It’s true that installing solar panels will reduce electricity bills, but it’s also true that it is not a cheap alternative. The best way to calculate solar panel cost is by determining its price per watt. It’s worth noting that price per watt is pretty consistent across the USA.
The average cost of a solar panel in 2019 is $3.14 per watt. Whereas, the average solar panel system in the USA is nearly 6 kW. When you do the math, the average solar panel system would cost over $13,180 after tax credits. Yes, it’s costly, but the cost has decreased since the last ten years and continues to do so at the average rate of six percent per year. The average price per watt of solar panel ranges between $2.7 to $3.5, which makes the cost of an average-sized installation between $11,300 to $14, 900 after tax in the USA.
Average Solar Panel Cost in the USA
| Power Output | Cost before tax credits | Cost after tax credits |
| 2 kW | $6200 | $4300 |
| 3 kW | $9400 | $6500 |
| 4 kW | $12,500 | $8700 |
| 5 kW | $15,700 | $10.900 |
| 6 kW | $18,800 | $13,100 |
| 7 kW | $21,900 | $15,300 |
| 8 kW | $25,100 | $17,500 |
| 9 kW | $26,500 | $18,500 |
| 10 kW | $31,400 | $21,900 |
| 12 kW | $37,600 | $26,300 |
| 15 kW | $47,100 | $32,900 |
| 20 kW | $62,800 | $43,900 |
| 25 kW | $78,500 | $54,900 |
The prices mentioned above are mentioned after deducting the federal solar tax credit, also called as ITC. The tax credit reduces solar panel cost by 30%. Moreover, many states have their tax incentives and rebates which will reduce the cost of solar panel installation in their respective states.
National average cost per watt is $3.14.
States with on-average solar panel cost:
- Colorado
- South Carolina
- Pennsylvania
- Utah
- Georgia
States with above-average solar panel cost:
- Oregon
- California
- New Mexico
- Los Angeles
- Wisconsin
- Minnesota
- Iowa
- Missouri
- New York
- Connecticut
- Massachusetts
- New Hampshire
- Rhode Island
- Vermont
States with below-average solar panel cost:
- Washington
- Nevada
- Arizona
- Florida
- North Carolina
- Texas
- Virginia
- Illinois
- Michigan
- Ohio
- Indiana
- Maryland
- Delaware
- Maine
Average solar panel cost in US states
| State | Avg Solar Price for 6 KW | Avg Solar Price for 10 KW |
| Washington | $9,900 – $13,600 | $16,500 – $22,700 |
| Florida | $9,100 – $11,900 | $15,300 – $19,900 |
| Rhode Island | $13,100 – $15,700 | $21,800 – $26,300 |
| New York | $12,200 – $16,000 | $20,400 – $26,700 |
| Massachusetts | $12,200 – 15,300 | $20,400 – $25,600 |
| Connecticut | $12,200 – 15,000 | $20,300 – $25,100 |
| New Hampshire | $12,000 – $14,800 | $20,100 – $24,700 |
| California | $11,900 – $15,200 | $19,800 – $25,300 |
| South Carolina | $11,800 – $14,500 | $19,800 – $24,200 |
| Oregon | $11,800 – $15,100 | $19,600 – $25,200 |
| New Jersey | $11,800 – $14,500 | $19,600 – $24,200 |
| Colorado | $11,600 – $14,900 | $19,400 – $24,900 |
| Pennsylvania | $11,600 – $14,400 | $19,300 – $24,100 |
| Illinois | $11,400 – $13,900 | $19,000 – $24,100 |
| Texas | $10,900 – $13,800 | $18,200 – $23,000 |
| North Carolina | $10,500 – $14,100 | $17,500 – $23,600 |
| Virginia | $10,400 – $13,300 | $17,300 – $22,200 |
| Ohio | $10,300 – $13,000 | $17,200 – $21,700 |
| Maryland | $10,300 – $12,700 | $17,200 – $21,200 |
| Arizona | $10,300 – $12,000 | $17,200 – $20,100 |
Furthermore, it’s worth noting that bigger solar system cost more, but also make a ton of saving. With a 10kW solar energy system, you can power your whole house with little to none electricity bills. Although installed a high power solar system will cost your more, it does save you a ton of money and moreover, it’s comparatively cheaper than it used to be. Today, solar panels have become affordable and you can buy one with $0 down payment and low-interest solar loans. It’s worth noting that solar panel have become more affordable than it used to be.
Cost of a Single Solar Panel
Solar installers purchase panels in bulk from distributors; they buy at a much lower rate than the average consumer would. Generally, they get a single solar panel at $0.75 per watt. For a 250 watts output solar panel, it will cost you just over $180. On the other hand, if you are buying a solar panel on your own for a DIY project, you will pay nearly $1 per watt. For the same $250 watt output it will cost you over $250. Solar panel cost usually ranges from $0.85 per watt to $1.25 per watt for an output up to 350 watts. For now, the cost is pretty cheap, but it will soon add up as you need to install inverters, solar batteries, and other equipment for the solar energy system. Even after that, the cost of installing a solar panel system is still cost-effective.
Determining the Cost of Solar Panel System Installation
Except for the cost of solar panels, a lot goes into determining the total cost of installing a solar panel system. The cost of the solar panel itself will vary marginally depending on the manufacturer, but other equipment such as batteries, controllers, inverters cost higher, especially if you want to install from a reliable manufacturer. Efficient, high-quality equipment will cost you more, but will also provide your benefits that are worth the added cost. Not only they would produce more electricity but also have longer warranties.
On top of the cost of equipment, there’s the cost of permits and labor. Generally, you will have to pay a fee up to $500 to connect your solar system to the grid energy. Furthermore, it takes significant manpower to finish the project which includes, designing the system based on your house structure, permits, site visits, and the installation of a solar panel.
The structure of your house will also determine the cost of solar panel installation. For example, if your roof has slopes especially facing south, installing a solar panel will be easier. If your roof as a dormer, skylights, etc., you will need additional hardware and manpower to install solar panels to get the same energy output.
How Much Can You Save On Solar Panel System Installation?
How much you will save will largely depend on your location as different cities and states have varying electricity costs. It will also depend on the amount of sunlight, incentives, and rebates you receive in your location for using a solar panel system.
Here’s a savings breakdown after 20 years of using solar panel system in major US cities
- Seattle – $12,600+ (Payback in 9 years)
- Portland – $17,200+ (Payback in 7 years)
- San Francisco – $36,400+ (Payback in 7 years)
- Los Angeles – $49,500+ (Payback in 7 years)
- Albuquerque – $26,900+ (Payback in 9 years)
- Austin – $15,600+ (Payback in 9 years)
- Charlotte – $16,000+ (Payback in 11 years)
- Baltimore – $29,200+ (Payback in 8 years)
- Washington, DC – $22,500+ (Payback in 6 years)
- Jersey City – $35,200+ (Payback in 6 years)
- New York – $28,000+ (Payback in 8 years)
- Boston – $43,900+ (Payback in 5 years)
- Philadelphia – $20,100+ (Payback in 10 years)
- Chicago – $21,100+ (Payback in 7 years)
Solar Panel Installation Cost
In an average a typical house consumers 1 kW of power for an hour. The average price of 1 kWh of electricity is nearly $0.10, so for a month, the average monthly bill will be around $73 – $75 for 730 kWh of electricity. It is the average price, which doesn’t include hot-tub, plasma TV, video games, air conditioning and other appliances that run continuously. Moreover, the electricity cost will vary across states and cities ranging from as low as $0.07/kWh to $0.24/kWh.
In an average, a solar panel generates 10 watts of power per sq ft, with a conversion efficiency of 12%. It represents that for 1 kW of power, you will need a 100 sq ft of solar panels. It is a typical number considering the fact the panel get sunlight 24 hours a day. But, that’s not the case; hence you will need a wider area of the solar panel to power your whole house. Then again, during the daylight, the amount of sunlight solar panels get depends on the length of the day, cloud cover and the angle at which your house is located.
Varying Solar Panel Cost Based on the US States
Some places such as Seattle and Chicago get only 3 to 4 hours of sunlight per day, thereby making solar panel installation expensive in those areas. Other places such as California and Colorado get up to 6 hours of sunlight per day, whereas Arizona gets up to 7 hours of sunlight per day, making solar panel installation cheaper in this area. People living in Seattle, Chicago and other places with less sunshine per day will have to install more panel to get their need power output.
The usual way to determine the solar panel system cost is the cost per watt which is calculated by dividing the total cost (equipment, labor, etc.) by power produced. It will also vary depending on the installation company you hire, incentives and rebates you get from your states, etc. For example, in California, the average cost-per-watt will be nearly $4 for a small system and nearly $3 for a large system.
The average installation cost of a solar panel is between $7 to $9 per watt
So, for a 5 kW solar panel system, it would cost you nearly $30,000. Many utility companies will give incentives that can slash the installation cost by 50%. Although the cost of solar panel is just over $3 per watt, the additional cost equipment, and labor makes installation cost up to $7 – $9 per watt. Homeowners interested in the solar shingle roof system will have to pay more with the cost ranging from $4 per watt to $8 per watt.
Saving on Solar Panel Installation Cost
Since the Solar and Wind Investment Tax Credit (ITC) was implemented in 2006, the cost of solar panel system installation has dropped below 70%; making it a viable option for consumers to install a solar panel and save energy bills.
Net Metering – To set up net metering is expensive but it does pay out on its own. This a billing setup which enables your solar system to send excess electricity to generate to the utility’s grid and get paid for it. Most homeowners, sell their solar system’s electricity to the utility during peak hours and buy electricity during off-peak hours. This either enables homeowners to earn money out of solar energy or simply even out the energy bills to zero.
This is measured through the utility’s home meter, which runs backward when the solar system is feeding electricity into the grid; however, it’s worth noting that different states have different rules.
Example: Here are some rules of the U.S. Department of Energy
California – Here, customers are credited for NEG (net excess generated) electricity on the next bill. The system capacity limit is 1MW and a 5% aggregate capacity limit.
Colorado – Like California, customers are credited for NEG electricity on the next month on the current retail rate. Consumers can receive payment at hourly incremental cost for the accumulated credit. The system capacity is 120% of customer’s annual consumption.
Net-metering varies largely depending on the state. It depends on factors such as capacity limits, credit retention, REC ownership, eligible technology, etc. Hence, homeowners should consult for their state’s net-metering rules.
Tax Incentives – The Federal incentives come in the form of ITC (Investment Tax Credit) which provides a 30% federal tax credit for installing solar panel system, but on qualifying residential and commercial property. Both homeowners and businessmen can use the credit while purchasing their solar system and install it in their property. The credit is applied to the federal income taxes. On top of ITC, there are state incentives and rebates offered by many states but not all. Some state-based incentives are given directly by utility companies.
Escape Rising Utility Rates – Utility cost has increased consistently over the years and will continue to do so. This is enough of a good reason for homeowners to invest in solar panel system. Compared to houses using utility grid houses with solar panel save more and their cost is fixed. The only investment in a solar panel is the upfront purchase and installation cost, after that the electricity produced is free. This makes solar power users independent of the fluctuating cost of fossil fuels. The good news is, a solar system has up to 30 years of lifespan.
Save Money on Energy – Let’s do the math; if a 5 kW system cost between $18,000 and $25,000 to purchase and install, the tax credits and state rebates will bring down the cost to $14,000. Considering an annual increase of electricity price to be 5 percent, and a homeowner gets an average annual bill of $1,200; then a solar power system producing 100 percent of the house’s electricity can save over $30,000 in 30 years or the lifespan of the solar system. This means your net saving would be $16,000 in 30 years.
Increase Home Value – Reports suggest that having a solar panel system or PV system increases the resale value of the house by nearly 4%. People are willing are pay more for a house that runs completely on solar energy independent of utility grid supply. According to the survey, the average market price increases by $4 per watt, so upon selling the house, you get nearly $15,000 for a 3.6kW Solar system.
Best Practices on Buying Solar Panels
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Get multiple quotes to save expenses
Installing solar panel is an invest and demands thousands of dollars, for which it does take some research and consideration by the homeowners. A report from NREL suggests that homeowners or businessmen who compare solar system providers save over 15% and avoid paying inflated prices offered by large installers. To avail smaller contractors you could join online networks or join communities for the recommendation. On average, you can save from $5000 to $10,00 on solar panel installation if your compare contractors.
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Avoid big solar panel installers
Chasing after big brands can be expensive and don’t guarantee that they are efficient. Basically, with large companies you pay over $5000 extra for their ads and marketing campaigns. Hence, smaller solar companies are the most cost-effective option. You get the same power output, efficiency, and quality at a lower price.
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Compare your additional equipment
Big companies not only offer high cost but also have fewer solar equipment options. You should check out other manufacturers, join communities for recommendations and online networks to get quotes from multiple manufacturers. Getting multiple quotes will enable you to make an informed decision. You could also look into companies provide equipment packages at a cost-effective price.
Roof Structure will Determine Installation of Solar Panels
To get the most out of your solar panels, it has to be positioned where the panels are exposed to the most of the sunlight and for more time in a day. The rooftop solar installation makes obvious sense, but not all roofs are suitable for solar panel installation.
Ideally, for residential solar panel installation, the house should have a large roof with a 30-degree pitch facing south. However, without the ideal conditions, your contractors can use additional hardware to install the solar panels.
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The direction of the roof
Ideally, south-facing roofs are the best for solar panel installation. That said, facing east or west can still produce a good deal of energy, but not as much as from a south-facing panel. This will reduce your electricity bills, as well as save money and reduce carbon footprint.
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Pitch angle
The pitch angle should be between 15 to 40 degrees. Even for a flat roof, you can install a solar panel for as long as it’s in a proper angle.
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Roof size and shape
A large square roof will be ideal for easy solar panel installation. In general, for 1 kW of the panel, you need 100 square feet of roof space. So, for a residential solar system, you will need nearly 500 square feet of space. So, make sure you have that much roof space on your house. On the other hand, skylights, dormers, chimneys will only hinder the available space for solar panel installation.
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Surrounding elements
For your solar panel to give its best, it should get full sunlight throughout the day. For this matter, tall trees or building in the surrounding can block sunlight, which will significantly reduce the electricity produced.
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Roof condition
A solar panel installation typically lasts up to 30 years and has to remain fixed on the roof. So, if your roof needs to be replaced, you should do it before installing the panels. Before installing solar panels, make sure that the roof is in good shape and doesn’t need to replace anytime soon.
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Roof material
Although solar panel installation work with all roof materials, a few materials such as slate, cedar, and clay tiles tend to break during installation. For a better hold, a wooden or cement roof would be best. However, experienced installers can manage to install on brittle material like clay tiles.
Top Solar Panel or PV system Facts
- It is the cheapest and the most abundant energy source in the world – In December 2016, the cost of solar energy installation dropped lower than wind energy installation and fossil fuels.
- Over 90 Petawatts of potential solar energy production is available on earth, making it the most abundant energy source.
- Nearly 1.5 houses in the USA are solar powered. It has a cumulative capacity of over 40 gigawatts.
- Solar panel efficiency had increased from 17.8% in 2013 to nearly 23% in 2018.
- Homeowners in the USA reach a breakeven point with a solar panel in just three years.
- There is a community solar panel installed in California, Colorado, Minnesota, and Massachusetts, where homeowners don’t have to install the panel on their house.
Conclusion
Solar panel installation does help you save thousands of dollars, and it’s not just for houses in the sunniest places in the USA. Residents of all sizes, shapes, and location can benefit significantly by installing the solar panel. Yes, it does have a high upfront investment, but on the long-run, you will be saving thousands of dollars. Moreover, with the availability ITC, tax credits, state rebates, etc. there isn’t a better time to adopt a solar panel to power your house.
