Solar Panel Cost

With the cost of solar panels declining, utility rates rising, and the 30% solar tax credit likely ending after 2025, home solar now offers more cost-saving potential than ever before.

So, what’s standing in the way of American homeowners and solar panels? The biggest hurdle is often the perceived “upfront cost” of installing solar panels.

The cost of installing solar is far less intimidating when you understand the various components, how savings are generated, and different ways to lower your cash outlay through financing.

In this article, we’ll explore:

• Solar panel cost over time
• Price per Watt vs cost per kWh
• How to calculate the cost of solar panels
• How much do solar panels cost per square foot
• Do solar panels really save you money?
• Solar installation costs
• How to reduce the cost of solar panels
• Frequently asked questions

As always, our goal is to empower you with the resources and knowledge to make educated decisions during the solar process.

Get multiple binding solar quotes from solar installers in your area.

Is the price of solar panels falling?

The price of solar panels has declined substantially over the last decade as the industry has matured and reached production at the largest global scale.

Since 2010, the cost to install solar panels on a home has fallen by roughly 50%. Costs rose slightly from 2020-2023 largely due to supply chain tangles from the pandemic, and then fell again in 2024. 

As a general trend, we expect U.S. solar prices to continue falling as local manufacturing plants come online.

However, with the threat of new tariffs beginning in 2025 we might currently be in the lowest price environment for solar for several years. Even domestically made solar panels will likely see price changes as many sub-components are imported and also subjected to tariffs.

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How much does a solar panel cost?

Today’s premium monocrystalline solar panels typically cost between 30 and 50 cents per Watt, putting the price of a single 400-watt solar panel between $120 to $200, depending on how you buy it.

Less efficient polycrystalline panels are typically cheaper at $0.25 per Watt.

The cost of a solar panel also depends on how you buy it. If you purchase through a full-service installer, you will likely get a lower price for each panel than buying them individually from a retail store.

It’s worth noting (as we’ll explore further below) that solar modules typically make up less than 20% of the overall cost of a home installation. So, opting for less expensive (and lower quality) panels isn’t a very efficient way to reduce the overall cost of a project,  and in most cases, can lower the return on investment for going solar.

Solar Power Cost: Price per Watt vs cost per kWh

There are two main ways to calculate the cost of putting solar panels on your home:

• Price per watt ($/W) is useful for comparing multiple solar offers
• Cost per kilowatt-hour (cents/kWh) is useful for comparing the cost of solar versus grid energy

Let’s dive a little further into each measurement.

What is solar price per watt?

A fully installed solar system typically costs $3 to $5 per watt before factoring in incentives like the 30% tax credit. Using this measurement, 5,000 Watt solar system (5 kW) would have a gross cost between $15,00 and $25,000.

The price per watt for larger and relatively straightforward projects are often within the $3-$4 range. Claiming incentives like tax credits and rebates can bring the PPW even lower.

However, the following factors may push your solar price per watt into the $4 to $5 range.

• Smaller system size
• Unusual roof material or layout
• Premium panel and inverter models
• Multiple arrays versus a single array
• Additional work like panel box upgrades, trenching, or roof repair

How to calculate solar price per watt

Calculating the price per watt for a solar system is very straightforward — it’s simply the system cost divided by the number of watts in the system. 

Price per watt ($/W) allows for an apples-to-apples comparison of different solar quotes that may vary in total wattage, solar panel brands, etc.

Pro tip: It can be helpful to know your solar price per watt before and after claiming the 30% tax credit.

Ultimately, many factors figure into the price per watt of a solar system, but the average cost is typically as low as $2.75 per watt. This price will vary if a project requires special adders like ground mounting, a main panel upgrade, an EV charger, etc. 

Cost Per Kilowatt-Hour (kWh)

Another measure of the relative cost of solar energy is its price per kilowatt-hour (kWh). Whereas the price per watt considers the solar system’s size, the price per kWh shows the price of the solar system per unit of energy it produces over a given period of time.

Net cost of the system / lifetime output = cost per kilowatt hour

You may also see this referred to as levelized cost of energy (LCOE).

What is a kWh?

A kilowatt-hour is a unit of energy and is equivalent to consuming 1,000 watts – or 1 kilowatt – of power over one hour. For reference, an energy-efficient clothes dryer uses around 2 kWh of electricity per load, while central air conditioning uses around 3 kWh per hour.

While price per watt is most helpful in comparing the relative costs of solar bids, solar power cost per kWh is best used to illustrate the value of solar relative to buying your power from the electric utility.

For example, the average cost of a solar system purchased through solar.com is 6-8 cents per kWh, depending on the size of the system, type of equipment, and local incentives.

Let’s compare that to the average cost of utility electricity in each state.

Based on these prices, it costs around 46 cents to dry a load of laundry using grid electricity in New York. With solar power, it cost closer to 14 cents.

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How do I calculate the cost of installing solar panels?

There are a few ways to get a rough estimate of how much solar panels will cost without sitting through a sales pitch. These include:

• Online calculators
• Hand calculations based on your electricity usage
• The average cost of solar panels for comparable homes

Let’s start with the quickest method: online calculators.

Using a solar panel cost calculator

First, you can use an online solar cost calculator, like this one powered by solar.com. Simply punch in your address and your average monthly electricity bill, and the calculator will give you a side-by-side comparison of the cost of solar versus paying for utility electricity.

But before you use any solar panel cost calculator, it’s important to understand that there are dozens of variables that affect the cost of solar panels, and solar calculators work by making assumptions about those variables.

For example, your solar savings depends largely on how much utility rates increase over 25 years. Most calculators assume 3-5% annual inflation based on historical averages – but nobody can know for sure where prices will go over the next 25 years.

Solar savings are also geographically sensitive since every state has different incentives, electricity rates, sun exposure, and net metering policies.

For example, a solar panel cost calculator for California would have drastically different assumptions than a cost calculator for New York.

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How to calculate the cost of solar panels by hand

If you’d rather make your calculations offline, there are a few simple steps to estimate the cost of your solar system based on your electricity usage.

To get started:

• Dig up some recent electricity bills (the more the better!)
• Average them together to get a baseline for your monthly electricity consumption
• Divide your monthly consumption by 30 to get your daily electricity consumption.

Once you have your average daily electricity use, follow the steps in the graphic below. Here are a few tips:

• You’ll have to assume the price per Watt (PPW) you can get from a local solar installer. This typically ranges between $3.50 and $5 before incentives
  • Pro tip: Run the high and low PPW scenarios to get a range of solar costs
• Research local incentives like rebates and tax credits that can further reduce the cost of solar panels
• Consider future increases in electricity consumption like buying an EV, heat pump, or air conditioning

If hand calculations aren’t your thing, you can get a quick-and-dirty estimate based on the cost of solar for comparable homes.

How much do solar panels cost per square foot?

The third – and least accurate – way to get an idea of how much solar panels will cost for your home is to see how much solar panels cost for homes similar in size to yours.

We analyzed thousands of systems sold on solar.com in recent years to find the average cost of solar panels for homes based on their square footage of living space and number of bedrooms.

Note: Solar systems are sized based on your electricity usage, not the square footage of your home. The following is for reference only and is not intended to reflect accurate solar pricing.

On average, solar panels cost $8.77 per square foot of living space, after factoring in the 30% tax credit. However, the cost per square foot varies based on the size of the home and unique variables found in every installation.

For example, the post-tax credit cost of solar panels for a 2,500-square-foot home is around $20,000 for a rate of $7.96 per square foot.

But how much do solar panels cost for a 1,500-square-foot home? The average system cost only drops by $1,000 and the cost per square foot increases to $12.83. Installing less solar will lower your cost but on a non-linear basis as there are a lot of fixed costs for installers to design, permit, and install your system. This is why most homeowners choose to install the largest possible system up front versus adding on later. 

Based on systems purchased on solar.com. Square footage per Zillow.

If you don’t know your home’s square footage, you can either look it up on Zillow or get a rough estimate using the number of bedrooms.

What’s the cost of solar panels for a 3-bedroom house?

The average pre-incentive cost of home solar is $29,161 for a three-bedroom house, or $20,412 after claiming the 30% tax credit.

However, as shown in the chart below, the number of bedrooms isn’t a great indicator of the size and cost of a solar system – and neither is living space, for that matter.

Again, Solar systems are typically sized based on electricity consumption – not square footage or number of bedrooms. That’s because a two-bedroom house with two EVs and an electric heat pump would likely use more electricity than a four-bedroom house with no EVs and gas heating.

So, you can use this method to get in the right ballpark, but keep in mind that the previous two methods are more accurate.

Once you have a rough cost estimate for your solar system, it’s time to compare it to the cost of buying electricity from a utility provider to get a sense of how much you can save by going solar.

Do you really save money with solar panels?

Yes, homeowners across the US can save money on energy costs by powering their homes with solar panels instead of purchasing electricity from a utility at higher and higher rates each year.

If you’re paying more than .10/kWh for electricity from your utility, there’s a very high likelihood you’re a good candidate for saving money with solar.

Home solar is essentially a way to buy electricity in bulk – similar to buying a giant can of coffee grounds from Costco instead of 50 individual cups at Starbucks. The $25 can of grounds costs more upfront but pays for itself after just 9 Grande Lattes at $3 each and nets $125 in savings over its lifespan.

Related: Will Electricity Prices Go Down in 2025?

How much money do you save a month with solar panels?

Exactly how much money you save a month with solar panels depends on a few main ingredients:

1. Utility electricity rates
2. Electricity consumption
3. How you finance your system
4. Your energy goals

These factors vary from household to household, so let’s take a look at the average monthly electric bill with solar panels and without solar panels.

• By paying cash for a solar system, you can enjoy maximum lifetime savings – often north of $50,000 – but it can take several years to reach a payback period
• By taking out a solar loan, you can front-load your cost savings by making solar loan payments that are less than your average electricity bill, but interest payments eat into your lifetime savings

Adjusting the size of your solar system and how you finance it gives you control over your essential electricity costs – something you’ll never have by purchasing electricity solely through a utility company.

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How long does it take for solar panels to pay for themselves?

The payback period for solar panels is typically 5-10 years, depending on factors like your utility rate, electricity consumption, and how you financed the system.

With a solar loan, many homeowners can achieve “Day 1” savings by having a loan payment that’s lower than their average electricity bill. However, interest payments on the loan eat into the long-term energy cost savings.

By paying cash for solar, homeowners maximize their lifetime savings potential but typically need to wait 5-10 years to recoup the upfront investment.

Is solar worth it financially?

As a hedge against energy inflation, home solar is considered a safe and steady investment with a rate of return similar to real estate and 401k. Remember, home solar allows you to replace your electricity costs with lower, more predictable monthly payments on your solar system.

Why is it financially beneficial to pay for solar rather than utility electricity?

The chart below shows the steady rise of utility electricity prices from 5 cents per kWh to nearly 18 cents per kWh over the last 45 years.

For non-solar owners, this trend is a nightmare because it shows that utility rate hikes are about as certain as death and taxes. But if you have a home solar system, utility rate hikes are the fuel for your energy cost savings over the 25-year warrantied life of your solar system.

Home solar also acts as a time machine, of sorts. Instead of paying the current utility rate for electricity, the cost per kilowatt-hour of home solar is typically around 6-8 cents – roughly what utilities were charging 40 years ago.

So, are solar panels worth your money?

Solar panels are worth your money if you want to want to:

• Take control over your essential electricity costs
• Hedge against energy inflation
• Reduce your carbon emissions
• Increase your home value
• Provide backup power for grid outages (when paired with battery)

However, if you have a hunch that grid electricity prices are suddenly going to plummet below 8 cents per kWh and stay there for 25+ years, then don’t buy solar panels.

How much does solar panel installation cost?

Installation labor accounts for around 5.5% of the total cost of a residential solar project, according to a report from the National Renewable Energy Laboratory.

That amounts to $1,375 for a $25,000 solar project.

This figure often seems surprisingly low to homeowners who are used to labor being a bigger chunk of the cost for car repairs, landscaping work, and other home upgrades.

Data via NREL.

Of course, installation costs vary from project to project based on the local wage and scope of the project. For example, labor for specialized electrical work typically costs more than general labor for panel installation. This variability is why it’s tough to find a solar installation cost estimator online.

Overall, labor costs have fallen in the last decade as technology has improved and the labor force has matured. The chart below shows the solar panel installation cost breakdown since 2010.

It’s notable that:

• The overall cost of residential solar fell by 64% in the 2010s
• Solar module, inverter, and labor costs have come down substantially in the last decade
• Non-labor soft costs and electrical hardware have been more stubborn

At the end of the day, the installation labor makes up a very small chunk of the total cost of a solar system – and it’s well worth having professionals install a system that you want to last for 25 years or more.

Can I install solar panels myself?

Some homeowners with advanced knowledge and experience in construction, circuitry, and local permitting guidelines (not to mention a good amount of time on their hands) can successfully install solar panels up to inspection and interconnection standards.

However, it’s important to consider that DIY solar installation may void the manufacturer’s warranties on the equipment and does come with workmanship warranties.

So, if there are problems with the equipment or the installation, like a panel broken during installation or a leaky hole in the roof, you are on your own to solve and pay for them.

It’s also worth noting that full-service installers typically handle permitting, interconnection, and applying for incentives — which can be complicated and time-consuming.

How much does one solar panel cost?

The average cost for one 400W solar panel is between $120 and $200 when it’s installed as part of a rooftop solar array. This boils down to $0.30 to $0.50 per watt for panels purchased through a full-service solar company.

But a solar panel by itself won’t get you very far as it will need to be paired with an inverter, mounted to the roof, and interconnected.

At a retail vendor, such as Home Depot, you can buy a single 100W solar panel for $100 or a pack of 10 320W solar panels for $2,659, which boils down to $0.83 to $1 per watt.

Given the relationships with panel manufacturers, full-service solar companies can offer a much lower cost per solar panel than retail establishments.

How long do solar panels last?

Today’s solar panels typically have 25- to 30-year performance warranties that guarantee a certain level of production (usually 85-92% of its Day 1 capacity) during that time. However, the panels themselves can last and generate a meaningful amount of electricity for much longer.

For example, the first modern solar cells were created in 1954 and are still producing power from their display case in a museum. Similarly, a solar panel installed in 1980 on a rooftop in Vermont is still producing at 92% of its original capacity.

Based on manufacturer warranties, it’s safe to assume today’s solar panels will produce at a high level for at least 25-30 years. The real question is how far will they overshoot that warrantied lifespan.

It is important to look beyond just the length of the warranty and also focus on the annual degradation rate.

Solar cells (the “engines” of solar panels) are large semiconductors, which degrade slowly over time. Different types of solar cells degrade at different rates. Lower efficiency PERC cells may be much cheaper up-front but they might degrade at .5 – .7% per year. A more robust N-type TopCon might have a degradation rate of .35 – .55% and a very high-efficiency hetero junction technology or back contact cell might be as low as .25%.

Think fractions of a percent don’t make a difference? In 10 years your utility rate might be 50% higher than it is today and a high-efficiency solar panel might produce 5% more power than a higher degradation one. This translates into tens of dollars of extra savings every month. And those rates compound as the solar savings keep accruing.

How can I lower the cost of solar panels?

Although home solar is already more affordable than paying for utility electricity, there are a few ways to reduce the cost of your system and maximize your energy cost savings.

Solar incentives

First, there are solar incentives offered by federal, state, and local governments, in addition to utility providers.

The most notable is the federal solar tax credit worth 30% of what you pay for solar panels. So, if your all-in cost is $25,000, you can claim a tax credit worth $7,500 on your federal income tax return for the year your system is deemed operational.

May 13, 2025 update: Congress has proposed removing the 30% solar tax credit at the end of 2025. If passed in its current form, systems installed and inspected by December 31, 2025 will qualify for a 30% tax credit, and systems installed in 2026 and beyond will not qualify for a federal tax credit.

Don’t miss out! Start your solar project today to secure a 2025 installation.

https://www.youtube.com/watch?v=9pNWgAbZ1Cg&t

Next, many states have additional incentives like tax credits, tax exemptions, and rebates for residential solar systems. For example, New York has all three with its NYSERDA rebate, 25% state tax credit, and sales and property tax exemptions for solar installations.

At the local level, many city governments, municipal utilities, and investor-owned utilities have incentives for solar panels, battery storage, and other energy-efficient home upgrades.

Some examples include:

• The Austin Energy solar rebate worth $2,500
• California’s Self-Generation Incentive Program with battery rebates up to $1,000 per kWh of capacity
• Massachusetts’ handful of municipal utility rebates

It’s well worth spending 5-10 minutes searching for solar incentives through your state, county, city, and utility provider.

Compare multiple quotes

The next way to reduce the cost of solar panels is to shop for the lowest price like you would for cars or a new pair of hiking boots.

In most areas of the US, there are at least a handful of solar installers willing to compete for your business. Getting quotes from at least three reputable installers gives you a sense of a fair price, weeds out scammers, and gives you leverage to negotiate for a lower price.

Admittedly, it takes time and effort to research installers, set appointments, and sit through sales pitches to gather quotes. Solar.com simplifies this process by instantly generating dozens of quotes from our network of trusted installers so you can easily compare quotes in a pressure-free environment.

However you choose to do it, comparing multiple quotes is crucial to lowering your solar cost and setting yourself up for a long-lasting and productive solar installation.

Can I get free solar panels?

Despite what the ads on Facebook and YouTube say, it is not possible to get free solar panels from Tesla, Home Depot, or the US government. This is a common scam used to gather personal data and/or trick people into signing long-term solar lease agreements that are far less favorable than owning solar panels.

For example, in February 2023, a Facebook page called “Solar Panel Rate” ran multiple ads claiming Elon Musk was paying homeowners $2,500 to test out new solar technology. Further inspection revealed that the account was run by three individuals in Indonesia and the ads were designed to collect personal information.

There are also dozens of YouTube ads claiming that the “US government is giving away free solar panels.” While there are solar incentives at the national, state, and local levels that can help reduce the cost of going solar, these hardly constitute “free solar.”

Reputable solar companies don’t mislead consumers or purchase leads from companies that offer misleading — or flagrantly false — marketing and homeowners should steer clear of these scams.

Recap

The falling cost of solar panels, coupled with the recent spike in grid electricity prices, have made home solar a reliable means of reducing your essential energy costs.

While the five-figure price tag for home solar often gives people sticker shock, it’s important to remember that going solar is like buying 25 years’ worth of electricity in bulk. It may cost more upfront, but it is much more affordable than buying electricity at the retail rate from a utility.

Plus, there are zero-down solar loans that can spread out the cost of solar panels and, in many cases, provide instant energy cost savings.

Installation accounts for roughly 5.5% of the total cost of solar projects. However, non-labor soft costs like permitting, inspection, interconnection, and general overhead make up around half of the cost of home solar.

There are a few ways to reduce the cost of going solar. First, research federal, state, and local solar incentives to make sure you’re not leaving money on the table. Second, shop around for the best price by getting multiple quotes from vetted local installers. (Solar.com makes this quick, easy, and pressure-free).

Finally, neither Elon Musk nor the US government are giving away free solar panels. And if they were, they wouldn’t be advertising it on Facebook and YouTube.

Steer clear of free solar ads to avoid giving away personal information or ending up in a long-term solar lease.

Frequently asked questions

Is one solar panel enough to power a house?

One solar panel is not enough to power a house. Home solar systems are designed to meet the unique needs of the homeowner, whether it’s aiming for 100% offset, oversizing to account for a future EV purchase, or perhaps constrained to specific locations on the roof.

It’s also worth mentioning that installing one solar panel at a time isn’t very efficient, as there are soft costs associated with designing, permitting, inspecting, and interconnecting solar systems. Homeowners typically get the most bang for their buck by installing at once as many solar panels as they’ll need to offset current and near-future electricity needs.

How long can a house run on solar power alone?

According to the NREL, a small solar system with 10 kWh of battery storage can power the essential electrical systems of a home for three days in parts of the US and in most months of the year.

Essential electrical systems do not include electric heating or air conditioning, which require massive amounts of electricity.

However, it’s worth noting that solar systems need to be paired with battery storage to provide backup power during outages. Solar-only systems are automatically shut off during outages as a safety precaution to protect the technicians repairing the grid.

What is the main downside of solar energy?

The main downside of solar energy is that it’s intermittent. In other words, solar panels need sunlight to produce electricity, and when the sun goes down production stops.

This intermittence poses challenges to grid operators because it creates an influx of energy during the middle of the day, when consumption is down, and a lack of energy in the evening when consumption is peaking.

The most obvious solution to this challenge is various forms of energy storage including batteries, pumped hydro, compressed air, and thermal technologies.

In fact, residential solar and battery systems in California provided around 340 MW of power during a heatwave in September 2022 to help prevent power outages.

Is it worth it to get solar panels in California?

Given its abundant sunshine and high utility electricity rates, California is one of the best states to save money with home solar.

In fact, even after reducing the value of solar exports through NEM 3.0 solar billing, Californians can still save more money with solar than homeowners in most other states. Under NEM 3.0, it’s much more beneficial to pair solar systems with battery storage to use as much of your own solar production as possible instead of exporting it onto the grid.

Many installers are offering less expensive “arbitrage” battery systems that allow solar owners to store and use their own electricity, but don’t provide backup power during outages (hence the price decrease).