The cost of solar panels has declined dramatically over the last several decades and, with a sharp rise in utility electricity rates in recent years, home solar now offers more cost savings potential than ever before.
So, what’s standing in the way of American homeowners and solar panels? The biggest hurdle is often the cost of installing solar panels.
The upfront cost of installing solar is far less intimidating when you understand the various components, how savings are generated, and different ways to lower your cash outlay through financing.
The average cost of installing an average-size home solar system in 2025 is $29,360 before federal tax credits and incentives. The federal solar tax credit may reduce the net cost to $20,552, and local incentives can further lower the cost.
Solar energy is a popular alternative energy source that can reduce energy costs and increase home value. Our overview of the cost of solar panels will help you learn more about the advantages and disadvantages of a solar system.
The average cost of an 11 kW solar panel installation in 2025:
| Cost | Cost Before Federal Tax Credit | Cost After Federal Tax Credit |
| Low-end | $24,626 | $17,238 |
| Average | $29,360 | $20,552 |
| High-end | $33,193 | $23,235 |
How Much Does a Solar Panel Cost?
Today’s premium monocrystalline solar panels typically cost between 30 and 50 cents per Watt, putting the price of a single 400-watt solar panel between $120 to $200 depending on how you buy it.
Less efficient polycrystalline panels are typically cheaper at $0.25 per Watt.
The cost of a solar panel also depends on how you buy it. If you purchase through a full-service installer, you will likely get a lower price for each panel than buying them individually from a retail store.
It’s worth noting that solar modules typically make up less than 20% of the overall cost of a home installation. So, opting for less expensive (and lower quality) panels isn’t a very efficient way to reduce the overall cost of a project, and in most cases can lower the return on investment for going solar.
Solar Power Cost: Price per Watt vs cost per kWh
There are two main ways to calculate the cost of putting solar panels on your home:
- Price per watt ($/W) is useful for comparing multiple solar offers
- Cost per kilowatt-hour (cents/kWh) is useful for comparing the cost of solar versus grid energy
Let’s dive a little further into each measurement.
What is solar price per watt?
A fully installed solar system typically costs $3 to $5 per watt before incentives like the 30% tax credit are applied. Using this measurement, 5,000 Watt solar system (5 kW) would have a gross cost between $15,00 and $25,000.
The price per watt for larger and relatively straightforward projects are often within the $3-$4 range. Claiming incentives like tax credits and rebates can bring the PPW even lower.
However, the following factors may push your solar price per watt into the $4 to $5 range.
- Smaller system size
- Unusual roof material or layout
- Premium panel and inverter models
- Multiple arrays versus a single array
- Additional work like panel box upgrades, trenching, or roof repair
Cost Per Kilowatt-Hour (kWh)
Another measure of the relative cost of solar energy is its price per kilowatt-hour (kWh). Whereas the price per watt considers the solar system’s size, the price per kWh shows the price of the solar system per unit of energy it produces over a given period of time.
Net cost of the system/lifetime output = cost per kilowatt hour
You may also see this referred to as levelized cost of energy (LCOE).
What is a kWh?
A kilowatt-hour is a unit of energy and is equivalent to consuming 1,000 watts – or 1 kilowatt – of power over one hour. For reference, an energy-efficient clothes dryer uses around 2 kWh of electricity per load, while central air conditioning uses around 3 kWh per hour.
While price per watt is most helpful in comparing the relative costs of solar bids, solar power cost per kWh is best used to illustrate the value of solar relative to buying your power from the electric utility.
For example, the average cost of a solar system purchased through solar.com is 6-8 cents per kWh, depending on the size of the system, type of equipment, and local incentives.
Solar panel costs by state
The cost of installing residential solar systems has dropped by nearly $15,000 over the past two decades, according to the Solar Energy Industries Association. That change has made solar more accessible for many more homeowners.
However, costs vary among states. Here are the typical costs for installing residential solar panels by state according to EnergySage data.
| State | Average solar system cost after incentives | Average cost per watt |
| Alabama | $30,411. | $3.20. |
| Arizona | $18,918. | $2.03. |
| Arkansas | $22,985. | $2.51. |
| California | $14,240. | $2.31. |
| Colorado | $19,711. | $2.94. |
| Connecticut | $22,188. | $2.87. |
| Delaware | $21,635. | $2.39. |
| Florida | $21,509. | $2.19. |
| Georgia | $21,875. | $2.61. |
| Hawaii | $19,726. | $3.38. |
| Idaho | $21,652. | $2.47. |
| Illinois | $24,771. | $3.04. |
| Indiana | $26,282. | $3.24. |
| Iowa | $28,256. | $3.22. |
| Kansas | $26,429. | $3.18. |
| Kentucky | $26,831. | $2.72. |
| Louisiana | $20,109. | $2.60. |
| Maine | $24,224. | $3.23. |
| Maryland | $24,625. | $2.72. |
| Massachusetts | $23,151. | $3.18. |
| Michigan | $21,674. | $3.14. |
| Minnesota | $25,320. | $3.03. |
| Mississippi | $23,570. | $2.84. |
| Missouri | $24,893. | $2.88. |
| Montana | $22,807. | $2.69. |
| Nebraska | $21,675. | $2.23. |
| New Hampshire | $22,352. | $3.21. |
| New Jersey | $22,410. | $2.61. |
| New Mexico | $19,014. | $2.97. |
| Nevada* | $20,052. | $2.26. |
| New York | $23,526. | $2.95. |
| North Carolina | $20,494. | $2.27. |
| Ohio | $21,851. | $2.62. |
| Oklahoma | $22,471. | $2.26. |
| Oregon | $19,986. | $2.62. |
| Pennsylvania | $23,213. | $2.69. |
| Rhode Island | $22,039. | $3.29. |
| South Carolina | $22,868. | $2.53. |
| Tennessee | $26,823. | $3.26. |
| Texas* | $20,052. | $2.14. |
| Utah | $21,064. | $2.60. |
| Vermont | $20,951. | $2.85. |
| Virginia | $25,623. | $2.85. |
| Washington | $23,329. | $2.66. |
| Washington, D.C. | $19,165. | $2.96. |
| West Virginia | $30,992. | $3.10. |
| Wisconsin | $24,062. | $3.07. |
| Wyoming | $29,435. | $3.56. |
* Before tax credits, according to EnergySage and Solar Reviews.
Solar panel installation cost breakdown
First, consider your average household energy needs. This tells you how big of a system you need. If you’re prone to regular power outages, a solar energy storage battery is definitely worth considering. Another solar cost factor people don’t always consider is the condition of their roof.
System Size:
Your average household energy consumption tells you how big of a system you need. For a typical American home, that could mean about 25 to 30 solar panels, each generating around 400 watts.
The exact amount depends on factors like system efficiency and the amount of sunlight (or solar irradiance) your area gets.
Considering the difference between a 7 kW system and an 8 kW system is almost $3,000, it’s smart to get your electrical loads as low as possible before going solar.
| Solar Panel Size | Average Solar Installation Costs |
| 2 kW | $6,015 |
| 3 kW | $9,225 |
| 4 kW | $12,035 |
| 5 kW | $14,893 |
| 6 kW | $18,500 |
| 7 kW | $21,008 |
| 8 kW | $24,552 |
Solar Panels Types And Quality:
Of the three types of solar panels available, homes are most commonly powered by monocrystalline or polycrystalline panels. In general, monocrystalline panels are considered the best bang for your buck. Cheaper solar panels are typically polycrystalline.
The difference comes down to efficiency and materials: Monocrystalline panels are made from pure, single silicon crystals; various silicon fragments melted together are used to make polycrystalline panels.
- Monocrystalline panels have a solid black appearance. With up to 24% efficiency, they work well in limited roof space and handle extreme temperatures better.
- Polycrystalline panels have a shimmering blue appearance. With 15% to 20% efficiency, they are good for large installations with more space but lose efficiency in extreme temperatures.
Most American homes end up needing 15 to 30 panels to meet their electrical demands. If you have limited roof space, you might need more efficient panels to make the investment worth it.
Additional Equipment Cost:
Solar panels usually make up the largest portion of your hard cost, but other equipment, such as the inverter factor into the overall price.
- Battery: If you live in an area with frequent power outages, a solar energy storage battery is worth considering. Solar batteries let you keep your lights on even when your local power grid is down. They are also expensive — usually $7,000 to $18,000.
- Inverter: A solar inverter converts the generated DC electricity into AC electricity that can be used to power your home. The cost of an inverter depends on its size and efficiency, but these devices typically cost between $1,000 and $3,000.
- Mounting system: This is what holds rooftop solar panels in place. Costs vary depending on the type of solar installation, but it generally costs between 7 and 20 cents per watt.
- Electrical wiring and hardware: This includes the wiring, switches and circuit breakers required to connect the solar panel system to your home’s electrical system. Electrical wiring and hardware costs typically range from 10 cents to 20 cents per watt.
Soft costs:
Soft costs include labor, permits, deposits and administrative expenses.
- Labor: Solar installation costs include hiring an electrician to handle wiring, connect the system to your house and set up various electronics to convert the power from the panels to the same AC voltage you have in your home.
Labor costs usually range from $0.50 to $1 per watt but can vary greatly depending on where you live and the complexity of the installation. - Permits: Permits ensure the solar panel installation is safe, follows regulations and can qualify for solar incentives and rebates. Fees vary based on location, but residential solar permits typically cost a few hundred dollars. Some state regulations cap permitting fees (for example, Colorado caps them at $500 for residential projects and $1,000 for commercial solar panel projects; California caps residential fees at $450).
- Maintenance: Occasional panel cleaning and repairs (depending on the warranty) can add to your overall cost. Most solar energy companies offer monitoring apps that help you see how much energy your solar system produces and when it may require maintenance.
The Condition of your Roof:
Solar panels are designed to last 25 to 30 years, and your roof needs to last just as long. We recommend taking care of any roof repairs before installing solar panels.
It’s more cost-effective than removing the panels and reinstalling them later. Get a thorough inspection of your roof now and take pictures.
One solar customer, Devin in California, discovered leaks in their roof a year after installing panels. It cost $5,000 to remove and reinstall the panels after the roof was replaced. “If I had known the roof was in such bad shape, I would’ve replaced the roof before installing the panels,” Devin told us.
Similarly, when Marie in Florida had to fix an old roof after going solar, she said it cost “$150 per panel to take them down so I can get a new roof and put them back up.”
Is solar worth the price tag?
Solar is worth it for most homeowners because it eliminates or significantly reduces your electric bill. It’s most helpful to think about solar panels as an investment.
It takes an average of 7.1 years to earn back the money you spend on installing solar panels. After that point, the electricity from your solar panels is free.
Most homeowners will save $31,000 to $120,000 over 25 years with solar. Your savings depend on a few factors, including your electricity rates and the cost of your system.
You can calculate your break-even point, or solar payback period, by dividing the final cost (the total cost of your solar panel system minus any upfront incentives) by your annual financial benefit (the amount you save on electricity combined with annual incentives).
The faster the cost of electricity increases, the shorter your payback period and the greater your savings will be.
Lower solar prices also drive shorter payback periods. Ten years ago, a home solar installation cost $3.36/W according to the National Renewable Energy Laboratory.
Solar prices did increase slightly in the last three years, primarily due to the pandemic-related equipment shortages felt in many industries. But, as of 2025, solar is back down to pre-pandemic prices, so it’s a great time to get quotes!
How Long Does It Take to Break Even With Solar?
The average solar payback period ranges from six to 10 years, with most homeowners breaking even in about seven and a half years. However, this timeline varies significantly based on your location, electricity rates, and available incentives.
For example, homeowners in Hawaii or California often see payback periods as short as four to six years due to high electricity rates, while those in states with lower rates might need eight to 12 years to break even.
To calculate your specific break-even point, add up your total costs (including installation, equipment, and any loan interest) and subtract all incentives and tax credits. Then, divide this net cost by your annual energy savings (your current electricity bill multiplied by 12, adjusted for any expected utility rate increases).
For instance, if your net system cost is $15,000 and you save $2,000 annually on electricity, you would divide 15,000 by 2,000 for a payback period of seven and a half years. Remember to factor in potential electricity rate increases, which can shorten your payback period as utility costs rise.
What Are the Hidden Costs and Downsides of Going Solar?
While solar panels offer significant long-term benefits, several often-overlooked costs and considerations can impact your overall investment.
Beyond the advertised installation price, homeowners should prepare for additional expenses throughout their system’s lifetime and understand certain limitations that might affect their solar experience.
Understanding these hidden factors helps set realistic expectations and allows for better financial planning.
The most significant hidden costs and potential drawbacks include:
- Winter performance: Snow removal services might be necessary in colder climates. Additionally, reduced winter sunlight can lower system production during these months, affecting your overall return on investment calculations.
- Annual maintenance: Professional panel cleaning and inspection services are needed once or twice per year to maintain optimal performance. While panels are generally low-maintenance, neglecting this routine care can reduce efficiency over time.
- Roof repairs: If your roof needs maintenance after solar installation, removing and reinstalling panels adds to typical roof repair costs. Some installers recommend preventative roof maintenance before installation.
- Home insurance: Adding solar panels increases home insurance premiums, though the exact amount varies by provider and coverage level. Some insurers may require specific coverage riders for solar equipment.
- HOAs and permitting: In addition to basic permit fees, some homeowners face unexpected costs when meeting HOA requirements or local building codes. These requirements might include specialized mounting hardware, screening materials, or system modifications.
- Inverter replacement: Most string inverters need to be replaced after 10–15 years. While this expense is predictable, it’s often overlooked in initial cost calculations. Microinverters last longer but cost more upfront.
- Monitoring fees: While many monitoring systems are free initially, some require annual subscriptions after the first few years to maintain advanced monitoring capabilities and smartphone app access.
- Utility connection: Some utility companies charge additional fees for grid interconnection or require system upgrades to accommodate solar installations.
How should you pay for solar?
How you pay for solar impacts your total cost and long-term savings. There are three main ways to pay for home solar:
- Purchase it with cash. If you have a large enough tax bill to take advantage of the ITC and can pay for your system upfront, a cash purchase will give you the best long-term savings.
- Take out a solar loan. A solar loan is right if you don’t want to shell out the cash required to pay for a system upfront. Some solar loans don’t require any money down, allowing you to start saving on day one. You’ll own your system, so you’ll receive any available incentives.
- Sign a solar lease. A solar lease or power purchase agreement (PPA) is a good option if you’d prefer someone else to monitor and maintain your system or if you don’t have a tax bill to take advantage of the ITC. Just keep in mind, you won’t own the panels on your roof and you’ll have the lowest long-term savings with a lease or PPA.
Bottom line
After solar incentives, the general range is $10,000 to $30,000 for an average American household to invest in solar panels. This includes the cost of the panels themselves, installation and any additional equipment needed.
It typically takes five to 15 years to break even on solar installation costs. Solar panels pay for themselves faster in states where electricity costs are high.
Because the sun is a free source of energy, once you’ve paid for your panels and installation, returns are high and maintenance costs are minimal. Next, read about the pros and cons of solar panels or learn how solar panels work.