What’s a Good Price for Rooftop Solar in 2024?
At its core, rooftop solar is a way to pre-purchase 25 years of electricity in order to hedge against ever-rising utility rates – quite similar to buying bulk coffee grounds instead of individual Venti Lattes from Starbucks.
The return on this long-term investment depends on a handful of key factors, including the price of the solar system itself. After all, the cost of your solar system is your line in the sand that says “This is how much I’m paying for electricity.”
Like anything else, homeowners want to know they’re paying a good price for solar and, by extension, electricity. So, in this article, we’ll take a look at average solar prices, how much they can vary, and what makes a good price for rooftop solar.
Jump to a section:
- What’s the average price of rooftop solar?
- Comparing solar prices by company
- Why does rooftop solar pricing vary so much?
- So, what is a good price for rooftop solar?
Let’s start with a recap of where residential solar prices have been in the last five years and where they are now.
After decades of falling dramatically, the cost of residential solar projects – measured in Price Per Watt (PPW) – bottomed out at $2.92 per watt in 2019 and has increased slightly in the three years since to reach $3.27 in the first half of 2023, according to data from the Solar Energy Industries Association (SEIA).
PPW measures the total cost of the project per watt of solar capacity installed. For context, residential solar panels are typically rated between 350 and 400 watts each, and the average rooftop solar system is around 7,000 watts (7 kilowatts).
The price per watt of a solar project includes both “hard costs” like panels, inverters, and racking and “soft costs” like labor, permitting, interconnection, customer acquisition, and general overhead. However, PPW does not typically include interest costs from taking out a solar loan.
Given the average solar system is around 7 kW (7,000 watts), the table below shows the average price of a home solar system during the last 15 years.
Residential solar price per watt (PPW) 2011-2023
|System Size (W)
Now that we have a sense of the average, let’s get familiar with the range of prices you might see for rooftop solar in 2023 and 2024.
Just like every other good and service – food, clothes, and electricity itself – the price of rooftop solar varies based on who you purchase the system from.
For example, let’s look at pricing for three of the industry’s most prominent publicly-owned companies: Sunrun, Sunnova, and SunPower. We analyzed public filings by these three companies to get a sense of the average price per watt for their residential projects over time.
|Price per watt
|Latest quarter’s average creation cost + platform services margin
|Latest quarter’s total creation cost divided by watts of solar capacity deployed
|Latest quarter’s revenue per watt + margin per watt for residential projects
Of course, prices are constantly fluctuating. The chart below shows PPW over time based on our analysis of public filings.
There are a few things to take away from this chart:
- Solar pricing is not uniform, even among companies of comparable size and structure
- Residential solar prices have been trending upward since 2019, as confirmed by the SEIA chart above
- Large public solar companies are reporting higher PPW than the SEIA’s average for the first half of 2023
On the other end of the spectrum, we’ve got Tesla – a privately owned and (once) nationwide residential solar services company – with an average PPW of around $2.50 (based on quotes we’ve been able to gather and analyze).
That gives us a range of more than $2 per watt for residential solar pricing – a difference of at least $14,000 on a 7 kW project. How in the world could prices vary so much for the same – or very similar – product?
To understand the variation in solar prices between companies, it’s important to first have a sense of what goes into the cost of a solar project.
As we mentioned above, rooftop solar costs can be broken into two categories: Hard costs and soft costs. Each category accounts for roughly half of the total project cost, based on the latest data from the National Renewable Energy Lab (NREL).
While hard costs make up a substantial chunk of a solar project, they are relatively stable from company to company and can be controlled – to some extent – by selecting various models of panels and inverters.
Soft costs, on the other hand, can vary substantially from company to company and aren’t easily influenced by customers.
For example, you can easily select lower-priced panels and inverters to reduce the hard costs of your project, but you won’t have much luck asking a company to use lower-priced installation technicians to reduce the soft costs of your project.
Variations in soft costs
Drilling down a bit further, a substantial chunk of soft costs is dedicated to customer acquisition (aka marketing), profit, and general overhead – which can vary greatly from company to company.
For example, Sunrun is a large publicly traded company that:
- Engages in complex and wide-reaching marketing campaigns
- Has over 10,000 employees
- Has obligations to public shareholders
These massive operating costs along with the public shareholder pressure certainly influence Sunrun’s soft costs and may help to explain the higher-than-average PPW reported in their public filings.
By contrast, residential solar companies that boast an exceptionally low PPW do so largely by reducing soft costs, often by replacing human sales and support staff with automation. This model can be effective for reducing upfront costs but comes at the expense of:
- Robust guidance and customization during the design and sales processes
- Human support and advocacy during permitting, installation, and activation
- In-house (and easily accountable) installation services
- Ongoing system monitoring, warranty support, and prompt maintenance
For example, we mentioned above that Tesla solar systems typically cost around $2.50 per watt. While this is exceptionally low, it’s well-documented that Tesla’s sales and customer service are largely automated and notoriously unhelpful – which can substantially affect your solar savings over time.
When it comes to your solar system, electricity production equals money. Every minute that your system is under-producing – or not producing at all – is a minute that you are paying too much for electricity and eroding your return on investment.
A good price per watt for rooftop solar provides a balance of savings potential and robust warranty and service coverage. Based on recent solar pricing trends from the SEIA, this balance can be found in the $3-4 per watt range for residential solar projects.
If you focus only on finding the absolute lowest price, you risk sacrificing quality in workmanship and customer service which can actually eat away at your long-term savings. On the other hand, paying a higher PPW to work with a large public company doesn’t necessarily translate into higher quality and service. In fact, the added cost is likely going to pay for layers of corporate bureaucracy, expensive marketing campaigns, and insatiable shareholder demands.
The best way to find the Goldilocks Zone of solar pricing is to compare multiple quotes from local and regional solar installers. Connect with an Energy Advisor today to easily compare quotes from vetted installers in your area.