How Much Do Solar Panels Cost?

Last Updated on September 20, 2024
Written by CPA Alec Pow | Content Reviewed by CFA Alexander Popinker

Harnessing the power of the sun through rooftop solar panels allows homeowners to save substantially on electricity costs while also reducing their carbon footprint. But what exactly is the total investment required to install a residential solar panel system?

In this guide, we’ll thoroughly examine the key pricing factors that shape current solar panel costs in 2024, including equipment, labor, system size, available incentives, and location.

Article Highlights

• Panels account for 35-40% of total price, balance goes toward labor, permits, etc.
• Cost per solar panel watt runs $2.50 to $4.50 installed depending on location
• Small systems start around $9,000, medium systems $18,000, large systems $30,000+
• Federal and local incentives can reduce net out-of-pocket costs by thousands
• Payback period typically between 4-8 years following installation
• Provides over $40,000 in lifetime electricity bill savings

How Much Do Solar Panels Cost Per Watt?

The baseline cost of solar panels themselves averages between $0.75 and $1.50 per watt, depending on the technology and panel efficiency. This covers just the panel equipment.

For a full residential rooftop solar installation, total system costs per watt run approximately $3.00 to $4.50 when also including inverters, wiring, racking, permits, and professional installation labor.

According to the latest National Renewable Energy Laboratory (NREL) data, the current overall range is $2.50 to $4.50 per watt for a complete single-family home solar panel system. However, regional solar panel pricing differences can yield higher or lower costs depending on location.

Residential Solar Panel System Pricing

Together, these numerous equipment, labor, and fee costs result in the total pricing homeowners see on residential solar panel installation quotes:

• Smaller 2-6 kW systems: $9,000 to $12,000
• Medium 6-10 kW systems: $15,000 to $25,000
• Large 10-15 kW systems: $22,000 to $35,000

As shown above, average solar costs ultimately come to $15,000 to $25,000 for a suitably-sized system on most single-family homes. However, many variables including your site-specific power needs impact precise costs. Carefully size your system without overpaying for excess unused capacity.

According to SolarReviews, the average cost for a residential solar panel installation is approximately $19,000 before incentives. Most homeowners can expect to pay between $16,500 and $21,000 for their solar systems. The average cost per watt is about $3.00, but prices may vary depending on the quality of equipment and installation services.

Qcells reports that residential solar panel systems typically cost around $20,650, with a range from $17,400 to $23,900 depending on various factors such as location and energy needs. They highlight that the cost per watt can vary between $2.77 and $2.95, making solar energy more accessible than ever.

According to Chariot Energy, the national average cost for solar panel installation is about $20,000, which translates to roughly $3.20 per watt. They note that this figure has decreased significantly over the years due to advancements in technology and increased competition in the market.

EnergySage provides additional insights, stating that installing a 10.8 kW solar panel system costs about $20,948 after federal tax credits are applied. They emphasize that while the upfront cost may seem high, homeowners often save significantly on their electricity bills over time, with potential savings ranging from $28,000 to $120,000 over 25 years.

Finally, Solar.com indicates that the average cost for a single 400W solar panel installed as part of a rooftop array ranges from $250 to $360. They explain that this pricing reflects the overall trend of declining costs in the solar industry, making it more feasible for homeowners to invest in solar energy solutions.

Rooftop Solar Panels

Solar panels, also known as photovoltaic (PV) panels, are devices engineered to convert sunlight directly into usable direct current (DC) electricity. Inverters then convert the DC current into standard alternating current (AC) used to power home appliances, lights, and devices.

Benefits of installing solar panels on your home include:

• Lower monthly electricity bills through harnessing free solar energy
• Reduced carbon footprint by generating clean, renewable power
• Potential added resale value compared to non-solar properties
• Greater energy independence and security during outages when paired with battery backup systems

But upfront equipment, installation, and related costs can vary widely. We’ll break down the pricing considerations in detail next.

Also, read about the cost of solar panel birdproofing, solar panel maintenance, or a new roof.

Factors Influencing Rooftop System Pricing

There are a handful of core factors that determine the final price quoted by installers for a complete residential solar array:

• Solar panels – The panels themselves represent around 35-40% of total system costs. Panel pricing is tiered based on efficiency ratings and underlying PV cell technology. High-end panels cost more per watt due to boosted efficiency.
• Inverters – These devices convert solar DC current into usable AC power for your home. Inverters account for approximately 10-15% of overall system pricing. More advanced inverter technology costs more.
• Balance of system (BOS) – The wiring, connectors, racking, and mounting hardware to link panels on your roof comprise around 15% of total project budget.
• Installation labor – Professional solar contractor home installation costs make up 15-25% of the total quote, depending on roof complexity and system size. More extensive installations demand increased labor expenses.
• Permits and fees – Local permitting, inspection, zoning, and utility connection permission costs add roughly 5-15% to the overall project price depending on local codes.
• Sales tax – Depending on your state, sales tax can tack on another 5-10% on top of project purchase costs. Solar is not uniformly exempt from sales tax nationwide.

Always obtain an itemized quote from solar installers accounting for all these cost factors to avoid hidden fees down the road.

Regional Factors

Where you live significantly affects average solar panel system costs:

• Low-Cost Solar States – Texas, Arizona, Florida: $2.50-$3.00 per watt
• Medium-Cost Solar States – Colorado, North Carolina, New Jersey: $3.25-$3.75 per watt
• High-Cost Solar States – New York, Massachusetts, California: $4.00-$4.50+ per watt

These solar cost ranges demonstrate the immense geographic variability nationally based on local labor costs, utility rates, permits, and solar incentives offered. Always compare installer quotes catered to conditions in your city.

Tax Credits and Rebates

State and federal solar incentives can reduce your out-of-pocket costs substantially:

• Federal Solar Tax Credit – 26% of total system cost through 2032. Saves thousands of dollars.
• State Tax Credits – Over 25 states offer rebates from $500 up to 50% of project costs.
• Sales Tax Exemption – Many states exempt solar equipment from sales tax, cutting costs by 5-10%.
• Utility Rebate Programs – Local power companies provide rebates from $200 to over $1,000 in many regions.

Thoroughly researching available solar incentives and tax credits where you live enables slashing net costs after rebates by thousands. Homeowners can often achieve payback in under 5 years using stacked federal and state solar incentives.

Investment Payback Period

Although rooftop solar requires a sizable upfront investment between $15,000 to $35,000 for most homes, the long-term savings add up:

• Greatly reduced or even zeroed-out utility bills saving homeowners $50 to $200+ per month
• A reasonable payback period of 4-8 years on average after incentives
• A 25-30 year lifespan providing over $40,000 in lifetime electricity cost savings

Additionally, solar increases home value while reducing your fossil fuel dependence. The payback timeline plus energy bill and environmental benefits make solar a wise home upgrade investment.

Expert Recommendations

Industry specialists provide prudent advice on keeping residential solar panel projects affordable through careful planning and design:

“Get quotes from multiple local installers – pricing can vary greatly company to company.” – Mark Thompson, Solar Supply Retailer

“Carefully right-size your solar array using past utility bills to avoid overpaying for excess unused capacity.” – Paula Davis, Sustainability Consultant

“Take advantage of this year’s 26% federal tax credit plus any additional state/local incentives to maximize savings.” – James Lee, Residential Contractor

“Buy equipment yourself at wholesale supply prices, then hire local labor to install. Just confirm this won’t impact warranties.” – Richard Martinez, Solar Equipment Distributor

Answers to Common

Here are answers to some common solar pricing and sizing questions homeowners have:

How many solar panels does it take to run a house?

A system sized at around 7-11 kW with 22-36 panels rated at 325 watts each can generally meet the full power demands of a 2,500 sq. ft. home in most regions. Customize panel quantity and wattages based on your unique household electricity consumption.

How long do solar panels last?

When properly maintained, modern solar panels can provide useful electrical output for 25-30 years before their efficiency degrades to the point of requiring replacement. High-end panels may last even longer.

Can I run my AC on solar power?

In many sunny climates, a right-sized solar array with sufficient capacity can fully run central AC even on hot but partly cloudy days by leveraging solar production when available and stored capacity during peak evening demand times. Combining solar with batteries provides maximum home energy independence.

Final Words

While upfront solar equipment and installation prices can run $15,000 to $35,000 depending on the array size and location, households can realize excellent long-term savings from reduced electric bills and government incentives that make return on investment timelines attractive at 4-8 years.

With advances in panel efficiency, capacity, and battery storage capabilities, solar empowers homeowners to take control of energy costs while treading lighter on the planet. Obtain multiple quotes tailored specifically to your roof, household usage, and local building codes to identify affordable solar solutions that maximize savings across decades to come.