How Much Does Solar Panel Installation Cost?

Solar power has become increasingly popular for homeowners looking to save on their energy bills and reduce their environmental impact. However, one of the most common questions is: how much does solar panel installation cost? In Nashville, TN, the cost of solar panels can be as high as $80,000, while in Phoenix, AZ, they’re about $28,000. And solar panel installation costs are divided in three ways: materials 50%; labor and permits 25%, and maintenance 25%.

Highlights & Key Takeaways

• When considering purchasing solar panels, know that the installation cost is typically included in the cost you see. For example, solar panels installed in California can range from $12,622 to $17,078 for the same-sized system, with the average gross price being $14,850.
• The larger your solar system, the higher the price tag.
• Solar systems installed in the southwest of a country where sunshine is more abundant will typically produce more energy than those installed in the northeast.
• The federal solar tax credit currently provides a 26% credit for the cost of the system.

How Much Do Solar Panels Cost to Install?

Solar panel installation costs can vary depending on several factors, including the number of panels needed and where you live. For most homes, 17 to 21 solar panels are necessary for 100% of their energy usage. After incentives are applied, the associated costs for these panels can range between $16,870 and $23,170 on average. 

However, it's important to note that your actual costs may differ based on the size and location of your home. For example, the average cost of Arizona solar panels may be between $10,455 and $14,145, with the average cost being $12,300 for a 5-kilowatt solar panel system. Solar panels in California can range from $12,622 to $17,078 for the same-sized system, with the average gross price being $14,850, below the national average, and can be as high as $20,498 or more.

Factors that Affect the Cost of Solar Panel Installation

The cost of solar panel installation can vary widely depending on several factors. Some of the most important factors to consider include the average electricity usage of your home, the amount of sunlight exposure your roof receives, the quality and size of the solar panels you choose, and the geographic location of your home. Other factors that can impact the cost include the type of roofing material on your home, the cost of permits and labor, and any applicable tax credits or incentives. 

Average Electricity Usage

Your household's energy consumption is a crucial factor in the efficiency of your solar panels. According to the U.S. Energy Information Administration, the average monthly electricity usage for a U.S. residential utility customer is around 877 kilowatt-hours (kWh). So, if your household consumes more energy than your solar panels can produce, you will still need to rely on grid electricity, which can reduce the potential energy savings from your solar panels. In contrast, if your household energy usage is lower than the amount of energy produced by your solar panels, you can sell the excess energy back to the grid and earn credits on your electricity bill.

Type of Solar Panel

The type of solar panel you choose will significantly impact the cost of your solar panel installation. Two main types of solar panels are available: 

• Monocrystalline
• Polycrystalline

Monocrystalline solar panels are more efficient and take up less space than polycrystalline solar panels. However, they also tend to be more expensive. On the other hand, polycrystalline solar panels are less efficient but are generally more affordable than monocrystalline panels. Therefore, monocrystalline solar panels may be the best choice if you want to maximize the energy your solar panels produce and have a budget. However, if you're on a tight budget and don't mind sacrificing efficiency, polycrystalline solar panels may be more cost-effective.

Size of Solar System

The larger your solar system, the higher the price tag. However, it's worth noting that purchasing a solar system is similar to buying other products in bulk, as a higher-wattage system can have a lower average cost per watt. This means that while a more extensive system comes with a higher upfront cost, it also provides more significant long-term cost savings in energy production. As a helpful reference, the U.S.'s average residential solar system size is between 5kW and 6kW. Still, the ideal size for your home will depend on factors like energy consumption, geographical location, and available roof space.

Geographical Location

The energy output of solar panels depends on several different factors. One common misconception is that solar panels perform better in hotter temperatures. However, cooler temperatures can produce greater energy, while excessively high temperatures can cause overheating and decrease efficiency. 

Another key factor is the geographical location where the solar panels are installed. Because of the earth's tilted axis as it orbits the sun, areas farther away from the equator tend to have lower energy production levels. This means solar systems installed in the country's southwest typically produce more energy than those installed in the northeast. Other weather conditions like precipitation, pollution, and fog can also impact solar panel efficiency, but solar panels can still produce energy even on cloudy days or in indirect sunlight.

Sunlight Exposure

The efficiency of your solar panels is also influenced by the amount of sunlight available, the climate of where you live, and even the time of year. States like Arizona, California, and Florida, which receive plenty of sunshine throughout the year, are ideal for solar panel installations, as they can yield greater power production. However, states with lower levels of sun exposure, such as Washington and Oregon, may see reduced efficiency. 

Labor Costs

Solar panel installation requires specialized electrical wiring skills, construction knowledge, and the ability to read and interpret design plans. Installers must also be proficient in performing electrical testing and using various hand and power tools. The job may also require working at heights, physical strength and stamina, and attention to detail. Therefore, it's important to hire a qualified solar panel installer who has the necessary expertise to do the job. 

That said, on average, the cost to install solar panels across the U.S. can vary greatly, with some states like Arizona, California, and Florida having more favorable conditions for solar power and, therefore, lower installation costs. It’s also important to understand that the average solar panel installation costs can vary based on who you ask. According to Fixr, the installation cost for solar panels on residential properties across the U.S. averages between $16,500 to $20,100. This cost estimate is based on installing a 6 kW grid-tied system on a roof in an area with moderate sun exposure, with most homeowners paying around $18,750.

Roof Type, Size, and Shape

The type, size, and shape of your roof can significantly impact the cost of solar panel installation. Flat roofs are generally the easiest and most cost-effective to install solar panels on, while sloped or tiled roofs may require additional equipment and labor. The size of your roof also plays a role, as larger roofs require more solar panels and can increase the overall installation cost. Additionally, the shape of your roof can impact the amount of sunlight the panels receive and their efficiency, which may require additional panels or positioning adjustments.

Panel Quality and Size

The quality and size of the solar panels can impact the installation cost. SunPower panels, as an example, known for their high efficiency and durability, have the highest average prices, with a 6 kW system costing $22,740 and a 10 kW system costing $37,900. However, most panel manufacturers have similar cost ranges, and other factors like installer experience, location, racking equipment, and inverter brand also impact the final system price.

Solar Panel Manufacturer

Selecting the right solar panel manufacturer for your needs is critical. Different manufacturers offer various levels of quality and efficiency, which can impact the price of the panels and the installation. For example, panels from the top-rated manufacturer SunPower or LG tend to be more expensive than those from other manufacturers. However, higher-quality panels can improve long-term savings through increased efficiency and durability. 

State and Local Incentives

Residential solar power systems can offer homeowners more than just savings on monthly electricity bills. Installing a qualifying solar panel system can also make them eligible for several rebates and tax credits offered by federal, state, and local governments. Here are a few examples of how tax credits can save you money, based on where you live.

• In California, you can receive a tax credit of up to 30% of the total cost of your solar panel system through the federal solar investment tax credit (ITC).
• Arizona offers a state tax credit of up to $1,000 for those who install a solar panel system on their home.
• In Colorado, you can receive a rebate of up to $1.75 per watt of installed solar capacity, up to a maximum of $9,000.
• Hawaii offers a tax credit of 35% of the total cost of the solar panel system, up to a maximum of $5,000 per system.
• In Massachusetts, you can receive a state tax credit of up to $1,000 for installing a solar panel system on top of the federal ITC.
• New Jersey offers a state tax credit of up to $1,000 for those who install a solar panel system, in addition to the federal ITC.

Permit and Interconnection Requirements

While solar system projects are relatively affordable, it's essential to note that you will probably be charged a permit fee. These fees range from $100 to $1,000; sometimes, you may need to cover additional expenses for plan reviews and inspections. Although these costs are usually included in the overall project cost, it's important to know them beforehand.

Average Solar Panel Installation Cost by State

Wondering how much solar panel installation will cost depending on your state? Check out this grid, according to EnergySage and Solar Reviews, that provides estimated costs for a 6-kW system before tax credits, applicable tax credits, and other factors that may impact the overall cost of solar panel installation.

According to EnergySage and Solar Reviews

Breakdown of Solar Installation Cost per Watt

The price per watt can break down the cost of a solar panel installation. And though this information can change frequently, the current average price per watt for a solar panel system in the U.S. is $2.60. This price per watt can vary based on factors such as the type and quality of solar panels, the system's size, and the installation's location. 

This said, most installers price their systems based on the system's wattage, with the average cost per watt ranging from $3 to $5. This cost per watt represents the price for each "unit" of energy the solar panel system produces. While $1 may not seem like much, it can add up to thousands of dollars when multiplied by the system's total wattage. If you only need a few panels for a small DIY project, prices start at around $200 to $350 per panel or 80 cents to $1.40 per watt. 

How to Estimate the Cost of Solar Installation for Your Home

If you are seriously considering solar panels and want to understand the average cost of solar panel installation, these steps should help.

• Determine your energy needs. The first step is to determine how much energy your household consumes. Look at your electricity bills to see how much kilowatt-hours (kWh) of electricity you use monthly.
• Calculate the size of your solar panel system. Once you know your monthly energy usage, you can calculate the solar panel system size you need. A typical residential solar panel system is around 6 kW, generating about 7,500 kWh of electricity per year.
• Determine the cost per watt. The cost per watt of solar panels typically ranges from $3 to $5. Multiply the size of your system by the cost per watt to get an estimate of the system's total cost.
• Check for available incentives. Many states and utility companies offer rebates or other incentives for installing solar panels. Check with your local utility company or state energy office for available incentives. And remember that the federal solar tax credit currently provides a 26% credit for the cost of the system, and many states and local governments offer additional incentives.
• Get quotes from multiple installers. Don’t settle with the first installer your meet with. Be sure to get quotes from multiple solar panel installers to find the best deal. Make sure to compare the cost per watt, the quality of the equipment, and the warranty each installer offers.

Tips to Lower the Cost of Solar Panel Installation

Researching and comparing various solar panel installation companies is key to securing the best upfront costs for solar panels across the U.S. Familiarizing yourself with the available tax incentives, rebates, and credits can also make it a more profitable investment in the long run. To obtain the most favorable price, consider the following

• Obtain multiple quotes and compare the pricing, warranties, and equipment offered
• Take advantage of available incentives and financing options
• Purchase during off-peak seasons to save on installation costs potentially
• Negotiate with the installation company to potentially receive discounts or a better overall deal

Additional Solar Panel Costs to Consider

The cost to maintain, clean, monitor, insure, and repair solar panels can vary depending on the size of the system and the type of equipment used. Solar panel maintenance costs are generally relatively low, ranging from $10 to $100 annually. However, it's important to remember that regular cleaning of the panels is necessary to ensure optimal energy production, which can cost around $150 to $300 per cleaning session. 

Additionally, monitoring the system's performance is crucial, and this can be done through software or hardware that can range from free to $500 per year.

Insurance is another consideration. If your solar panels are permanently attached to your home's structure, such as rooftop-mounted panels, your homeowner's insurance policy may cover them as part of your dwelling coverage. Solar panels not attached to your home, such as ground-mounted panels, may be covered by your homeowner's insurance policy under other structures coverage. However, some insurance policies exclude coverage for solar panel damage caused by wind or hail. So, be sure to double-check your coverage before installing solar panels to ensure your investment is protected.

Finally, repairs can be necessary in the event of damage or component failure, and the cost of these repairs can vary widely depending on the extent of the damage and the system's warranty.

Ways to Finance Solar Panels

Solar panel loans are personal loans provided by multiple lenders, including LightStream, Credible, SoFi, BestEgg, Upgrade, and more. Depending on the loan amount, the lender, and your credit score, the average interest rate for a solar panel loan ranges from 3% to 8%, although it could be higher. Some lenders might provide lower interest rates to borrowers with excellent credit scores or for shorter loan terms. To get the best interest rate and loan terms for your solar panel financing, comparing loan offers from various lenders is advisable.

Final Word

The cost of solar panel installation varies depending on several factors, including the size of your home, your energy needs, and the location of your property. While the upfront cost of $16,870 and $23,170 on average may seem high, it's important to consider the long-term savings and benefits of solar energy, including reduced energy bills and a lower carbon footprint. Financing options, tax incentives, and rebates are available to help make solar panel installation more affordable.