What Do Solar Panels Cost and Are They Worth It?

Consider solar panels if you have a high utility bill, get a lot of sun and qualify for tax breaks or other savings.
Tommy Tindall
Lauren Schwahn
By Lauren Schwahn and  Tommy Tindall 
Edited by Courtney Neidel

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Prices certainly vary, but the cost to install an average-sized residential solar system is around $25,000, according to the Solar Energy Industries Association

Solar Energy Industries Association. Solar Industry Research Data. Accessed Dec 18, 2023.
. That number is before any government tax incentives. Home services booking site Angi puts the normal range for solar panel installation in the U.S. from around $18,000 to $36,000 based on its database of completed projects.

Solar panel cost by state


6kW system cost

Average cost per watt
















Washington, D.C.



















































North Carolina



New Hampshire



New Jersey



New Mexico






New York















Rhode Island



South Carolina
























West Virginia



Source: EnergySage, a solar and home energy product comparison marketplace founded in 2012.

Note: EnergySage does not have data for AK, AL, HI, MS, MT, ND, NE, SD or WY.

Before you make the leap, learn how your electric bill, location and incentives can impact your wallet over time. Here are five steps to take to determine whether you’ll save more than you spend on solar panels.

1. Review your electricity bill

Solar panels generate their own power and can therefore greatly offset your monthly electricity bill, if not eliminate it. The higher your bill, the more likely you'll benefit from switching. But be aware that electricity rates and usage — the main charges on your statement — are volatile.

"If a utility’s electricity prices fluctuate, so could the amount of savings," says Garrett Nilsen, deputy director for the U.S. Department of Energy's solar energy technologies office. "Similarly, if energy consumption changes, the amount of savings can also vary."

Electricity rates vary by location. The national average is about 16 cents per kilowatt-hour, according to year-to-date 2023 data from the U.S. Energy Information Administration

U.S. Energy Information Administration. Electric Power Monthly.

2. Evaluate your sunlight exposure

More sun means more energy produced and a greater potential to save with solar. Certain states, like Arizona and California, average more sunlight hours per day. Your home's orientation toward the sun, the amount of shade it gets and its roof type also affect a solar system's output. You can estimate the efficiency of panels on your home using this solar panel cost and savings calculator from SolarReviews.

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3. Estimate and compare the cost of solar panels for homes

The brunt of the expense with solar panels is in installation and the purchase of the actual panels.

Minimal long-term costs can make up for the upfront costs. “Most systems don’t require much maintenance and are designed to last for 20 years or more with little change to the amount of electricity produced,” Nilsen says.

When calculating the total price, consider how much energy you regularly consume — your usage is listed on your monthly utility bill statement — and what size system will generate the amount needed. Some tools, like the SolarReviews calculator, estimate the system size for you.

You can expect to pay somewhere between $2.50 and $3.50 per watt for solar panel installation when you factor in the cost of materials and labor, according to Angi. If you need around 6kW — or a 6,000 watt system — to power your home, it’d cost you between $15,000 and $21,000 before any tax credits or incentives to get set up.

If you know your current energy usage, you can calculate how much you’ll need to pay for solar panels. Then comparison shop for solar panels as you would other big-ticket item, such as a car or TV, says Vikram Aggarwal, CEO of the solar marketplace EnergySage. Some companies reduce installation costs through rebates and other programs.

Aggarwal recommends getting quotes from three to five contractors. EnergySage compiles solar companies’ customer reviews, certifications, Better Business Bureau profiles and other information to help you find reputable providers.

4. Take advantage of government incentives

A federal law passed in 2022 updated an existing tax break that was going to expire. The Residential Clean Energy Credit allows taxpayers who have solar (or other approved clean energy equipment) installed to recoup 30% of the cost in the form of a federal tax credit.

What that means: A solar setup that costs $25,000 would yield a $7,500 credit (30% of $25,000) that you can take advantage of come tax time to reduce any federal taxes owed. The credit isn't refundable though, meaning any money left over after your full tax bill is covered won’t be paid out to you. But you may be able to apply the remainder of the credit toward taxes owed in subsequent tax years.

The credit applies to eligible equipment installed after Dec. 31, 2021, and remains in effect at the 30% rate through 2032. It decreases incrementally after that.

Depending on your state, you may receive extra incentives like cash back, property tax exemption, waived fees and expedited permits. In some states, homeowners with solar panels can sell excess power to their local utility companies. Look up credits available in your state by reviewing the database of state incentives for renewables and efficiency.

5. Pick a purchase method that works for you

If you decide to purchase solar panels, shop around and search for incentives. Consider financing your solar panels with a loan if you’d rather spread out the cost over time. Options range from personal loans to rolling the cost of solar installation into a refinanced mortgage. Explore all your options and use a solar loan calculator to determine payments and total interest before you decide.

Keep in mind that you don’t have to buy solar panels — you can lease them, too. Leasing offers a lower upfront cost, though since you don’t own the panels, they won’t raise the value of your home, and you may not be eligible for incentives.

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Is solar panel installation right for your home?

If you live in an area with high energy rates and a suitable solar rating, and if you can afford the initial investment, it’s worth installing solar panels on your home while the 30% tax break is in place — for the good of the environment and your wallet. But don't expect to eliminate your power bill overnight.

Going solar isn’t the only potential way to save money. Learn more about what you can do to lower your bills.

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