Solar panels in the United States will cost around $20,020 on average in 2023, down from more than $50,000 ten years ago. This article will break down the cost of solar by system size, state, and panel brand, all of which can have a significant impact on the final cost you pay.
What you’ll learn about in this article
- Average cost of solar panels in 2023
- What impacts the cost of solar panels?
- How do you pay for a solar panel installation?
- What rebates and incentives are available?
- How does a solar panel installation work?
- Do solar panels save you money?
Average cost of solar panels
After factoring in the federal solar tax credit, the average cost of a solar panel installation in 2023 ranges from $16,870 to $23,170, with an average solar installation costing around $20,020. Solar panel prices in 2023 average $2.86/W in terms of cost per watt ($/W) (before incentives). This information is derived from our own marketplace data collected from thousands of users in 37 states and Washington, D.C.
Solar installations are a one-of-a-kind product; average solar panel costs can vary greatly depending on your state and the manufacturer of your chosen solar panels. You can use the Zanbur Energy Solar Calculator to calculate your own costs and potential solar savings.
| Low-end cost | $16,870 |
| Average cost | $20,020 |
| High-end cost | $23,170 |
A note about pricing: gross vs. net costs
Throughout this article (and throughout our website), we usually discuss solar panel pricing in terms of gross cost, which is the cost before any solar rebates and incentives, which can reduce the upfront cost of solar or even get you some money back over time. For example, throughout the rest of this article, our cost per Watt ($/W) figures are always the gross cost. This is due to the fact that solar rebates and incentives are not always available to everyone. Even the federal solar tax credit of 30% is not always available for everyone to take full advantage of; you must have enough tax liability to claim the credit.
How long does it take to break even on solar panels?
It takes an average of 6.7 years to recoup the initial investment in solar panels. In fact, it’s best to think of solar panels as an investment rather than a one-time purchase. The point at which you break even on your investment, also known as the solar payback period, can be calculated by dividing your combined costs (the gross cost of your solar panel system minus any incentives and rebates) by your annual financial benefits (the amount you save on electricity combined with eligible incentives and rebates).
Your payback period is determined by a number of factors, including your electricity rates and energy consumption. You’ll be able to protect yourself as energy costs rise by going solar: the faster the cost of electricity rises, the shorter your payback period.
What impacts the cost of solar panels?
A lot goes into the sticker price that a solar installer charges you. Solar installations are a one-of-a-kind product: the price you pay is heavily influenced by your specific situation as well as factors related to your electricity use and property. Here are some of the most important factors to consider when determining the cost of solar panels for your property:
• System size: the larger your solar panel system, the higher the cost. Importantly, as system size increases, the average per-unit price of solar decreases.
• Pricing varies by state as a result of both local quoting trends and system size differences – states with larger average system sizes will naturally have a lower average cost of solar.
• Panel brand and quality: Solar panels, like any other product or appliance, vary in quality, which can be highly dependent on brand.
• Panel type: the type of panel you use (usually monocrystalline, polycrystalline, or thin-film) has a direct impact on the overall quality of your installation. Price increases with increasing quality.
• Roof characteristics: the cost of a solar panel installation is not solely determined by the equipment. Your solar installer will also charge for the difficulty of the installation, and having a complicated roof may increase the cost of your system.
• Labor: Each solar company charges a different labor rate for their services. You may prefer to pay more for a more reputable company with better reviews and a shorter installation timetable.
• Permitting and interconnection: While not a significant factor, paying for permits and your grid interconnection fee will add a small amount to the total cost of your solar installation.
Dimensions of the system
The size of the system you get is perhaps the most obvious and influential factor in the price you pay for a solar panel installation. It’s simple: a larger system with more panels will cost more than a smaller system with fewer panels (and lower energy output). There is, however, a Costco-like relationship between system size and price, with a larger system having a lower average $/W. It’s similar to buying food in bulk: the overall cost is higher, but the per unit cost is lower.
Remember that while larger solar power systems may be more expensive, they will almost certainly save you more money in the long run. If you install a 10 kW solar energy system that covers all of your electricity needs, you may have to pay more out of pocket, but you’ll be eliminating a major monthly expense – your utility bill – and saving more money as a result. Solar loans with no down payment and low interest rates are becoming more common, making it even easier to purchase a solar panel system that can fully offset your electricity bill and maximize your solar savings.
Location
Solar installation costs vary depending on where you live, mostly by state. The price spread isn’t that wide, and much of the variation by location is due to differences in system sizes and incentives, but it’s worth keeping an eye on.
To understand solar panel system prices by state, we analyzed quote data from our solar marketplace. Arizona has the lowest overall average cost per watt at $2.33. Washington, D.C. has the highest overall value from the 2023 federal tax credit, at $8,866. However, as previously stated, system sizes tend to be larger in states with lower pricing, so comparing a 10 kW system in Florida to a 10 kW system in Massachusetts is not always fair. Their energy requirements are simply too dissimilar.
What states are the best for solar?
When deciding to go solar, each person must consider their own specific needs and circumstances. While some states may be better for certain people, others may not be as beneficial. Finally, as solar deployment grows and expands across the country, we can expect even greater reductions in solar costs everywhere. However, due to strong incentives, some states are currently the best for solar, including:
New York, Rhode Island, Iowa, Connecticut, and Maryland
Cost of residential solar panels by state
| STATE | SOLAR PANEL COST: 6 KW SYSTEM AVERAGE | SOLAR PANEL COST: 10 KW SYSTEM AVERAGE | 2023 FEDERAL TAX CREDIT VALUE (FOR 10 KW SYSTEM) | AVERAGE COST PER WATT ($/W) |
| Wisconsin | $20,040 | $33,400 | $8,684 | $3.34 |
| Washington D.C. | $19,920 | $33,200 | $8,632 | $3.32 |
| Washington | $17,580 | $29,300 | $7,618 | $2.93 |
| Virginia | $17,760 | $29,600 | $7,696 | $2.96 |
| Vermont | $18,420 | $30,700 | $7,982 | $3.07 |
| Utah | $16,500 | $27,500 | $7,150 | $2.75 |
| Texas | $16,380 | $27,300 | $7,098 | $2.73 |
| Tennessee | $18,480 | $30,800 | $8,008 | $3.08 |
| South Carolina | $17,100 | $28,500 | $7,410 | $2.85 |
| Rhode Island | $20,640 | $34,400 | $8,944 | $3.44 |
In general, states where homeowners must use air conditioning more frequently have higher average electricity consumption per household. As a result, some of the largest solar panel systems are built in sunny, warm states like Arizona and Florida. What is the significance of this? As we’ve already said, solar installers usually charge less per kilowatt-hour (kWh) for bigger systems. It’s similar to buying in bulk at Costco: you may pay a higher sticker price, but your per-unit costs are lower when you buy in bulk.
Finally, lower $/W pricing in warm states and higher $/W pricing in cold states roughly translates. However, total pricing is usually close to a wash – warm states have lower prices per watt but larger system sizes, while cold states have higher prices per watt but smaller system sizes.
Panel brand and equipment quality
Another method for categorizing solar panel prices is by panel brand.
To some extent, the price you pay for a solar panel brand reflects the quality of the panel. SunPower panels, for example, have the highest average price ($22,140 for a 6 kW system and $36,900 for a 10 kW system), and SunPower is known for producing well-made, high-efficiency products.
Surprisingly, there aren’t many outliers when it comes to brand pricing, and most manufacturers see similar cost ranges. When comparing system prices based on panel brands, it’s important to remember that there are many factors other than panel manufacturer that influence the final system price, such as installer experience, location, racking equipment, inverter brand, warranty, and more.
Panel type
Monocrystalline solar panels are the highest-performing type of panel in general, but they are often more expensive than polycrystalline solar panels. However, because polycrystalline panels have lower efficiencies, you may need to purchase more of them, so your overall installation costs may not vary as much as you’d expect.
Thin-film solar panels are another option, but they are rarely used in residential installations. Consider a small thin-film system for solar panel installations on RVs and campers.
Roof characteristics
The characteristics of your home and roof also play a part in your total solar costs. If you have a south-facing roof that slopes at a 30-degree angle, installing solar on your home will be relatively easier for your installer, as they can probably install all of your panels on a single roof plane that has optimal sun exposure (better, more direct sun exposure = fewer panels needed, which will lower your costs). On the other hand, if your roof has more than one level, dormers, or skylights, it may take more time to finish the installation and cost more in equipment and labor.
Labor
The company that does the solar installation is another piece of the puzzle. Solar installers charge different fees for their services, and the final price they offer for an installation is determined by factors such as your installer’s track record, warranty options, and internal operations. You can see how a reputable solar installer with premium warranty options can charge more for an installation job and still make a profit.
Permitting and interconnection
While the cost of solar permits and interconnection fees are significant components of your solar energy system quote, they can also be a factor. To connect your solar energy system to the grid (known as “interconnection”), you will typically need to obtain a few solar permit documents and pay a fee. There is some exciting work being done in this area to reduce the costs and time lag associated with getting an approved interconnection – the Department of Energy’s SolarApp+ is attempting to make the interconnection process cheaper and faster for everyone.
How do you pay for a solar panel installation?
Once you’ve determined the cost of solar for your specific project, you must decide how you’ll pay for solar. For residential solar systems, there are three primary financing options: cash purchase, solar loan, or solar lease/power purchase agreement.
Purchase of cash
In general, a cash purchase is appropriate if you want to maximize your solar savings, have enough tax liability to qualify for the solar tax credit, or have the funds available to pay for a solar panel system upfront.
Solar financing
If you don’t want to pay the full cost of a solar panel system up front, you still want to save as much money on your energy bills as possible, and you want to be eligible for all incentives and rebates, a solar loan is for you.
Solar leasing
If you prefer that someone else monitor and maintain the system, if you are not eligible for tax incentives, or if you simply want to reduce and/or lock in your monthly electricity bill, a solar lease or PPA is for you.
Reduce your solar costs with rebates and incentives
We’ve discussed the factors that increase the cost of a solar installation, but it’s also important to consider the ways you can save with solar rebates and incentives. You can get money back on a solar installation through tax credits, cash rebates, performance-based incentives (PBIs), and energy credits. The availability of these types of incentives almost always depends on where you live; utilities, cities, and states all typically offer their own solar incentives to residents of their service areas.
The federal solar tax credit: the best solar incentive
The federal solar tax credit, also known as the investment tax credit, is the best incentive in the country for going solar (ITC). This tax credit allows you to deduct 30% of the cost of installing solar panels from your federal taxes, with no dollar limit. A 10 kW system, for example, costs $28,600 when priced at the national average ($2.86/W). However, with the ITC, you could deduct 30% of the cost, or $8,580, from your taxes. This effectively reduces the cost of your system to the $20,020 figure mentioned at the start of this article.
Depending on where you live, you may also be eligible for additional state or local incentives; be sure to ask your installer about these so you get the best return on investment.
The cost of solar after installation
It’s not widely discussed, but one aspect of the cost of a solar panel installation to consider is the long-term maintenance required. Solar panels, in general, require little to no maintenance over their lifetime, and you shouldn’t expect to spend much money once they’re installed and operational. However, there is always the possibility that something will occur that is not covered by your warranties. If you live in an area of the country with excessive air pollution, you may need to trim trees as they grow or hire a cleaner. Learn more about the costs of solar panels after installation in our article about the costs of solar panels after installation.
How does a solar panel installation work?
Installing solar panels doesn’t happen overnight – there’s a process for what needs to happen to get your panels ready to begin powering your home. From the day you sign your contract with your installer, it will typically take between one and three months before your solar panels are grid-connected and producing energy for your home. We’ve outlined the five-step solar panel installation process below: 1. Selecting and ordering your equipment
The first step in a solar installation is to select your solar panels and inverters and confirm with your installer so that everything can be ordered for you. Solar panels and inverters are the two main components you’ll need to evaluate for your system. Most homeowners will compare the various brands and types of solar panels and inverters based on durability, efficiency, and aesthetics (other than price). Learn more in our guide to selecting solar equipment, or browse our list of the best solar panels.
2. Engineering site visit
Following the signing of your solar contract, an engineer (likely an employee or subcontractor of the installer you’re working with) will visit your home to inspect it and ensure that everything is compatible with your new solar photovoltaic system.
During the visit, the engineer will inspect your roof to ensure that it is structurally sound. They will also inspect your electrical panel (the grey box in your basement) to determine whether it needs to be upgraded.
3. Documentation and permits
Installing solar panels, like any major financial decision, necessitates a significant amount of paperwork. Fortunately, the installer handles the majority of the paperwork. They will assist you in applying for solar incentives as well as filling out any permits and documents required to legally go solar.
4. The big day for solar installation
The actual installation is an exciting day for any solar homeowner who prefers to use renewable energy rather than rely on a utility company. The actual installation day consists of several individual steps, such as racking your roof, wiring, placing panels and inverters, and connecting everything together. The installation will take between one and three days, depending on the size of the system you are installing.
5. Acceptance and interconnection
The final step in going solar is to “flip the switch,” so to speak, and start generating power from your rooftop. Before you can connect your solar panels to the electric grid, a representative from your town government must inspect and approve the system.
During this inspection, the representative will essentially double-check the work of your installer. He or she will ensure that the electrical wiring was done correctly, that the mounting was securely attached, and that the overall installation complies with standard electrical and roof setback codes. Following this step, you will be able to generate free, clean energy right in your own home!
The bottom line: solar panels will save you money in the long run
In the end, the cost of solar is only as important as the return on investment from installing solar panels. Solar is a worthwhile investment for most homeowners, and you can “break even” in as little as six years, depending on how much electricity you consume and how much electricity costs in your area. During those six years, you’ll be generating your own, free electricity rather than paying for it from the grid, and any excess electricity you generate may be eligible for credit due to net metering policies (depending on where you live). This is, of course, without even mentioning the environmental benefits of solar.
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