See how much solar panels cost in your area
Please enter a valid zipcode.
Zero Upfront Cost
Best Price Guaranteed
Solar Learning Center > Solar Panel Cost
Solar Panel Cost
The cost of solar panels has declined dramatically over the last decade, and solar systems now offer more value to homeowners than they ever have before.
The recently extended 30% solar tax credit makes the deal that much sweeter.
That said, solar panels are only one component of a complete solar system, so there are other solar installation costs to consider as well.
In this article, we’ll take a look at why solar module prices have fallen so dramatically, the key terms for evaluating the cost of solar systems, and the many factors that will ultimately impact the price you pay for your solar system.
Get multiple quotes from our vetted installers. Start here.
The Solar Panel Cost Over Time
The cost 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, solar panel prices have fallen by roughly 90% while global solar deployment has grown by over 400%, and this incredible growth rate along the entire global solar supply chain has dramatically reduced prices.
Just like computers, big-screen TVs, and cell phones, the economies of scale that solar panels now enjoy have produced a dramatic cost curve that has fundamentally changed the energy industry.
Utility-scale solar installations are now cheaper than all other forms of power generation in many parts of the world and will continue to replace older, dirtier power plants run on coal and natural gas.
Additionally, homeowners are now able to own their power production more cost-effectively than ever before.
Use our solar calculator to see how much you could save with solar.
How To Calculate Solar Panel Cost
There are two main ways to calculate the cost of a solar system:
- Price per watt ($/W) is useful for comparing multiple solar offers
- Cost per kilowatt-hour (cents/kWh) is useful for comparing the cost of solar versus grid energy
Let’s dive a little further into each measurement.
Solar Panel Cost in Price Per Watt
The price per watt (PPW) of a solar system is the price that the homeowner will pay for every watt of solar being installed.
Calculating the price per watt for a solar system is very straightforward — it’s simply the gross system cost (contract value) divided by the number of watts in the system.
Price per watt ($/W) allows for an apples-to-apples comparison of different solar quotes that may vary in total wattage, solar panel brands, etc.
Ultimately there are many factors that 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, EV charger, etc.
Solar Price Per Watt | Solar Price Per Kilowatt-Hour |
GROSS system cost / Total system wattage | NET system cost / Total lifetime system production |
Useful for comparing solar quotes against one another | Useful for comparing solar versus utility bill |
Pertains to the POWER of a system | Pertains to the PRODUCTION of a system |
Typically $3.00-4.00/watt | Typically $0.06-0.08/kWh |
Related reading: Are Solar Panels Worth It? Calculate Your Return on Investment
Solar Energy 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.
You may also see this referred to as levelized cost of energy (LCOE).
A kilowatt-hour is a unit of energy and is equivalent to consuming 1,000 watts – or 1 kilowatt – of power over one hour.
While price per watt is most helpful comparing the relative costs of solar bids, price per kilowatt-hour is mostly used to illustrate the value of solar relative compared 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 grid electricity prices in major metro areas for November 2022:
Grid electricity (cents/kWh) | Solar.com electricity (cents/kWh) | |
New York City | 23.2 | 6-8 |
Chicago | 13.3 | 6-8 |
Miami | 16.3 | 6-8 |
Houston | 18.2 | 6-8 |
Denver | 15.2 | 6-8 |
Los Angeles | 25.7 | 6-8 |
Seattle | 11.8 | 6-8 |
While electric bills are subject to continuously increasing rates, purchasing a solar system can be thought of as pre-paying for 25-years of power at a locked-in price, protecting you from decades of rate increases.
The average price per kilowatt-hour from electric providers in the United States is about 16.3 cents/kWh, according to the Bureau of Labor Statistics, and increasing a nearly 4% per year since 2016.
Here’s how rising grid prices compare to a flat-rate of 7 cents per kWh for solar energy over 25 years:
The payback period of going solar for the average US household is around 9-10 years. However, it can be much shorter for homeowners with higher than average utility electricity rates.
See how much solar would cost per kWh for your home.
How do you calculate solar energy cost per kWh?
Comparing the cost per kWh of solar versus grid electricity is an easy way to estimate how much you can save by going solar. This figure is provided in quotes generated through solar.com
But if you want to do it on your own, the equation is pretty simple:
Net cost of the system / lifetime output = cost per kilowatt hour
Let’s run through an example using a 6.4 kW system with a net price of $20,484 (after the 30% tax credit). Most solar panels are warrantied for 20-25 years and last much longer, so we’ll assume a 22 year lifespan to be super conservative. Finally, we’ll assume 90% efficiency over the 22 years.
Lifetime solar output = 6.4W x 5.5kWh of sun per day x 365 days x 22 years x 90% efficiency = 254,390kWh
So now we have both the net cost of the systema and the lifetime output. Let’s bring it home to cost per kWh!
$20,484 / 254,390kWh = $0.08 per kWh
Now that you can calculate the levelized cost of going solar, you can easily compare your solar quotes to the cost of staying on grid.
Related reading: Free Solar Panels? The Truth Behind the Ads for Free Solar
How To Reduce the Cost per kWh of Solar Energy
There are two main ways to reduce the cost of going solar:
- Claim local and federal incentives
- Shop around for the best price
Claiming incentives
Incentives for solar and batteries are also important components of the overall cost of a solar system.
The most widely available incentive is the federal tax credit, now set at 30% from 2022 to 2032 thank to the passage of the Inflation Reduction Act. This tax credit applies to the gross cost of the project — parts, labor, permits, battery, and more — and substantially reduces the price per kWh.
Let’s see how that looks using the 6.4 kW system from the example above.
Net price | Cents/kWh | |
Without 30% tax credit | $29,263 | 11 cents/kWh |
With 30% tax credit | $20,484 | 8 cents/kWh |
There are other important state and local incentives that depend on location, such as New York’s 25% state tax credit and California’s SGIP program for solar batteries.
Shopping for the best price
At the end of the day, going solar is a home improvement just like remodeling a kitchen or putting in new floors. As with any home improvement project, it’s crucial to get multiple bids to find the best price without sacrificing quality.
Solar.com makes that easy by using a single design to generate dozens of bids from our vetted network of installers.
What goes into the cost of a solar system?
It’s important to understand that solar system costs involve a lot more than just the solar module prices themselves.
In fact, the price of solar panels, inverters, and other equipment (balance of system) make up just over half of the total system cost.
The other half stems from “soft costs” including labor, which only accounts for around 5% of the system cost. Other soft costs include:
- Sales tax (if applicable)
- Permitting, inspection, and interconnection
- Sales and marketing
- General overhead (Business expenses not directly tied to installation, like rent, equipment/building maintenance, administrative staff, etc.)
- Profit
Hard costs for solar panel modules, inverters, and balance of system equipment increased by as much as 53% in 2021/2022 due to supply chain issues. These costs are expected to fall in the future as supply chains untangle and new tax incentives jumpstart American manufacturing of solar equipment.
There are also opportunities to reduce costs by standardizing and automated the permitting process.
How Much Does Solar Energy Cost?
Now that we understand how to evaluate the relative cost of solar systems and the factors that contribute to overall installation costs, let’s consider the big question: how much do solar panels cost to install on your home?
The short answer is that it depends.
Solar energy system costs vary widely depending on many factors like the amount of energy needed, the amount of roof space available, the kinds of panels and inverters being used, and whether a battery is included with the solar system.
The average cost for a solar system is around $20-30,000 (before incentives), but the system size is proportional to the amount of power needed. Especially in places like California and New York, system payments are typically lower than the electric bill the homeowner is paying for anyway.
With an investment of this size, homeowners typically have two primary concerns:
- That they have great pricing for the system they’re having installed
- That the great pricing doesn’t come at the expense of high-quality workmanship and a fantastic customer experience
Fortunately solar.com was founded to address these exact concerns and ensure a positive experience throughout.
As a virtual platform, solar.com has been structured from the very beginning to have the lowest costs in the industry, as verified by the US Department of Energy.
Most companies rely on expensive marketing campaigns and in-home salespeople to sign up homeowners, which leads to an extremely high cost of acquisition for every system they install. By operating virtually, solar.com saves installers on those costs, and those savings are passed along to you!
Here is a direct comparison between average market pricing and solar.com’s average pricing in some of the largest solar markets in the country, according to data from the National Renewable Energy Laboratory.
Solar energy cost vs grid energy by state
State | Market Price Per Watt | Solar.com Price Per Watt |
Arizona | $3.61/W | $3.39/W |
California | $4.31/W | $3.76/W |
Florida | $3.45/W | $2.82/W |
Massachusetts | $4.18/W | $3.92/W |
Maryland | $3.93/W | $3.64/W |
Minnesota | $4.61/W | $3.66/W |
New Hampshire | $3.72/W | $3.37/W |
New Mexico | $4.82/W | $3.56/W |
Oregon | $3.79/W | $3.68/W |
Texas | $3.83/W | $3.17/W |
That said, fantastic pricing isn’t enough. Homeowners also need to feel confident that they’ll have the highest-quality workmanship on their home and have a smooth installation process.
To that end, solar.com employs a rigorous vetting process to ensure that only the best solar installers have access to our platform and customers.
Homeowners who use our platform also have a dedicated Energy Advisor who will advocate to the installer on their behalf to make sure their system is installed as quickly and seamlessly as possible.
Related reading: The Actual Cost of the Tesla Solar Roof
Solar Energy Cost Frequently Asked Questions
How much does solar energy cost per kWh?
The most common way to measure the cost of a solar panel system is in cents per kilowatt-hours (cents/kWh).
Residential solar energy costs on average 6 to 8 cents per kWh when purchased through the solar.com marketplace. The cost per kWh varies based on the size of the solar system, sunlight, type of equipment, and energy needs.
To find the cost per kWh of solar energy, divide the net cost (after tax credit and rebates) by the lifetime output of the system (system size in kW x average peak sun hours per day 0.7 efficiency rating x 365 x 25 years).
Net cost of the system / lifetime output = cost per kilowatt hour
How much does solar energy cost per watt?
One way to measure solar panel cost is in Price Per Watt (PPW). In California, the average PPW of a home solar system is between $3.00 and $4.00 per Watt.
To calculate price per Watt, divide the gross system cost (before tax credits and rebates) by the system size (in DC Watts).
For example, a 6 kW system (15 panels x 400W each) with a gross price of $20,000 comes out to $3.33 per Watt.
$20,000 / 6,000 Watts = $3.33 per Watt
Is solar energy cost effective?
With an average cost of 6 to 8 cents per kilowatt-hour through the solar.com network, solar energy is much more cost effective that grid electricity in most of the US. In November 2022, the average price of grid energy was 16.3 cents per kWh — more than double the average cost of solar energy purchased on solar.com.
Solar owners essentially replace their utility electricity bill with payments on their solar system. Once the solar system is paid off (typically over 5-10 years), solar owners no longer pay for electricity and enjoy a return on investment for the life of their solar system (typically 25 years or more).
Is the cost of solar energy expensive?
Residential solar energy looks expensive as the upfront cost of a solar system is typically between $20,000 and $30,000 (before the 30% federal tax credit and state/local incentives). But when boiled down to cents per kWh, home solar energy is much cheaper than grid electricity in most areas.
The average cost of solar energy purchased through solar.com is 6 to 8 cents per kWh while the national average cost of grid electricity was 16.3 cents per kWh in November 2022.
Solar panels are typically warrantied for 25 years or more and pay for themselves after 5-10 years (depending on the size of the system and cost of local grid electricity). For many solar owners, that leaves 15-20 years of zero electricity costs adding up to tens or hundreds of thousands of dollars in savings.
The Bottom Line
The cost of solar energy has fallen dramatically over the last decade and federal and state incentives have made home solar systems more accessible to homeowners than ever before.
Knowing the key terms for evaluating solar system costs and the primary components of solar systems helps to understand the most important considerations that factor into the cost of solar systems.
While it might seem like a lot to consider, our Energy Advisors are ready to guide you through the process and connect you with bids from fantastic installers at industry-leading prices!
Enter your zip code below to get started.
Related Articles
5 Things To Know in the Final Weeks of NEM 2.0
On April 15, 2023, a new solar billing plan known as NEM 3.0 will replace NEM 2.0 for customers of California’s three investor-owned utilities (IOUs)....
How to Grandfather Your Solar System into NEM 2.0
With NEM 3.0 approved and scheduled to take effect in mid-April, customers of Californias investor-owned utilities have a brief window to grandfather a solar system...
What Is the Average Payback Period for Solar Panels?
The payback period for solar panels is the amount of time it takes for the energy savings to exceed the cost of going solar. Also...
What is NEM 3.0 and How Will it Impact California Solar Owners?
NEM 3.0 Final Decision: The California Public Utilities Commission (CPUC) unanimously voted to approve NEM 3.0. Under NEM 3.0, customers of PG&E, SCE, and SDG&E...
What Is Net Metering And Which States Have it?
There are plenty of industry terms to keep track of when you’re shopping for solar and net metering is among the most important. Also referred...
Are Solar Panels Worth It? Calculate Your Return on Investment
Are solar panels worth it? Over the past decade, solar panels have risen in popularity at an increasing rate. Odds are, if you drive through...
SmartFlower Solar Review: The True Cost of a Solar Flower
SmartFlower Solar produces unique, ground-mounted solar panel systems that include a sun tracker and a number of other high-tech features. This ‘smart’ solar panel system...
How Long Do Solar Panels Last?
. In 2017, solar panels are now thinner, sleeker, durable, and made to last decades. Your new solar panel energy system will continue to produce...
How to Find High Quality Solar Quotes in 2021
As the summer heat starts taking its toll, the idea of installing a home solar panel system starts to make more sense for many homeowners....
BREAKING: Will PG&E's Bankruptcy Affect Going Solar?
After weeks of speculation, Pacific Gas & Electric, the largest utility in the Golden State, has announced plans to file Chapter 11 bankruptcy protection in...
Department of Energy Study Proves Customers Save with Solar.com
The U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) just released a report that found that solar customers can achieve lower system prices by using online...
Solar Panels and Homeowners Insurance - What's Covered?
Going solar is one of the best ways you can personally combat climate change and make a positive impact. But with climate change comes...
Renewable Energy May Soon be Cheaper Than Existing Fossil Fuel Plants
While 2018’s solar tariffs have increased the prices of some international modules, the solar industry continues to rapidly expand. The price of solar has decreased...
Can a Golf Ball Damage My Solar Panels?
In California and many of the other states where solar is prevalent, there is no shortage of golf courses and homes that surround them....
How to Get Fast Quotes on Solar for Your Home
The process of transitioning to a solar-powered home can be overwhelming for some. From identifying the right solar panel hardware to ensuring that you are taking...
Solar Panel Cleaning: Best Practices and Simple Guide
Dirty panels? There are some instances where solar panels might need cleaning, but most of the evidence says solar panels are self-sufficient and low-maintenance. We’ll...
How the 2018 Solar Tariffs Will Affect Prices
If you’re considering solar, you might be wondering how the recently mandated solar tariffs could affect the price of solar. Will it nudge the needle...
How Multiple Solar Quotes Saves Money
Mama said shop around, and National Renewable Energy Laboratory agrees. In a recent study, the National Renewable Energy Laboratory (NREL) found that people interested in...
Solar Tariffs Are Here: The Sky Is NOT Falling, but the Sunshine...
The wait is over. Almost one year after the original trade case petition was filed, following months of hearings, negotiations, and a final recommendation from...
Snow Harm Done! Solar in Cold Climates
With the Cyclone Bomb bringing record low temperatures to the East Coast this month, many homeowners have had snow on the mind. Though it might...
Solar Panel Costs: The Full Breakdown for Installing Home Solar
Here’s an exciting number. The cost for residential solar panel systems has dropped a remarkable 61 percent since 2010. That’s according to the National Renewable...
Will the Solar Trade War Impact Home Solar?
The solar industry waits with breath abated. If approved by President Trump, the effects of the potential tariffs recommended by the United States ITC (International...
With Potential Solar Prices Increasing, Trump is Accelerating the Adoption of Solar
At a glance: Suniva, a U.S. based solar panel manufacturer, filed a product dumping complaint with the International Trade Commission in April 2017. Suniva...
Why You Need To Know Your PPW When You Go Solar
Before even speaking with a solar company there are a few things you need to know in order to ask the right solar questions....
The Economics of Cleaning Solar Panels
What is soiling loss? Soiling loss is the term given to all energy production loss in a solar system that is attributed to the panels...
Will I Save Money When I Go Solar?
Yes, you will not only save money by going solar, but you will become the owner of independent and clean energy. By investing in...
To Wash or Not to Wash?
The economics of solar panel cleaning We all know what a fresh cleaning does for windows. The world outside suddenly seems brighter, more vibrant, because...
The Falling Price of Solar Power
In 1977, a solar panel system cost $76.77 a watt. Imagine that you want to install an average, 2,000-watt system for your home. If you’re...
What You Need to Know about Net Metering 2.0
Traditionally, California has been one of the states with friendliest policies towards solar power. Numerous programs are in place which helps reduce the cost of...
The Real Price of Free Solar
“For now, the noise around solar is tolerable. But if the industry does not police itself better and make sure the search for profit is...
Sell-Out Solar Workshops Highlight Top 5 Insights Before Going Solar
With over 6,100 solar companies, 5 major financing methods, thousands of panel models and dozens of inverter manufacturers, homeowners can’t find straight answers. Solar.com has...
The Advantages of Solar Energy during the Holidays
When it comes to the holidays, few things are quite as iconic as the Christmas Tree. With beautiful lights shining night after night, entire towns...
Get the Solar Energy Facts – What Are You Really Paying For?
The fall heat doesn’t seem to be subsiding, the air conditioner is still clicking on every day and you’ve decided that you’ve waited long...
See how much solar panels cost in your area.
Please enter a valid zipcode.
Please enter a valid zipcode.
Zero Upfront Cost. Best Price Guaranteed.