the ITC and can pay for your system upfront, a cash purchase will give you the best long-term savings.
Take out a solar loan. A solar loan is right if you don’t want to shell out the cash required to pay for a system upfront. Some solar loans don't require any money down, allowing you to start saving on day one. You'll own your system, so you'll receive any available incentives.
Sign a solar lease. A solar lease or power purchase agreement (PPA) is a good option if you’d prefer someone else to monitor and maintain your system or if you don't have a tax bill to take advantage of the ITC. Just keep in mind, you won't own the panels on your roof and you'll have the lowest long-term savings with a lease or PPA.
The best way to get the most competitive prices for solar is to compare multiple quotes. EnergySage is the nation’s leading online clean energy Marketplace. When you sign up for a free account, we connect you with solar companies in your area. They compete for your business with custom solar quotes tailored to your needs. About 10 million people come to EnergySage each year to learn about, shop for, and invest in solar. Sign up today to see how much solar can save you.