Solar Panels For Home

Solar energy is more accessible than ever due to the declining cost of solar panel systems. Numerous state and federal policies and incentives encourage homeowners to install solar panels and generate their own electricity. Installing solar panels can cut your home energy costs while reducing your reliance on fossil fuels.

As a homeowner, there are many factors to consider when investing in solar panels. It is important to understand solar energy costs and electricity bill savings before making your decision. Adding solar panels to your home is an investment and energy-saving upgrade that can lower your electricity costs for decades.

• The federal solar tax credit, also known as the Residential Clean Energy Credit, can help you recover 30% of the total cost of a solar energy system. It applies to the solar panels, components, batteries, and labor costs, but you must buy your solar system to qualify.
• The U.S. Department of Energy reports a home’s value can increase by $15,000 after installing rooftop solar panels.
• Net metering programs allow most homeowners to sell excess solar energy back to their utility companies.

You can significantly reduce or even eliminate your electric bills when investing in solar energy. Your exact savings may depend on your electricity rate, home energy use, local climate, solar system capacity, and solar panel efficiency.

Rooftop solar systems range in cost depending on the system size, components, installer pricing, local solar incentives, and other factors. The U.S. average price per watt for residential solar panels is $3.67. The average 8.6-kilowatt (kW) solar panel system costs about $31,558 and may qualify for a $9,467 solar tax credit.

Calculating the cost of an average rooftop 8.6 kW solar energy system:

• $3.67 x 8,600 = $31,558
• $31,558 x 0.3 = $9,467 solar tax credit
• $31,558 – $9,467 = $22,091 after the federal tax credit

Keep in mind that cost does not include any additional rebates or tax incentives at the state or local levels, which could lower your installation price even further.

Curious about the price of solar panels by state? Visit our guide on the cost of home solar panels for a more detailed walkthrough.

Get your free solar savings estimate

You can significantly lower your energy costs by investing in solar panels. Enter some basic information below and we’ll provide an instant, free estimate of solar cost and savings for your home.

When considering solar panels, many customers want to know how much they can lower their home energy bills. Purchasing solar panels for your home can dramatically reduce your energy costs, depending on how much electricity your panels generate and your typical energy usage. 

Most solar-powered homes remain connected to the power grid to have electricity at night and on cloudy days when their systems are not generating as much power. If your solar system is grid-tied, you can also take advantage of net metering programs with the local utility company to receive solar credits on your electricity bill for selling surplus solar power. Our solar cost savings guide can help you determine your potential savings.

If your solar system generates as much electricity in a year as your home consumes, you can eliminate the supply charges on your power bills. This is the lion’s share of most home power bills. However, utility companies typically still charge a small monthly fee for distribution and transmission services.

Various solar tax credits and incentives are available to substantially lower the cost of your home solar system. The Residential Clean Energy Credit provides a credit for 30% of your total solar system cost when you file your annual tax returns. There is no ceiling on this federal tax credit, although it is set to decrease to 26% in 2033 and 22% in 2034. This incentive will expire in 2035 unless Congress renews it.

Depending on where you live, other solar tax credits and rebates may be available to help lower the cost of solar panels. Many states offer programs to encourage residents to invest in solar energy. States like Texas that do not have a statewide net metering program may still have initiatives at the local level.

To explore the solar incentives near you, visit your state’s solar page. You can find a list of our state solar pages at the end of this guide.

Net metering programs allow utility customers in many states to sell extra solar power to their utility companies. In exchange, customers receive solar credits on their electric bills.

Not all states offer net metering programs. Refer to the DSIRE website to determine if there are net metering programs with your local utility company.

It usually only takes one to two days for a solar company to install a residential solar system. However, the overall process of going solar takes longer. Before installing a rooftop solar system, you’ll need to get a proposal from a solar company. Most home solar systems also require a permit and permission from the utility company to supply surplus electricity to the grid. Most solar installers handle these two processes on the customer’s behalf.

Ask your solar installation company about the timeline to ensure you are both on the same page regarding how long it will take. Thankfully, the installation is typically the quickest step in this process. After installing your home solar panels, the final step is to take advantage of tax credits and rebates in your area.

Before signing a solar panel contract, ensure your roof is in optimal condition for solar panels. If your roof is older, largely shaded, or in poor condition, it may not be suitable for solar panels.

Replacing a roof on a solar-powered house requires removing and then reinstalling the solar panels. If your roof needs to be replaced soon, you may need to factor in this cost before installing your solar power system.

The lifespan of solar panels averages around 25 to 30 years, although some newer models can last even longer. But many homeowners won’t live in a single home for that long. The good news is that installing a working solar system on your roof increases your home’s resale value by an average of $15,000, which could help you recover the initial cost of the solar system. 

The average payback period for solar panels is currently about 13 years, depending on your energy consumption, location, electricity rates, roof shading, local net metering laws, and installation costs.

The average cost per kilowatt-hour (kWh) of electricity in the U.S. is 16.1 cents, as of April 2023, according to the Energy Information Administration. You may have a shorter payback period if you have more sun exposure, higher than average power rates, and your local utility company offers net metering. A shorter payback period also means a higher solar return on investment (ROI).

With all the benefits of solar energy, there are a few drawbacks that you should consider before you go solar.

• The upfront cost. Solar panels have come down in price over the last 20 years, but the upfront cost of investing in a solar system for your home is still high. Consider whether the total cost of your solar system fits your budget before you buy.
• Solar panels might not be right for your home. As discussed earlier, your roof needs to be in good condition to handle a solar array. Solar panels also might not be a realistic option for renters or people living in apartments (although community solar projects or green energy programs could be a good option).
• Solar isn’t always consistent. Solar panels produce less electricity in cloudy weather, and your solar panels won’t generate power at night. This is why most homeowners who buy solar panels also stay connected to the traditional power grid. Your solar energy production might be lower than expected in some months but higher in others.
• Solar leases can complicate home sales. Therefore, many homeowners opt to buy their solar systems instead of leasing them. Many solar companies also offer financing options for those who cannot afford an upfront cash purchase.
• Solar batteries are expensive. Adding energy storage capacity to your solar energy system can significantly increase the total cost. Therefore, most households install solar systems without solar batteries.

You can find more details about the top advantages and disadvantages of solar panels in our solar pros and cons guide.