There’s no question about it: solar panels are expensive, costing between $10,000 and $30,000 for most homes. There are two main reasons that solar panels cost so much:
The first is the cost of the equipment. Producing it requires advanced manufacturing as well as expensive raw materials, such as high-grade silicon for the solar panels and lithium for solar batteries.
The second is due to soft costs, which includes a professional solar installation that is safe, compliant with local codes and manufacturer warranties, and can pass the necessary inspections.
That, of course, is the short answer. The full story is that there are actually several factors that contribute to the cost of solar panels. Our analysis of solar panel cost data shows that prices vary greatly depending on choice of brand, the system size, location, roof type, and other factors.
But how have these costs changed over time? What can homeowners do to get the best deal on their new installation? Are solar panels worth it at their current cost? This blog will answer all these questions.
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How expensive are solar panels?
Solar panel installations generally cost between $2.00 and $3.00 per watt before incentives. A typical 6 kilowatt (kW) home installation would therefore cost $12,000–$18,000.
However, if you live in a large home and/or consume a lot of electricity, something like a 10 kW solar system might make more sense. A 10 kW system will set you back $20,000–$30,000.
You can see detailed data on solar panel costs — by state, system size and brand — on our solar panel cost page.
You may have been taken aback when you first saw the price of solar panels. This shock is compounded when you hear that residential systems are much cheaper in some other countries.
But solar panels are a lot cheaper now than they were even just a few years back, and in many states they now offer an excellent return on investment.
Solar panels cost much less than they used to
According to the Solar Energy Industries Association (SEIA), the median installed price for solar energy systems fell 70% in the last decade (2010-2020).
If we shorten the time frame and look at just the last 5 years, we see that solar panel costs dropped 37%.
So a typical 6 kW residential solar panel system that costs an average of $15,840 in 2020 would have cost $25,143 in 2015, and a whopping $52,800 in 2010.
|System size||Year||Average cost|
Our own analysis of solar panel costs, based on thousands of quotes received by consumers, finds:
- The decrease in price has significantly changed residential solar‘s cost-benefit equation
- In most states the solar payback period is now between 4-9 years
- Our forecasts also show that further price drops are unlikely due to the stepdown of the federal solar tax credit, which has already dropped to 26% in 2020 (from 30% previously) and will fall again in 2021 before expiring completely in 2022
What makes up the cost of a solar system?
There are several components in residential solar installations that affect the final price.
The cost can be grouped into two categories, hardware costs and ‘soft costs.’ According to our data:
- Hardware accounts for 46% of average solar panel costs. This covers solar panels, solar inverter(s), and balance of system (racking and mounting, wiring, etc)
- Soft costs account for 54% of average solar panel costs. This includes installation and labor, sales and marketing expenses, permitting and inspection fees, and installer margins.
The share of soft costs in the total cost of solar panels is another fact that often surprises consumers. However, the number makes sense when one considers the nature of solar panel companies and the installation jobs they perform.
Each home is different and requires a customized design and installation. Solar companies require staff with the proper skills and qualifications. And like other companies, they have to factor in profits, overhead expenses, and marketing costs.
Here is a more detailed breakdown of solar panel installation costs, based on the nationwide average solar panel installation cost of $2.64 per watt.
|Expense||% of total cost||Cost for a 6kW system*|
|Tier 1 solar panels||26%||$4,118.40|
|Racking and balance of system||10%||$1,584.00|
|Installation and labor||24%||$3,801.60|
|Sales and marketing||15%||$2,376.00|
|Installer margin (profit and non-sales overheads)||10%||$1,584.00|
|Permitting and inspections||5%||$792.00|
*Cost before incentives
How can you lower the cost of your solar power installation?
Even with soft costs and extra tariffs, consumers can find ways to reduce the final bill of their residential solar power system.
- Use the federal tax credit: Take advantage of the federal investment tax credit for new installations to receive up to 26% of your investment back. This incentive is available to anyone who pays taxes.
- Search for state and utility incentives: There are many incentives available at the state, utility and local level, some of which are worth thousands of dollars.
Learn more about incentives and rebates on our solar incentives page.
Does the installation company affect the price?
Solar power companies often offer incentives to lure interested customers. These deals can have a positive impact on the final price of residential solar power systems.
Check with several installation companies to ensure you get the best price available. Keep in mind that lower prices do not always mean a better deal. Take time to read reviews and get an idea of the company’s quality of work before committing to work with them.
The easiest way to shop around is to use the SolarReviews solar panel calculator.
How much does it cost to maintain a residential solar system?
As components wear out, get damaged, or become obsolete, regular inspections and maintenance are key to protecting power sources.
While the solar company will cover any warranty claims, all other upkeep is the sole responsibility of the homeowner.
An annual inspection by a local solar installation company costs roughly $150. A professional cleaning to free panels of dirt and debris averages $10 to $20 per panel. Repairs and equipment replacement costs vary.
Using these estimates, a home with 10 rooftop solar panels would spend $250 to $250 each year to keep their system running smoothly. A family with 30 solar panels would need between $450 and $750 for regular maintenance fees.
Frugal energy users can try cleaning their own panels to reduce their costs. However, periodic professional cleanings are still recommended to maintain optimal system performance.
How much will I save with solar energy?
The savings from solar panels come in the form of dramatically lower electric bills. The average savings from a typical 6kW solar panel installation in the United States is about $1,500 annually.
Another way to look at savings is by calculating your solar payback period. The payback period is the length of time it takes you to recoup your initial investment costs. After that time, every watt of energy you make is profit. In most states, the payback period for solar panels is currently 4-9 years.
Learn more about solar panel savings and solar payback period.
However, it’s crucial to note that there are huge differences in annual savings from state to state, and even from house to house. How much a household can actually save depends on many factors:
- The size, direction and pitch of the roof
- The number of panels and their rated energy production
- Hours of sunlight received on the property each day
- Whether or not battery storage is installed
- The cost of electricity in that particular area
Use the solar panel calculator below to understand how soon your new residential solar system will start paying you back.
Is going solar worth it despite the high cost?
Yes, solar panels are expensive. With a typical 6 kW system costing an average of $15,840, they are a home improvement that requires a significant financial investment.
But in addition to offering energy independence and environmentally-friendly renewable energy, solar panels also have the potential to save you thousands of dollars over the life of the panels.
Furthermore, the high upfront costs needn’t be an obstacle: most solar companies work with loan providers to offer many financing options.
If you haven’t already, start by getting an solar cost and savings estimate to see if the math is in your favor.
- System costs dropped dramatically (70%) over the last decade, but further price drops over the next few years are unlikely.
- Solar panel maintenance can cost you several hundred dollars per year, but it’s possible to save on this by cleaning the panels yourself.
- Typical energy savings are about $1,500 per month, while solar payback periods are generally between 4-9 years.
- Because many factors can affect solar panel cost and savings, use a solar panel calculator to see if solar panels are a good idea for your home.