Solar energy is on the rise and installing home solar panels is one of the easiest ways you can help reduce your environmental footprint and save on electricity in the long run. The average cost of a solar panel system varies, and multiple factors can influence pricing within each state. The cost of panels should continue to decrease as technology advances and the solar manufacturing industry achieves greater economies of scale.

This article will discuss the average costs and factors associated with solar panels, whether solar panels are worth the investment, as well as tips for anyone looking to take the next steps and purchase solar panels.

AVERAGE COST OF SOLAR PANELS

While a solar panel system will eventually reduce your overall electricity expenses, it does require a significant upfront cost. The average cost of solar panels varies by state so determining the cost of solar panels and calculating your returns can be complex. There are federal solar tax credits that deduct up to 30% of the total cost, making them even more affordable for the average consumer. The following breakdown of state averages is based on the installation of a 6-kilowatt system (slightly below the average size of U.S. systems) and after tax credits are applied. (Note. Data is only provided for the majority of U.S. states, not all 50).

State	Cost
Arizona	$14,640
Arkansas	$18,360
California	$17,160
Colorado	$20,640
Connecticut	$19,320
Washington D.C.	$21,000
Delaware	$16,500
Florida	$15,480
Georgia	$19,200
Idaho	$17,580
Illinois	$18,960
Indiana	$21,780
Iowa	$20,700
Louisiana	$19,020
Maine	$20,700
Maryland	$18,780
Massachusetts	$21,240
Michigan	$22,680
Minnesota	$20,700
Missouri	$17,100
Nevada	$15,600
New Hampshire	$21,660
New Jersey	$17,700
New Mexico	$20,340
New York	$20,880
North Carolina	$18,240
Ohio	$17,880
Oklahoma	$15,720
Oregon	$18,780
Pennsylvania	$18,360
Rhode Island	$21,660
South Carolina	$17,340
Tennessee	$17,820
Texas	$16,620
Utah	$16,140
Vermont	$18,840
Virginia	$18,240
Washington	$19,500
West Virginia	$17,520
Wisconsin	$20,460

WHAT IMPACTS THE COST OF SOLAR PANELS?

Many different factors affect the average price to install solar panels within your home or business. It’s important to keep in mind that when you pay for your installation you are paying for a lot more than just a product. The solar panels themselves only make up about 15% of your total cost. The rest is split between labor, design, permit fees, sales taxes and additional supporting equipment such as the inverter, wiring, and mounting hardware.

EQUIPMENT

The most obvious factor that affects the cost of solar panels is the size of the system you are interested in. The more efficient, higher quality equipment comes with benefits that may be well worth the added cost. Not all solar panels are created equal, and bigger is not always better. Better hardware and accessories can produce more electricity with the same amount of sunlight, and often includes a far more comprehensive warranty, too.

LABOR AND LEGAL PERMITS

You will usually have to pay some additional fees in order to get your solar energy system connected to the grid. There is a significant amount of labor required when it comes to design and engineering, HOA approvals, site inspections, permit filings, and the physical installation.

THE CHARACTERISTICS OF YOUR HOME

The location of your home will affect the average cost of solar installation in a couple of ways. The best houses for solar panels have a south-facing roof. If you have a south-facing roof with a slope of approximately 30 degrees, solar panels will generate the more energy than on a neighbor who has a north-facing roof. However, if your house is three stories or has a multi-tiered roof or skylights, the additional time and effort to finish the wiring and installation may increase your total spend. You also need to take into consideration the amount of energy your home uses as that will directly impact how extensive of a system you need to install. If you need to replace shingles or entirely replace your roof before installing solar panels, that can put an unexpected dent in the budget as well.

HOW LONG UNTIL YOU START SAVING MONEY BY SWITCHING TO SOLAR PANELS?

Now that you know more about the approximate cost of solar panel installation, you may be wondering how long it will take for you to begin seeing a return on that investment. The short term may seem like a large expenditure, but over time the solar energy savings will more than pay for the system itself. It may take up to five to twelve years to break even, depending on your electricity price and whether you are putting solar on your business or home. The length of time it will take to see savings depends on many factors including your energy usage, the upfront price of installation, and the amount of energy the solar panel system creates. In most cases, solar panels will increase the value of your home. Many utilities will allow you to sell the extra power that your solar panels are producing.

ARE SOLAR PANELS WORTH IT?

The short answer, yes. Solar panels are absolutely worth it and arguably remain one of the best home improvement investments, despite the initial short-term expenses. Ten years ago, the average cost of a system was more than $50,000. Now in 2023, solar panels in the U.S. cost less than half of that. Solar panels are typically under warranty for an average of 25 years and will last even longer than that. An investment in solar today could save you thousands of dollars when considering increasing utility prices over the next couple of decades.

TIPS FOR SOLAR SHOPPERS

The following tips are especially helpful for people looking to make the switch to solar energy. Your first step should be reaching out to friends, neighbors, and family. First-hand reviews can point you in the right direction and are a valuable source when it comes to customer service experiences, potential issues to avoid and pricing options. Like many other big purchases, you will get what you pay for and high quality isn’t always cheap.

HOW LONG UNTIL YOU START SAVING MONEY BY SWITCHING TO SOLAR PANELS?

Starting a solar panel system installation is a big undertaking. When shopping around take into consideration the typical cost of installing solar panels in your area, look for customer feedback and take your time checking several sources. You should make an effort to get at least three free quotes from vetted contractors in your area, but the more the better. Keep in mind, however, that not all solar panels are created equal and not all solar panel installers are either. Make sure you understand all the factors that go into the price before making a choice.

COMPARE ALL OF YOUR EQUIPMENT OPTIONS

It is important to understand the type and brand of equipment that you are presented with from a solar installer. Not all solar technology is the same. The production performance, quality, durability, and warranty will all vary by manufacturer. That is true not only for the solar panels themselves, but also your inverter, racking, and monitoring equipment. Be sure to ask your installer for the specific information and associated warranty paperwork for each component of the system before you make a decision.

CONCLUSION

Remember, the average price of solar panels and installation will ultimately depend on several factors including your location, characteristics of your home, and the product technology you choose, as well as the actual installation process. Switching to solar will definitely save you money in the long term. In the short term, it will require an investment or a loan payment that in many cases will be similar to your existing electricity bill. Remember though that finding a lower upfront price is not always worth it if you end up sacrificing efficiency or inferior equipment just to reduce upfront costs, as your reliability, productivity, and payback period will suffer in the long run.