Average Cost of Solar Panels – How Much Does Solar Panel Installation Cost?

Solar panel installation costs on average $18,500 in the United States for a 6kW solar panel system installed on a 1,500 square foot home. The cost of solar panels per watt can range from $2.50 to $3.50, depending on the geographical location of the residence. Residential solar panels are typically 3kW to 8kW in size and may cost between $9,255 to $28,000 in total installation expenses. See the average cost of a solar panel installation by size (before tax credits or discounts).

Solar energy is becoming more popular, and installing home solar panels is one of the simplest methods to help minimize your environmental impact while also saving money on power in the long term. The typical cost of a solar panel system varies by state, and numerous factors can impact pricing. As technology progresses and the solar manufacturing sector obtains greater economies of scale, the cost of panels should continue to fall. This post will go through the usual costs and aspects involved with solar panels, if they are worth the investment, and recommendations for those wishing to take the next step and buy solar panels.

How Much Do Solar Panels Cost?

The following are the primary elements that will decide how much it will cost to install solar panels on your home:

Average utility expenditures and energy use in your home

  • Your home’s average utility costs and energy usage
  • Your rooftop’s solar potential, or the amount of sun it receives yearly
  • The average local cost for a solar panel system in your area
  • The average labor costs and demand in your area
  • Local incentives and rebates you could receive

Keep in mind that the cost of installing solar panels varies by state. According to the Department of Energy, however, the cost of installing solar panels is decreasing nationally year over year as a result of new solar energy projects.

Solar costs have plummeted considerably in recent years, thanks to the Chinese government’s influence on the global solar industry through low-cost financing, which has increased solar panel production by more than tenfold. The DOE’s objective is to reduce solar installation prices by half by 2030, so now is the time to invest.

How Big of a Solar Panel System Do You Need?

The average residence consumes 905 kWh of power each month, or around 10,850 kWh per year. To assist cut utility expenditures, an average-sized home with enough sunlight might install a 5 kW to 6 kW solar panel system. You might be interested in learning about your solar sun number score depending on your home’s location and typical sunshine exposure, as detailed below. For further perspective, look at the various solar panel dimensions and sizes.

The money you save on your power bills with solar panels can more than pay for the original installation costs in 7 to 20 years. Solar rebates and incentives are widely available from both the government and local energy suppliers, which may considerably accelerate your return on investment.

You may also be able to participate in selling excess power generated by your solar panels in your region if net metering is available.

Additional Solar Panel System Costs

To get the most accurate price estimate, you’ll want to add a few items to the overall cost of your solar energy system. Here are a few more elements that will influence the cost of your solar panels:

Labor expenses – Local labor costs for solar installation will vary based on your location and the normal prices charged by solar installers in your region.

Installing solar mounts – The expenses of installing the racks that hold your home solar panels will have an impact on the overall cost. There are a few solar mounting possibilities.

Installing solar inverters – A solar inverter will be required to convert direct current (DC) electricity from the panels into alternating current (AC) power that can be used in your house.

Other costs include any municipal permission fees, inspection fees, and taxes on the solar panels.

With the decrease in solar panel prices, these “soft solar panel expenses” now account for the majority of what you spend when installing solar for your house.

Fortunately, as more people switch to solar power, soft costs have decreased—a trend that is expected to continue in the future. According to a study conducted by the federal government’s National Renewable Energy Laboratory (NREL), installation prices have declined at a pace ranging from 13% to 18% on an annual basis.

How Many Solar Panels Will You Need?

To figure out how many solar panels you’ll need, consider how much power you consume in your house as well as the sorts of solar panels you have installed.

The average home in the United States consumes around 900 kilowatt hours (kWh) per month, or approximately 11,000 kWh per year. By reviewing your previous power bills, you may quickly compute your real use. As a basic guideline…

  • A 3-kWh solar panel system will produce between 3,600 and 4,800 kWh per year.
  • A 5-kWh system generates between 6,000 and 8,000 kWh per year.
  • A 10-kWh system may generate between 12,000 and 16,000 kWh per year.

The solar panels would cost between $4,000 and $16,000 depending on the size of the installation. Add another $3,000 to $10,000 for additional essential components such as panel racks, wiring, and solar inverter prices, and the overall cost of solar panel installation is now closer to $20,000.

How Does the Amount of Sunlight Affect Solar Panels?

Different parts of the United States get more or less sunshine than others. The number of solar panels you will require is directly proportional to the quantity of sunshine you receive.

Southern states often receive more sunlight than northern states. However, southern areas with higher elevations and less cloud cover, such as Arizona and New Mexico, receive more solar radiation than states such as Florida or Georgia. As a result, for the same size house, you’d need more solar panels in Georgia than in Arizona.

Remember that even though the sun is shining, if it is hidden behind a cloud, your solar PV system will not absorb the same amount of solar energy. This means that a solar panel in San Diego will generate more electricity in a year than a solar panel in Seattle.

The picture below will assist you in calculating the solar energy, also known as solar insolation, in your region. Investigating your solar number score should also be beneficial. If your roof does not receive enough sunshine and you reside on a large enough piece of property, you may have additional choices for placing solar panels elsewhere that receive more sunlight.

What is the return on investment for solar panels?

You can determine the return on investment for solar panels by calculating the overall payback period. Calculate the cost of installing a solar panel system and then calculate the monthly savings on electricity bills. These two figures indicate how soon your funds will pay your first expenses. Electricity rates will vary by area, with the Northeast paying more than the Northwest. Solar is more cost effective if power rates are high and sunlight is plentiful.

Does Solar Net Metering have an impact on ROI?

In locations where net metering is available, consumers can sell surplus solar energy to their local utility. This reduces their power bill, shortens their payback period, and increases their cost savings.

Should You Rent or Buy Solar Panels?

There are numerous payment alternatives that include solar installation expenses into a consumer’s energy bill, such as solar panel leasing or a power purchase agreement (PPA). Solar leases allow homeowners to install solar panels without having to pay anything (or much) up front, lowering the overall cost of solar panels. The homeowner just pays a single monthly charge when the panels are installed. The charge covers installation fees, which are amortized over time, as well as the cost of electricity supply.


Consumers gain much from third-party financing arrangements, the most important of which is that there is no big out-of-pocket outlay. And the solar system generates a positive cash flow from the start. Unsurprisingly, these agreements have played a significant role in fueling today’s solar energy installation boom.


It is important to note that in most solar leasing agreements, the solar business retains any benefits connected with owning the solar panels. However, the customer benefits in other ways. The solar firm may provide a monthly cost that is lower than the utility rate or that does not climb in tandem with the utility rate. At the end of the term, homeowners have the option of renewing the contract, purchasing the system, or having the solar panel equipment removed.

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