Solar panels are a considerable investment—not just for the sake of your community and planet, but for your home’s value. Various factors influence how much a solar system costs, including the panels you choose, your home’s energy needs, and applicable state and federal tax incentives.
We have conducted in-depth research on the best solar companies in the United States and the industry overall. This guide breaks down the significant factors that influence what solar panels cost, as well as the national average for a solar energy system.
Solar Panel Cost Breakdown
The Solar Energy Industries Association (SEIA) estimates that the national average cost for a typical 6-kilowatt (kW, or 6,000 watts) residential rooftop solar system is roughly $18,000 before any federal tax credits or local incentives.* Overall, you should expect to pay anywhere between $10,000 and $24,000, depending on your system size and location.
The total cost of a solar system includes solar panel prices, which vary in price by brand and type, installation labor, and additional equipment. A solar installation company will charge a combination of labor costs and a price per watt for each solar panel.
*Based on a May 2019 report
Type of Solar Panels
The type of solar panel you order will influence your total price. Below is a breakdown of the three most popular types of solar panels and their average price.
- Monocrystalline: The most popular solar panel on the market today, monocrystalline panels offer the highest efficiency rate, at an average of 24%. However, they are also the most costly. The average cost for monocrystalline solar panels is $1 to $1.50 per watt. Therefore, a standard 6kW system costs between $6,000 and $9,000.
- Polycrystalline: Polycrystalline panels are a more cost-effective option up front. However, they feature a lower efficiency rate than mono panels, at an average of 20%. The average cost for polycrystalline solar panels is $0.90 to $1 per watt, or $5,400 to $6,000 total.
- Thin-film: Thin-film solar panels are less popular for residential solar systems. They tend to cost around $1 to $1.50 per watt.
Solar Panel Installation Cost
Installation costs range between 100% and 200% of the cost of the solar panel system itself. So, for example, if you purchase a 6kW monocrystalline solar panel system for $9,000, then a solar installation company will likely charge approximately $18,000 to $27,000 for the system and the installation, combined. The installation of a larger system will naturally increase labor costs.
Additional Equipment
Residential solar systems also typically require a battery to store energy and an inverter, which converts the variable direct current (DC) output of your PV solar panels into alternating current (AC). Most solar companies will include these components in your solar system’s design. However, if you request specific brands of inverters or batteries, they may come at a premium.
Other Solar Panel Costs to Consider
In addition to the cost per watt for each solar panel, other factors influence the overall cost of a solar power system. We have listed some of the most critical factors for you below.
Energy Needs
Take note of your current cost of electricity, as switching to solar may or may not save you money on your energy costs. The larger your home and higher your monthly electric bill, the more benefits you are likely to see from switching to solar. A solar system can eliminate a homeowner’s electricity bill in some instances.
On the other hand, if you already have relatively low utility bills, you may not see enough savings to justify the expense of installing a home solar system.
Location
The location of your home plays a vital role in how much money solar panels can save you. Using data from the Centers for Disease Control and Prevention (CDC), the data analysis site Stacker determined that the following 10 states are the sunniest in the continental United States:
- Arizona
- California
- Colorado
- Florida
- Kansas
- Nevada
- New Mexico
- Oklahoma
- Texas
- Utah
Roof Type
You can use a solar panel system even if you don’t live in these blue-sky states. Most solar panel installers use photovoltaic (PV) panels, which can absorb both direct and indirect sunlight. However, these solar panels generate the most energy on angled roofs that allow maximum sun exposure. On the other hand, a flat roof will require the construction of angled platforms, which will add to your labor costs and increase the overall cost of your solar system installation.
Additionally, south-, west- or southwest-facing roofs get more sun exposure. For example, a home that experiences less shade and has a south-facing roof with a slope between 15 and 40 degrees will receive the most sunlight. Therefore, these homes receive and retain more solar energy. On the other hand, a home with trees around it or in a less sunny region, like the Pacific Northwest, may not save as much money as a homeowner in Arizona or California.
Your roof’s age and structural soundness will also influence the overall cost of solar panel installation. Repairing your roof or upgrading your roofing material to support panels will come at an additional expense ahead of installation and affect your total cost.
Solar Incentives
Both state and federal governments provide solar incentives to help offset the up-front costs of switching to solar. Namely, the federal solar tax credit, or solar investment tax credit (ITC), plays a significant role in helping to make residential solar panels a better investment. This tax credit provides 26% off your total price of solar panel installation.
Local incentives vary by state. For example, some states allow you to earn and sell credits for the electricity your solar system produces through a net metering program. Others offer solar rebates. We recommend using the Database of State Incentives for Renewables & Efficiency to see what rebates and state tax credits you can receive.
Payment Options
Solar providers offer various payment methods that influence how cost-effective your investment in solar is. Here are the four payment options you can choose from with most solar companies:
- Purchase: Paying for your solar system up-front is the most cost-effective payment method for a solar system. Not only will you avoid paying interest over time, but you will also be eligible to file for the federal tax credit at your next income-tax filing.
- Solar Loan: Solar companies understand that not every homeowner is willing or able to pay for their system up-front, so they partner with a lending company to provide loan options. As with all bank loans, your interest rate will depend on your credit score.
- Solar Lease: Some homeowners may elect to lease their solar panel systems. With this arrangement, the solar company still owns the system, and you pay a set monthly amount for the installed solar panels. This option is not as cost-effective over time as purchasing or financing your system, as you are not eligible to receive state or federal incentives. However, you avoid paying hefty up-front sums.
- Power Purchase Agreement (PPA): A solar PPA lets you pay little to nothing for the actual installation of the PV system. Instead, you pay monthly payments to a utility company based on the energy generated by the system. Think of this as if you are paying for your usual electricity bill. As with a lease, you don’t own the system and are thus ineligible for tax incentives.
Our Recommendation
Residential solar panels help you cut both your electricity costs and carbon emissions. To ensure switching to solar is a sound investment for you, pay attention to your current utility rates. If you notice that your utility bill tends to be on the mid to upper end of your state’s average, you are nearly guaranteed to save money with solar in the long run. In addition, if you can purchase or finance your solar system, you are making a more cost-effective decision than if you lease or sign a PPA.
We suggest using the tool below to see which solar installation companies service your zip code and get a sense of what a solar provider near you charges for installation.