The Cost of Solar Panels

Solar panels are becoming more efficient, and the incentives for going solar have never been better.

With rising energy costs and environmental concerns, now is the perfect time to consider solar for your home.

Below, we’ll explain everything you need to know about solar panel costs, incentives, and their impact on your wallet.

Plus, we’ll show you how Project Solar can make the process easier and more affordable with transparent pricing and no sales pressure.

Key Takeaways

Solar panel systems cost between $18,000 and $43,000 before incentives.
Federal, state, and local incentives can cut solar costs by 30-60%.
The average payback period for solar panels is 8.5 years, with up to $90,000 in savings over 25 years.

Average System Cost

The average cost of a residential solar panel system ranges from $18,000 to $43,000, depending on the system size, location, and available incentives.

Typically, a 6-8 kW system - suitable for an average 2,000-square-foot home - will cost between $15,000 and $22,500 before applying any incentives.

However, after applying the 30% federal solar tax credit, the cost can drop significantly to between $10,500 and $15,750.

Your final price will depend on location, available incentives, system size, and your home’s specific features.

To get a quick estimate tailored to your situation, Project Solar offers an AI-powered tool that provides a personalized solar quote in just 5 minutes - without the hassle of pushy sales tactics.

Cost per Watt

The average cost per watt for solar panels in the U.S. is $2.84 for residential systems.

High-efficiency monocrystalline panels tend to be at the higher end of the price range, but they generate more power with fewer panels - ideal if you have limited roof space.

Project Solar uses top-quality black-on-black monocrystalline panels and Enphase microinverters to ensure maximum efficiency and reliability.

Commercial systems are slightly cheaper, ranging from $1 to $2.50 per watt.

How Incentives Impact Solar Costs

Solar incentives and tax credits play a significant role in making solar panels more affordable. Here are the top incentives available:

1. Federal Solar Tax Credit

The federal solar tax credit provides a 30% tax credit on the total cost of a solar system through 2032.

For a $20,000 system, this incentive means a $6,000 tax credit, reducing the net cost to $14,000.

Homeowners can save as much as $10,000 with this credit alone.

Project Solar helps you take full advantage of all available incentives to bring your installation costs down even further.

Note that this incentive will decrease to 26% in 2033 and 22% in 2034, so it’s wise to act soon to get the full benefit.

2. State and Local Incentives

Many states offer additional incentives to reduce solar costs further.

For example, New York provides a 25% state tax credit of up to $5,000.

Some states also exempt solar installations from sales or property taxes, significantly lowering costs.

Make sure to research what’s available in your area.

Or, let Project Solar do the heavy lifting by providing a comprehensive, transparent quote that includes all applicable state and local incentives.

3. Net Metering

Most states have net metering policies that allow homeowners to send excess solar energy back to the grid for credits on their electricity bills.

This means you can effectively “sell” your surplus energy and reduce your utility bill significantly.

Project Solar helps you set up net metering seamlessly, ensuring you get credit for every extra energy your system produces.

4. Performance-Based Incentives

Some states offer performance-based incentives (PBIs), which provide ongoing payments based on your solar system’s energy production.

For instance, New Jersey’s SuSI program offers $85 per 1,000 kWh generated for 15 years, making solar panels even more profitable.

Project Solar will guide you through the process to ensure you receive all the performance-based incentives available in your state.

5. The Total Impact

Combining all these incentives, you could easily see a 30-60% reduction in your total solar costs.

In states like New Jersey, incentives can reduce the cost of a 9.3 kW system from $42,275 to just $6,841 after all credits and rebates - a substantial reduction that makes the payback period much shorter.

Factors that Affect Solar Panel Cost

Several key factors determine how much you’ll pay for your solar panel installation:

System Size: Larger systems are more expensive but can generate more savings in the long run.
Location: Your location affects the sunlight your roof receives and labor and permitting costs.
Type of Solar Panels: Monocrystalline panels are more efficient but cost more, while polycrystalline panels are cheaper but less efficient.
Roof Condition and Installation Complexity: Older, complex, or multi-sloped roofs can increase installation costs.

System Size and Cost Estimates

The cost of your system largely depends on its size:

System Size	Estimated Cost (Before Incentives)
4 kW	$14,680
6 kW	$22,020
8 kW	$29,360
10 kW	$36,700

Additionally, the cost of installing solar panels varies by state, impacting the overall savings potential.

Below is a detailed breakdown of typical costs, average cost per watt, estimated payback periods, and potential 25-year savings for various states:

State	Install Cost*	Average Cost per Watt	Estimated Payback Period**	25-Year Savings***
Alabama	$37,475	$3.34	10.5 years	$65,922
Alaska	$23,088	$2.41	9.5 years	$54,668
Arizona	$19,440	$2.16	7 years	$59,661
Arkansas	$29,877	$2.67	9.5 years	$67,139
California	$18,105	$2.47	5 years	$106,870
Colorado	$28,088	$3.03	9 years	$53,986
Connecticut	$26,670	$2.96	6 years	$83,759
Delaware	$25,274	$2.49	10 years	$63,870
Florida	$24,403	$2.27	10.5 years	$56,077
Georgia	$30,494	$2.73	10 years	$57,429
Hawaii	$27,680	$3.46	6 years	$64,565
Idaho	$28,944	$2.69	10 years	$71,010
Illinois	$31,068	$3.07	11 years	$48,565
Indiana	$34,131	$3.10	12 years	$56,472
Iowa	$31,793	$3.12	10 years	$46,588
Kansas	$32,167	$3.12	10.5 years	$60,286
Kentucky	$31,313	$2.73	11.5 years	$54,204
Louisiana	$32,142	$2.93	11 years	$54,636
Maine	$29,267	$3.27	10.5 years	$64,522
Maryland	$28,504	$2.80	9 years	$64,703
Massachusetts	$27,158	$3.28	5 years	$87,689
Michigan	$30,902	$3.15	11 years	$53,663
Minnesota	$31,209	$3.09	11.5 years	$59,279
Mississippi	$36,110	$3.14	12 years	$59,530
Missouri	$31,842	$2.90	12 years	$55,374
Montana	$32,116	$2.80	10 years	$67,246
Nebraska	$20,787	$2.24	11.5 years	$53,725
Nevada	$20,768	$2.20	8 years	$41,459
New Hampshire	$29,870	$3.33	7.5 years	$69,087
New Jersey	$25,623	$2.70	4 years	$76,285
New Mexico	$24,571	$3.13	6 years	$68,335
New York	$27,291	$2.96	6 years	$75,242
North Carolina	$26,829	$2.56	9.5 years	$62,935
North Dakota	$33,275	$2.42	12 years	$58,265
Ohio	$29,127	$2.66	11.5 years	$52,568
Oklahoma	$26,900	$2.37	11 years	$65,916
Oregon	$28,965	$2.65	12.5 years	$52,903
Pennsylvania	$28,679	$2.82	9.5 years	$58,076
Rhode Island	$29,061	$3.28	2 years	$60,631
South Carolina	$26,548	$2.57	8.5 years	$62,231
South Dakota	$24,115	$2.39	11 years	$54,751
Tennessee	$39,120	$3.26	12.5 years	$51,774
Texas	$21,672	$2.10	7.5 years	$61,774
Utah	$29,158	$2.72	11 years	$53,135
Vermont	$25,375	$2.91	7.5 years	$70,243
Virginia	$31,427	$2.87	10.5 years	$60,802
Washington	$32,964	$2.68	13 years	$59,116
Washington, D.C.	$20,400	$3.00	-	$63,114
West Virginia	$28,737	$3.09	10 years	$63,114
Wisconsin	$31,806	$3.10	10.5 years	$54,553
Wyoming	$43,165	$3.76	9 years	$85,447

Seeing how costs vary by state can help you understand the range of investment and savings possible with solar.

These figures are starting points - your specific requirements, panel choice, and incentives will influence the final cost.

To make things even easier, Project Solar provides customized solar quotes that factor in your specific state incentives, offering you the lowest possible price in your area.

Get a transparent quote in just 5 minutes →

Additional Costs to Keep in Mind

Solar installations come with other associated costs beyond just the panels themselves:

Inverter:$1,000 to $3,000 (necessary to convert solar DC power to AC power).
Battery Storage: Around**$14,000** if you want to add energy storage (optional but useful for backup power).
Mounting Systems and Electrical Wiring: Adds roughly 7 to 20 cents per watt to the installation.

These additional costs are generally included in most quotes, but having an itemized understanding can help you make better financial decisions.

How Quickly Will You Break Even?

The average payback period for a solar installation is about 8.5 years.

This means that within just under nine years, the savings on your energy bills will have covered the system’s initial cost.

After that, it’s free electricity for the rest of your panels’ lifespan, lasting 25-30 years.

Plus, with Project Solar’s 25-year SolarCare™ Warranty, you’ll have peace of mind knowing your system is covered for production, workmanship, and more.

Long-term Savings

With incentives and reduced energy bills, homeowners can save between $20,000 and $90,000 over the life of their solar panels.

Studies also suggest installing solar panels can increase your home’s value, making them a solid investment in energy independence and property appreciation.

Is Solar Worth It?

In a nutshell, absolutely, yes. Solar energy remains an excellent option due to falling installation costs, lucrative federal and state incentives, and net metering policies.

Depending on your location, you could save 30-60% off your total system cost, with payback periods shorter than ever.

With the potential to save tens of thousands of dollars over the next few decades, there’s a good chance that your solar investment will keep paying dividends long after the system has paid for itself.

If you’re ready to explore your options, get a free quote from Project Solar.

With their AI-powered tool, you can get transparent pricing in just 5 minutes - no pressure, no strings attached.

This is a great way to see how much you can save and whether solar is right for your home.

And don’t wait too long - some of these incentives won’t be around forever.

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Written by

Enri Zhulati

Senior Director of Product

Senior Director of Product at Compare Power. 8+ years guiding Texans to smarter energy choices through data-driven tools and editorial excellence.

The Cost of Solar Panels