Homeowners with high electricity bills can potentially save tens of thousands of dollars by going solar, but you should be prepared for a high up-front cost of $15,000–$20,000. However, most homeowners can break even within six to 10 years, depending on their home’s size, electricity costs, and payment choice. Learn about these and other important cost factors before contacting nearby solar companies.



Average Cost of Solar Panels

According to the Center for Sustainable Energy, the average cost for solar panels is $15,000–$20,000 for a typical 5 kilowatt (kW) system. Most solar installers start the price according to the system’s wattage, with the average price being $3–$5 per watt. 

However, you can save more than 30% on this hefty price tag due to various tax rebates, like the federal solar tax credit. This tax incentive means you could receive a solar panel system for as low as $10,500.



Solar Panel Cost by State

Solar panel costs vary from state to state, partly due to the area’s average electricity bill. For example, Hawaii has the highest costs, while Louisiana has the lowest. The national average is 10.53 cents per kilowatt-hour (kWh). Keep reading for a breakdown of solar panel costs in each state.

Cost of Solar Panels by State

Use our tool below to see what a standard-sized solar panel system costs in your state.

StateCents Per Kilowatt-hour*Solar Panel Starting Cost for 6 kW System**2022 Tax Incentives at 30%**
New Hampshire17.01$17,460$5,238
New Jersey13.21$14,520$4,356
New Mexico9.35$16,680$5,004
New York14.83$15,900$4,770
North Carolina9.25$14,040$4,212
North Dakota8.91$13,555$4,067
Rhode Island18.1$16,200$4,860
South Carolina9.66$16,500$4,950
South Dakota9.97$13,353$4,006
West Virginia8.72$14,673$4,402

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


Find A Solar Installation Company in Your State

Solar Incentives by State

Certain tax incentives help lower solar panel installation costs. Federal and state governments, utility companies, and certain municipalities offer these incentives. Some common types include tax credits, cash rebates, Solar Renewable Energy Credits (SRECs), and property tax exemptions. These incentives vary by state in terms of availability and payout.

Learn more about the solar incentives and rebates each state offers with these guides: 

Solar Companies by State

If you want to know what top-rated solar installers are available in your state, read one of our guides:



What Factors Impact Solar Costs?

Several key factors determine the total cost of solar panels—namely, your home’s electrical demand and panel choice. Learn about other high-impact cost factors below.

High-Impact Solar Cost Factors

Here are some cost factors that influence your solar panels’ price: 

  • Household electrical demand: This is the amount of electricity your household uses each month. Homes with predominantly gas appliances will use less energy than primarily electric ones.
  • Purchasing options: Customers can pay with one lump sum, take out a loan, lease, or enter a Power Purchase Agreement (PPA). Each option affects how much you’ll pay in the long run.
  • System size: The most influential factor in your solar system installation cost is the system size. The bigger the system, the higher the price tag. However, buying a solar system is similar to buying other products in bulk. A higher-wattage system has a lower average cost per watt. Thus, when you purchase a larger system, the overall cost is higher but you have a lower cost per unit.

Medium-Impact Solar Cost Factors

Below are some of the medium-impact cost factors:

  • Amount of sunlight: The more sun your home receives daily, the more significant your potential savings.
  • Labor: Labor costs vary by location and are more expensive in areas with higher costs of living. Different solar providers also charge different prices. Labor will be included in your initial quote.
  • Panel quality: The equipment you choose greatly impacts your electricity production. You’ll want to find the most efficient solar panels that fit your budget. More expensive equipment doesn’t always mean higher savings, while the cheapest option can sacrifice value. Find the right balance between quality and price.
  • Panel size: A larger solar system costs more because it requires more labor and more equipment. However, it can yield greater savings.
  • Tax incentives: Federal and state solar incentives can reduce installation costs.

Low-Impact Solar Cost Factors

Here are some other cost factors that pose a minimal impact on solar’s overall price: 

  • Location: Solar panels cost more in some states than others, largely due to regional electricity costs. Peak sunlight hours are also a factor.
  • Permitting and interconnection: Required permits and local interconnection fees to the power grid will add a slight extra cost to your solar panel installation total.

Types of Solar Panels

Panel quality and size are some of the cost factors listed above, but the actual type of solar panels plays an important role in the total solar power system cost. For example, monocrystalline panels are more efficient but more expensive than polycrystalline panels. More efficient panels are typically needed for homes with limited roof space. 

Read over each type of solar panel in detail below: 

  • Monocrystalline solar panels: These panels, also called mono-panels, use the highest-grade silicon to yield some of the highest outputs, with over 20% efficiency. Therefore, they require the least amount of roof space. Monocrystalline panels last for more than 25 years on average, and they feature an average cost per watt between 32 cents and $1.50. 
  • Polycrystalline solar panels: Though polycrystalline panels yield a lower average output than monocrystalline panels (around 15–17%) they can act as a cost-effective solution if you have enough roof space. However, the panels have a blue hue and don’t hold up well under high temperatures. Therefore, we do not recommend them for homes in hotter year-round climates. These panels run between 70 cents and $1 per watt. 
  • Thin-film panels: Thin-film panels can be a good option for smaller solar projects, such as converting a boat, recreational vehicles (RV), and smaller buildings, such as a shed. They only yield an average efficiency rate of 6%–15%, and they’re less durable than monocrystalline and polycrystalline panels. However, they make a cheap solar panel solution for smaller projects with an average cost per watt of 43 cents to 70 cents.



How Do I Pay For Solar Panels?

Solar panel installation requires a significant financial commitment, so companies offer different payment options to suit different budgets. Here’s an overview of the typical financial options offered by solar providers:

  • Full payment: You pay for the solar system outright without a loan or payment plan. This option will save you the most money because you won’t pay interest rates. Full payment also grants you system ownership, qualifying you for incentives. In addition, when you opt for full payment, your payback period occurs at a later date but you receive a higher value right away. 
  • Solar loan: A loan allows you to make small payments over a longer payback period. However, you’ll pay more in the long run due to interest rates. Solar loans also qualify you for solar incentives. Your payback period is slightly different when you choose to finance your solar panels. Your “break-even” point may be different than the amount of time it takes to pay off your solar loans. This will happen if you decide to spend your electricity savings on other investments, rather than putting it toward your solar balance. 
  • Solar lease: This option allows you to make fixed monthly payments with little to no up-front cost. Your solar company retains ownership of your system and is responsible for its upkeep. These agreements usually last around 20 years. Leasing customers don’t qualify for solar incentives.
  • Power purchasing agreement (PPA): With a PPA, you only pay for the energy you use. Like an electric bill, the rate fluctuates each month. Your solar company retains system ownership and is responsible for its upkeep. You will not qualify for incentives.

Overall, we recommend full payment if you have the upfront capital to afford it. This is the most cost-effective option and yields the quickest return on investment. However, a solar loan is an excellent second option if you don’t have the cash required to pay for a solar panel system upfront. A solar loan still lets you experience maximum energy bill savings and solar incentive eligibility.



How To Save Money Going Solar

We surveyed 1,000 homeowners that received solar quotes and found 52% of respondents didn’t install solar panels because it was too expensive. Tax credits, rebates, and solar renewable energy credits (SRECs) are all ways you can get money back on a solar installation, therefore saving you money. 

Depending on your service area, different utility, state, and city legislation will offer solar incentives.

Here is a breakdown of ways to save money going solar. These are available to most United States homeowners:

  • Federal solar tax credit: The country’s best incentive for going solar is the Solar Investment Tax Credit (ITC), also called the federal solar tax credit. This incentive lets you apply 30% of your total solar installation cost to your federal taxes. There’s no cap on its value, meaning a 10 kW system priced at the national average of $28,600 can provide $8,580 to your taxes. This reduces your system cost to a $20,020 price tag.
  • Solar renewable energy credits (SRECs): Some states have passed legislation called renewable portfolio standards (RPS). These laws require utilities or other energy suppliers to source a certain percentage of generated electricity or sell from renewable sources. Therefore, when you opt for a grid-tied solar panel system, you send excess electricity into the power grid, and your utility provider tracks the amount you send back out. You’ll receive one credit for every 1,000 kWh of solar electricity your system generates. You can apply this credit to reduce your electricity bill or even make a profit, depending on how much energy your panels generate.



Are Solar Panels Worth It?

Solar is a balancing act between a hefty upfront cost and potential savings. However, solar panels are worth it in many ways besides reducing your electricity bills and receiving tax incentives. Also, solar panels pay for themselves over time. The average payback period for a solar PV system is six to 10 years. If you have access to SRECs and net-metering, you not only break even during this timeframe but also generate additional savings and income.

Below are ways that going solar can be worth it for you:

  • Homes with plenty of sun exposure: An ideal house that maximizes the potential of solar energy should be obstruction-free, so no tall trees or surrounding buildings. In addition, the roof should be south-facing and have a steep slope that can hold a solar panel at a 15- to 40-degree angle. Homes that receive little light or have limited roof space will not benefit from a system, making it a less valuable investment for those homeowners. 
  • Increased home value: Going solar increases your home’s value. The Department of Energy (DOE) states that homes with solar panel systems sold quicker throughout the country. Buyers will pay over $15,000 more for homes with preinstalled solar arrays. Selling a solar-powered home could result in a profitable ROI.
  • Lower utility bills: Using solar power in your home reduces the need for costly fossil fuels and taps into a less expensive resource. Homes that use more electric-powered appliances would benefit from a solar conversion.
  • Net-metering: Excess energy from your solar panel installation can be stored in a solar battery or returned to the power grid. You can accumulate enough credits through net-metering programs and SRECs to receive a monetary return.
  • Unlimited sustainable energy: Solar energy provides a renewable energy solution that helps protect the environment. Harnessing solar energy’s power provides homeowners unlimited access to clean energy. Without relying on expensive fossil fuels, homeowners can take full advantage of a natural energy source with lower energy costs. As a result, customers will reduce their carbon footprint, helping to reduce harmful emissions that contribute to climate change.
  • Solar tax breaks: As previously stated, there are plenty of solar incentives provided by local and state governments. We encourage you to ask your chosen solar installers to see what tax breaks they can help you obtain. In addition, the federal government offers the investment tax credit (ITC) for homeowners who install new solar panel systems. As stated earlier, this federal tax reduction is equal to 30% of your solar installation costs for systems installed until 2032. After that, the credit rate will reduce to 26% in 2033 and drop to 22% in 2034. It’s set to expire in 2035.



What Are the Hidden Costs and Disadvantages of Solar?

As with any other home improvement project, there are some hidden costs and downsides to solar energy that are not often discussed. Solar’s highest hidden cost is including a solar battery with your system, which runs from $8,500–$10,000. Though you can opt out of installing a solar battery, most homeowners choose to include one due to the overwhelming benefits and additional performance, 

Read over some of these hidden fees and disadvantages here:

  • Insurance: You can expect your home insurance to increase with a solar panel system purchase. Your state might require you to get solar panel-specific insurance in addition to your current insurance coverage. Therefore, we advise you to search for a reputable home insurance provider that helps with solar power system coverage before purchasing panels. 
  • Maintenance: Be aware that your solar panels will require ongoing maintenance to keep them in working order. One of the most important considerations before going solar is how much time and money you can devote to keeping your panels up and running. In addition to panel cleaning, you’ll need a professional to inspect wires and connections to ensure they’re in working condition. Because solar panels can last decades, you’ll experience ongoing maintenance costs for the long term. 
  • Panel cleaning: As part of your routine solar panel maintenance, you’ll need panel cleaning. This process is also best handled by a pro, given it requires roof access and ladders to remove fallen debris and leaves. 
  • Repairs: Solar panels are durable but can’t survive every condition. Hail or other inclement weather, such as hurricanes, might damage parts of the solar power system. You’ll have to pay for repair or replacement depending on what damage occurs to your system. 
  • Roof work: Solar panel installation sometimes requires extra roof work to be completed before the project can even start. Depending on your roof’s condition, this can be the highest or second-highest hidden cost. If your roof is roughly five to 10 years away from needing replacement, you may need to install an entirely new roof. Alternatively, a solar installer might suggest simply fortifying your roof’s eaves. Either way, we advise you to contact a local roofing company for an in-depth roof replacement inspection. 
  • Utility company charges: You’ll still receive a utility bill after going solar. Though that bill should be around $80 less than before, you’ll likely see some solar-specific charges from utility companies. Namely, you’ll notice a charge when your solar panels take electricity from the power grid instead of adding to it.
  • Solar battery: Most homeowners opt to purchase a solar battery with their systems. This device stores excess energy and lets you use this energy to power your home at night, during blackouts, or when utility rates are high.
  • System monitoring: If you opt to use a solar company’s active monitoring, there’s sometimes a monthly $10–$15 fee included.



How Solar Panel Installation Works

Solar installation is a straightforward process. Your solar company will handle most, if not all, steps. 

  1. A representative will begin by holding a consultation to assess your energy needs and home design.
  2. Your installer will design a system tailored to your home’s specifications and handle the required permits from your local municipality. This process can take anywhere between one to six months. 
  3. You’ll schedule an installation date once all the proper design and paperwork are sorted out. 
  4. Installation occurs over the course of one to two days. Your system will be ready to use later. 
  5. Finally, your solar company will help conduct final inspections. This process can take up to 60 days as the company must schedule a town government representative to inspect the system and approve its activation. During this inspection, the representative will double-check your installer’s work and ensure the installation meets standard electrical and roof setback codes.
  6. Once the representative gives approval, you can start generating free, renewable energy. 

Matt Johnson, co-owner of Namaste Solar, says that a reputable installer should supply an itemized cost list for each aspect of the installation, such as labor, permit fees, sales taxes, utility fees, and the interconnection fee. The installer should also include available tax incentives.

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



Our Conclusion

It’s important to do your research on the best solar providers and equipment before investing in solar panels. You should also maximize any federal and state incentives whenever possible. Our survey revealed that 94.6% of homeowners said installing solar panels was worth it, and most respondents said the transition reduced their energy bills.

We recommend getting as many quotes as possible to get the best rate and avoid inflated prices. Weigh the equipment’s cost, financing options, and warranties. Use our tool below to begin searching for your area’s solar providers.

Frequently Asked Questions



Our Rating Methodology

The This Old House Reviews Team is committed to providing comprehensive and unbiased reviews to our readers. This means earning your trust through transparent reviews and data to back up our ratings and recommendations. Our rating system for solar providers is on a 100-point system based on five factors:

  • Payment options (40 points): Options include purchase, loan, lease, and Power Purchase Agreements (PPAs). Companies receive points for each of the four options they provide.
  • Solar services (30 points): Does the company provide in-house installation of solar panels and battery backups? Can the company also monitor energy production and perform energy-efficiency audits to ensure system performance? The more options available, the higher the score. 
  • Warranty options (10 points): The success of a residential solar system depends on the workmanship, performance guarantees, and length of product coverage. The more warranties a company offers, the higher the score it receives. 
  • State availability (10 points): We award the most points to companies with the broadest service area and state availability.
  • Reputation (10 points): We factor in how the Business Better Bureau (BBB) scores each company. We deduct points for any alerts or pending lawsuits.

To share feedback or ask a question about this article, send a note to our Reviews team at reviews@thisoldhousereviews.com.