Solar panels can cut down on your utility bills, especially if you qualify for tax breaks and live in an area where they’re fairly cheap. If you have a high electricity bill, you could potentially save tens of thousands of dollars over the lifespan of your solar panels. But before you invest in solar panels, it’s a good idea to know just how much they will cost—for installation, monthly bills, and more.

According to the Center for Sustainable Energy, the average cost for solar panels is currently around $3–$5 per watt, and an average 5-kW residential system costs $15,000–$25,000, before incentives and tax credits.

Read our comprehensive guide on how much solar panels cost if you want to learn about the metrics that go into calculating cost before reaching out to solar companies near you.


How Much Solar Panels Cost

There is a wide range in price of solar panels, both in the starting cost for a 6-kilowatt solar energy system and cents per kilowatt-hour across the country. Prices and installation costs can vary greatly from state to state, due in part to the average electricity bill in the area.

Hawaii has the highest costs, while Louisiana has the lowest costs. The national average price is 10.53 cents per kilowatt-hour. Keep reading for a breakdown of solar panel costs in each state.

Cost of Solar Panels by State

StateCents Per Kilowatt-hour*Solar Panel Starting Cost for 6-kW System**2021 Tax Incentives at 22%**
Alabama9.63$13,706$3,015
Alaska19.36$13,454$2,960
Arizona10.85$13,680$3,010
Arkansas7.78$14,713$3,237
California16.58$15,240$3,353
Colorado10.02$17,100$3,762
Connecticut18.41$15,540$3,419
Delaware10.55$15,300$3,366
Florida10.31$13,920$3,062
Georgia9.62$15,840$3,485
Hawaii29.18$19,560$4,303
Idaho8.17$17,100$3,762
Illinois9.6$16,470$3,683
Indiana9.75$15,300$3,366
Iowa8.92$14,160$3,115
Kansas10.72$13,353$2,882
Kentucky8.52$13,101$2,882
Louisiana7.71$15,660$3,445
Maine13.44$16,073$3,536
Maryland11.57$15,540$3,419
Massachusetts18.5$16,440$3,617
Michigan11.4$16,020$3,524
Minnesota10.37$17,280$3,802
Mississippi9.24$14,763$3,248
Missouri9.93$14,461$3,181
Montana8.84$16,560$3,643
Nebraska9.02$15,820$3,480
Nevada8.67$14,760$3,247
New Hampshire17.01$17,460$3,841
New Jersey13.21$14,520$3,194
New Mexico9.35$16,680$3,670
New York14.83$15,900$3,498
North Carolina9.25$14,040$3,089
North Dakota8.91$13,555$2,982
Ohio9.94$14,400$3,168
Oklahoma8.09$14,667$3,227
Oregon8.85$15,060$3,313
Pennsylvania10.1$15,420$3,392
Rhode Island18.1$16,200$3,564
South Carolina9.66$16,500$3,630
South Dakota9.97$13,353$2,978
Tennessee9.58$13,909$3,060
Texas8.48$14,820$3,260
Utah8.21$15,420$3,392
Vermont15.13$16,620$3,656
Virginia9.48$15,780$3,472
Washington8$14,040$3,089
West Virginia8.72$14,673$3,248
Wisconsin10.58$17,580$3,868
Wyoming8.09$14,360$3,159

*Data from U.S. Energy Information Administration’s 2019 “Average Monthly Bill- Residential”
**Data from EnergySage


How Solar Panel Installation Works

Solar installation is a straightforward process. Your solar company handles almost every part of the process for you. First, the solar provider holds a consultation with you about your energy needs and home’s design.

Then, it designs a solar power system based on your home’s specifications and handles all required permits from your local municipality. Finally, the company schedules an installation day with you and conducts final inspections. Overall, this process may take 60 days to complete.

Watch our video below to get a better understanding of what the solar installation process entails:


Factors That Determine Solar Panel Costs

There are several key factors that determine the total cost of solar panels: household electrical demand or energy usage, location, type of panel, size, labor costs, incentives, and how you purchase them.

  • Household electrical demand. This is the amount of electricity the household uses every month. Homes with predominantly gas appliances will use less than those that use primarily electric appliances.
  • Location. Solar panels cost more in some states than others, largely due to the cost of electricity in the region. Peak sunlight hours are another metric that factors in.
  • Type of solar panel. Monocrystalline panels tend to be more efficient but cost more than polycrystalline panels in general. More efficient panels are typically needed for homes with limited roof space.
  • Size of the panel. A larger solar system size will cost more because it will require more labor and more equipment. Bigger solar power systems cost more upfront but can result in greater savings.
  • Amount of sunlight. The greater amount of daily sun your home receives, the greater the amount of potential savings.
  • Solar panel installation cost. The labor cost of your installation differs from place to place, which can have a big impact on the overall cost. Different solar providers and installers will charge varying amounts for their labor. When reaching out to a top solar company for a quote, you’ll be provided with more details on installation costs.
  • Tax incentives. The federal solar tax credit is known as ITC. The federal tax credit value for 2021 is set at 22%, compared to 26% for 2020.
  • Purchasing options. Customers can often choose between paying upfront or using solar leases or loans.

Solar Panel Savings

Solar panels will save you money on your electricity bills, but the amount they save you will depend on factors like the size and angle of your roof, the number of direct hours of daily sunlight, and local electricity rates. Homeowners can look to the amount they currently spend per month on electricity and compare that to what it would be with solar panels to get a sense of savings.

Solar panels are also cheaper than ever before. In fact, according to the Solar Energy Industries Association, the cost to install solar panels has dropped more than 70% in the past decade.

You will likely still receive an electricity bill, but you won’t owe any money. Instead, the bill will show you how your usage was offset by the month’s net credits. If you provide more electricity to the grid that you pull from it, your utility can roll over as a credit for the next month.


How Many Solar Panels Do I Need?

The number of solar panels you need will depend on a variety of factors, including the size of your home, the amount of daily sunlight it receives, and more. Ultimately, the energy needs will dictate how many panels you require. You’ll need your solar panels to generate 100% of your home’s electricity needs to completely get rid of your electricity bill.

The typical solar panel produces roughly one kilowatt-hour per day. You can find out your kWh usage on your utility bill. It will be listed monthly, so divide it by 30 to get your daily use. If you use 50 kWh, you would need 50 solar panels. But there are other features outside your home that might require energy, like powering a guest home or heating a pool. That will increase the number of solar panels you need.


How to Get the Best Deal

We’ve rounded up some bottom-line tips to ensure that you get the best deal possible on your solar panels. It’s important to do your research before you commit. The cheapest option doesn’t always have the best value.

Consider equipment. The equipment you choose will have a big impact on your electricity production. Sometimes smaller scale installers have a greater variety of equipment than national manufacturers. Weigh the cost of the equipment, financing options, and warranties. More expensive equipment doesn’t always translate to higher ultimate savings.

Compare quotes. Always look into your options before making your decision. The U.S. Department of Energy’s National Renewable Energy Laboratory recommends that customers compare as many quotes as possible to get the best rate and avoid inflated prices. Many solar calculator quote tools are available for free online, including the quote tool below that connects you to installers in your area:


Frequently Asked Questions

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