In 2023, solar panels in the U.S. cost about $20,020 on average down from more than $50,000 10 years ago. In this article, we’ll break down the cost of solar by system size, state, and panel brand, all of which can significantly impact the final number you pay.
What you’ll learn about in this article
- Average cost of solar panels in 2023
- What impacts the cost of solar panels?
- How do you pay for a solar panel installation?
- What rebates and incentives are available?
- How does a solar panel installation work?
- Do solar panels save you money?
Average cost of solar panels in 2023
The average cost of a solar panel installation in 2023 ranges from $16,870 to $23,170 after taking into account the federal solar tax credit, with an average solar installation costing about $20,020. On a cost per watt ($/W) basis, solar panel prices in 2023 average $2.86/W (before incentives). This data comes from our own marketplace data from thousands of users across 37 states and Washington D.C.
Solar installations are a unique product – just based on your state and the manufacturer of your chosen solar panels, average solar panel costs can vary widely. You can calculate your own cost and potential solar savings using the EnergySage Solar Calculator.
A note about pricing: gross vs. net costs
Throughout this article (and all around our website), we usually talk about solar panel pricing in terms of gross cost, aka the cost before any solar rebates and incentives that can reduce the upfront cost of solar, or even get you some money back over time. For example, our cost per Watt ($/W) figures throughout the rest of this article are always the gross cost. This is because solar rebates and incentives aren’t always available to everyone. Even the 30 percent federal solar tax credit isn’t always available for everyone to take full advantage of – you need to have enough tax liability to claim the credit.
How long does it take to break even on solar panels?
On average, it takes 8.7 years to earn back the money you spend upfront on installing solar panels. In fact, it is most helpful to think about solar panels as an investment instead of a single product that you simply buy. Also known as the solar payback period, the point at which you break even on your investment can be calculated by dividing your combined costs (the gross cost of your solar panel system minus any incentives and rebates) by your annual financial benefits (the amount you save on electricity combined with eligible incentives and rebates).
Your payback period depends on a few factors, including your electricity rates and your energy usage. As energy costs continue to increase, you’ll be able to protect yourself by going solar: the faster the cost of electricity increases, the shorter your payback period will be.
What impacts the cost of solar panels?
There’s a lot that goes into the sticker price a solar installer charges you. Solar installations are a unique product: the price you pay is heavily dependent on your unique situation and factors related to your electricity use and property. Here are some of the top factors to keep in mind that can and do influence the cost of solar panels for your property:
- System size: the bigger your solar panel system, the pricier it will be. Importantly, the average per-unit price for solar decreases with increasing system size.
- Location: pricing varies by state as well, which is a result of both local quoting trends and system size differences – states that have a larger average system size will naturally have a lower average cost of solar.
- Panel brand and quality: like any product or appliance, solar panels come in varying quality which can be highly dependent on brand.
- Panel type: the type of panel you install (typically monocrystalline, polycrystalline, or thin-film) directly impacts the overall quality of your installation. Higher quality = higher prices.
- Roof characteristics: the cost of a solar panel installation doesn’t just come from equipment. Your solar installer will also charge for the difficulty of the installation, and having a complex roof might make your system cost more.
- Labor: solar companies all charge different labor rates for their work. You may opt to pay more for a more reputable company with better reviews and a shorter timetable to installation.
- Permitting and interconnection: while it’s not a large factor, paying for permits and your interconnection fee to the grid will add a little to the top of your total solar installation price.
Perhaps the most obvious and influential factor in the price you pay for a solar panel installation is the size of the system you get. It’s pretty simple: a bigger system with more panels will cost more money than a system with fewer panels (and lower energy output). However, there’s also that Costco-esque relationship between system size and price, where a larger system has a lower average $/W. It’s like buying food in bulk – the overall price is higher, but the per unit price is lower.
Remember, while bigger solar power systems may cost more, they’ll also very likely save you more in the long run. If you install a 10 kW solar energy system that covers all of your electricity use, you might have to pay more out of pocket, but you’ll be cutting a significant monthly expense – your utility bill – and saving more money as a result. Zero-down, low-interest solar loans are becoming increasingly common, making it even easier to buy a solar panel system that can fully offset your electricity bill and maximize your solar savings.
Solar installation costs also vary by your location, mostly by state. The spread of prices isn’t that wide and much of the differences by location are actually due to differences in system sizes and incentives, but it’s still something to keep an eye on.
We’ve analyzed quote data from our solar marketplace to understand solar panel system prices by state. Arizona has the lowest average cost per watt overall at $2.33. The highest overall value from the 2023 federal tax credit can be found in Washington D.C. with $8,866. But as we said above, system sizes tend to be larger in states with lower pricing, so it’s not always fair to compare a 10 kW system in Florida to a 10 kW system in Massachusetts. Their energy needs are just too different.
What states are the best for solar?
Every person has their own unique needs and conditions to keep in mind when they choose to go solar. While some states may be better for some people, others may not be as advantageous. Ultimately, as solar deployment continues to grow and expand across the country, we’ll likely see even bigger declines in the cost of solar everywhere. However, there are some states that are currently the best for solar due to strong incentives, including:
Cost of residential solar panels by state
|State||Solar panel cost: 6 kw system average||Solar panel cost: 10 kw system average||2022 federal tax credit value (for 10 kw system)||Average cost per watt ($/W)|
NOTE: These ranges come from EnergySage marketplace data and are system prices BEFORE the 30 percent federal tax credit for solar. Additionally, EnergySage does not currently provide quotes in all 50 states, which limits our ability to provide solar panel cost estimates in each.
In general, states where homeowners need to use air conditioning more often have more average electricity used per household. As such, some of the largest solar panel systems are installed in sunny, warm states like Arizona and Florida. Why does this matter? As we’ve previously explained, for solar installers, the larger your system, the less they will usually charge per kilowatt-hour (kWh). It’s like buying in bulk at Costco – you might pay a higher sticker price, but your per-unit costs are lower when you buy more at one time.
In the end, this very roughly translates to lower $/W pricing in warm states and higher $/W pricing in cold states. But ultimately, total pricing is usually close to a wash – warm states have a lower price per watt, but larger system sizes, and cold states have a higher price per watt, but smaller system sizes.
Panel brand and equipment quality
Another way to break down solar panel price data is by the panel brand.
The price you pay for a solar panel brand is reflective of panel quality to a degree. For example, systems using SunPower panels see the highest average prices ($22,140 for a 6 kW system and $36,900 for a 10 kW system), and SunPower is known for producing well-made, high-efficiency products.
Interestingly, there aren’t that many outliers when it comes to brand pricing, and most manufacturers generally see similar cost ranges. It’s important to keep in mind that when comparing system prices based on panel brands, there are so many factors aside from just panel manufacturer that impact the final system price – like installer experience, location, racking equipment, inverter brand, warranty and more.
In general, monocrystalline solar panels are the highest-performing type of panel, and are often more expensive than polycrystalline solar panels. However, you may need to buy more polycrystalline panels due to their lower efficiencies, so your overall installation costs may not vary as much as you’d expect.
Thin-film solar panels are also an option, but aren’t often used for residential installations. For solar panel setups on RVs and campers, you may want to consider a small thin-film system.
The characteristics of your home and roof also play a part in your total solar costs. If you have a south-facing roof that slopes at a 30-degree angle, installing solar on your home will be relatively easier for your installer, as they can probably install all of your panels on a single roof plane that has optimal sun exposure (better, more direct sun exposure = fewer panels needed, which will lower your costs). Conversely, if your roof has multiple levels, dormers, or skylights, the additional effort to finish the installation may include additional equipment and installation costs.
Another piece of the solar installation puzzle is the company actually performing the job. Solar installers charge varying amounts for their services, and the final price they offer for an installation depends on measures like your installer’s track record, warranty offerings, and internal operations. You can imagine how a well-regarded solar installer with premium warranty offerings can charge more for an installation job, and it will be worth your money.
EnergySage brings the best solar installers right to you on our Marketplace – check out our article on choosing an installer to learn how we vet installers, and how you can and should compare them against one another.
Permitting and interconnection
While equipment and labor costs make up a significant portion of your solar energy system quote, the cost of solar permits and your interconnection fees can also be a factor. Typically, you will have to obtain a few solar permit documents and pay a fee to get your solar energy system connected to the grid (known as “interconnection”). There is some exciting work happening in this area to keep the costs and time lag to getting an approved interconnection – the Department of Energy’s SolarApp+ is trying to make the interconnection process cheaper and quicker for everyone.
How do you pay for a solar panel installation?
Once you know the cost of solar for your unique project, it’s time to decide how you’ll pay for solar. There are three primary financing options for residential solar systems: a cash purchase, a solar loan, or a solar lease/power purchase agreement.
Generally, a cash purchase is right for you if you’re looking to maximize your savings from solar, you have enough tax liability to take advantage of the solar tax credit, or you have the funds available to pay for a solar panel system upfront.
A solar loan is right for you if you don’t want to shell out the amount of cash required to pay for a solar panel system upfront, you still want the most savings on your energy bills as possible, and you would like to be eligible for all incentives and rebates.
A solar lease or PPA is right for you if you would prefer someone else to monitor and maintain the system, if you aren’t eligible for tax incentives, or if you’d just like to reduce and/or lock-in your monthly electricity bill.
Reduce your solar costs with rebates and incentives
We’ve been talking about factors that add on cost to a solar installation, but it’s also equally essential to consider the ways you can save with solar rebates and incentives. Tax credits, cash rebates, performance-based incentives (PBIs), and energy credits are all ways you can get money back on a solar installation. The availability of these types of incentives almost always depend on where you live – utilities, cities, and states all usually offer their own solar incentives to people living in their service areas.
The federal solar tax credit: solar’s best incentive
The best incentive for going solar in the country is the federal solar tax credit, or the investment tax credit (ITC). This incentive allows you to deduct 30 percent of the cost of installing solar panels from your federal taxes, and there’s no cap on its value. For example, a 10 kW system priced at the national average ($2.86/W) comes out to a total cost of $28,600. However, with the ITC, you’d be able to deduct 30 percent of that cost, or $8,580, from your taxes. This essentially reduces the cost of your system to the $20,020 price tag we highlighted at the beginning of this article.
Depending on where you live, you may also be eligible for additional state incentives or local incentives – be sure to ask your installer (or Energy Advisor if you go solar through EnergySage) so you can get the best return on investment.
The cost of solar after installation
It’s not talked about as much, but one thing to keep in mind about the cost of a solar panel installation is the long-term maintenance associated with it. In general, solar panels require little to no maintenance over their lifetime, and you shouldn’t expect to shell out much money at all once your panels are installed and operational. There’s always the off-chance something happens that’s not covered by your warranties, however. You may need to trim trees as they grow, or hire a cleaner if you live in an area of the country with abnormal air pollution. Learn more about what you could run into post-installation in our article about the costs of solar panels after they’re installed.
How does a solar panel installation work?
Installing solar panels doesn’t happen overnight – there’s a process for what needs to happen to get your panels ready to begin powering your home. From the day you sign your contract with your installer, it will typically take between one and three months before your solar panels are grid-connected and producing energy for your home. We’ve outlined the five-step solar panel installation process below:
1. Choosing and order your equipment
The very first step in a solar installation is to choose your solar panels and inverters, and confirm with your installer so they can order it all for you. The two primary components you’ll need to evaluate for your system are solar panels and inverters. Durability, efficiency and aesthetics are the primary factors most homeowners will use to compare the various brands and types of solar panels and inverters (other than price). Learn more in our guide to choosing solar equipment or check out our list of best solar panels.
2. Engineering site visit
After you sign your solar contract, an engineer (likely an employee or sub-contractor of the installer you’re working with) will come by your property to inspect your home and make sure everything is compatible with your new solar photovoltaic system.
During the visit, the engineer will evaluate the condition of your roof to ensure that it’s structurally sound. They will also look at your electrical panel – the grey box in your basement – to see if you’ll need to upgrade it.
3. Permits and documentation
As with any big financial decision, installing solar panels involves a lot of paperwork. Luckily, most of this paperwork is dealt with by the installer. They’ll help you apply for solar incentives and fill out any permits and documents you need to legally go solar.
4. Solar installation: the big day
The actual installation is an exciting day for every solar homeowner who wants to rely on renewable energy as opposed to a utility company. There are several individual steps to the actual installation day, including preparing your roof with racking, setting up wiring, placing panels and inverters, and attaching everything together. The timeline for the installation will range from one to three days, completely dependent on the size of the system you are installing.
5. Approval and interconnection
The final step of going solar is “flipping the switch,” so to speak, and officially commencing to generate power from your rooftop. Before you can connect your solar panels to the electric grid, a representative from your town government will need to inspect the system and give approval.
During this inspection, the representative will essentially be double-checking your installer’s work. He or she will verify that the electrical wiring was done correctly, the mounting was safely and sturdily attached, and the overall install meets standard electrical and roof setback codes. After this step, you’ll be able to generate free, clean energy right at home!
The bottom line: solar panels will save you money in the long run
At the end of the day, the cost of solar is only as important as the return you’ll get from installing solar panels. For most homeowners, solar is a worthwhile investment, and you can “break even” in as few as eight years, depending on the amount of electricity you consume and how much electricity costs in your area. During those eight years, you’ll be generating your own, free electricity instead of paying for electricity from the grid, and any extra electricity you produce you might be able to get credit for thanks to net metering policies (depending on where you live). And of course, this is without even considering the environmental benefits of solar.
Start your solar journey on EnergySage
The best way to get the most competitive prices for solar is to compare multiple quotes. EnergySage is the nation’s online Solar Marketplace: when you sign up for a free account, we connect you with solar companies in your area, who compete for your business with custom solar quotes tailored to fit your needs. Over 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.