How Much Do Solar Panels Cost?


Solar panels on a house
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We’ve all heard that solar panels can help reduce your electricity bills. But how much do they actually cost? Read our guide to learn everything you need to know about how much solar panels cost.

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 a residential system is currently $3-$5 per watt, and an average five kH 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 and whether solar panels could be worth it for you. For an estimate on how much solar panels will cost for your home, fill out this easy online form.

Factors That Determine Cost

There are several key factors that determine the 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 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

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.

Labor costs

The cost of labor differs from place to place, which can have a big impact on the overall cost. Different solar installers will charge varying amounts for their labor.

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. You can look to the amount you are currently spending per month on electricity and compare that to what it would be with solar panels to give you a sense of savings.

Solar panels are also cheaper than ever before. NPR states that the cost of solar has been dropping steadily, and according to the Solar Energy Industries Association, the cost to install solar has dropped more than 70% in the past decade.

Billing

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 than you pull from it, your utility can roll over as a credit for the next month.

Cost of Solar Panels By State

There is a wide range in price of solar panels, both in the starting cost for a 6-kilowatt system and cents per kilowatt-hour across the country. Prices 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 cost is 10.53 cents per kilowatt-hour.

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

**Data from EnergySage

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 several 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.

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 this quote tool.

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 and financing options. More expensive equipment doesn’t always translate to higher ultimate savings.

Frequently Asked Questions

Can solar panels really save you money?

Solar panels can slash your electricity bill due to their efficiency and federal tax incentives, as well as increase your property value.

How many solar panels are needed to power a house?

The amount of solar panels needed is highly variable and depends on the amount of daily sunlight your home receives, the types of appliances you have (electric vs. gas), the size of your roof, and more.

Do solar panels work at night?

No, solar panels do not generate power in the dark. However, solar panels can continue to provide power due to net metering—surplus power is transferred to the public utility power grid to offset the costs.

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