How much does Solar panel installation cost?

If you’ve considered installing a solar panel system on your house as an alternative source of electricity, you’re not alone. Whether it’s due to high energy costs, environmental concerns, or both, solar power is growing at a rate of 42% per year, according to the Solar Energy Industries Association (SEIA). 

In fact, residential solar panels—also known as photovoltaic panels— are an increasingly cost-effective option for powering a home. Installation costs have dropped by more than 70% over the last decade, the SEIA says. And over the next 10 years, solar energy system costs will drop up to 60% more, according to the US Department of Energy. 

That means it takes less time to reach the break-even point (or “payback period”)—when the accumulated savings on your utility bill make up for the overall cost of installing the system. Getting there depends on the system’s cost, your electrical usage, and local electricity rates. 

Here’s what you should know about the cost of installing solar panels, and what it takes to make that money back.

Learn more about home solar energy costs: How much does it cost to install a solar water heater?

To estimate the cost of a home solar power system, a solar panel contractor studies your roof’s size and amount of sun exposure. This helps them calculate the number and type of solar panels that can be mounted to the roof (or sometimes the ground) to handle your household’s electrical needs. 

The more solar panels you have, the more energy they’ll produce. An average-size home (approximately 2,000 square feet) would need about 20–25 for all of its electricity requirements, according to the industry group EnergySage.

The contractor will tell you how much energy this configuration will generate, and provide an installation bid that includes both materials and labor—usually figuring in any available rebates and incentives that reduce your out-of-pocket costs. (See “Incentives and tax credits,” below.) 

Here’s how much you’ll typically pay for solar panel installation on a 2,000-square-foot house. 

Average solar panel cost, installed (after rebates and incentives)

Low: $4,500

Avg.: $14,500

High: $28,000

Each solar panel is given an “output rating” that specifies its level of electricity production. When joined together as a group, multiple panels make up a system that supplies a home’s energy needs. An average system size would produce 6 kilowatts, which is enough for most homes in most states (depending on sun exposure). 

Each individual panel may produce 250–400 watts (1,000 watts equals 1 kilowatt). For example, a system that uses 300-watt panels will need 20 panels to generate 6 kilowatts (300 x 20 = 6,000 watts).

Average cost of 2–5-kilowatt systems, installed (after rebates and incentives)

Low: $4,500

Avg.: $9,500

High: $12,000

Average cost of 6–8-kilowatt systems, installed  (after rebates and incentives)

Low: $9,000

Avg.: $15,500

High: $28,000

Solar panels vary widely in price, depending on the brand, type of technology they use, and other factors. There are 3 main types of solar-energy panels. Most experts recommend choosing longevity and quality over up-front cost savings, especially if you plan to stay in your home a long time. They all carry about the same installation costs.

Labor accounts for about 15% of the cost of installing solar panels. The following issues can affect labor cost: 

Solar panel systems may seem expensive, but there are ways to reduce your costs: 

Federal solar tax credit. The US government offers a 26% federal solar tax credit on eligible solar panel installations. (In 2023, this credit will be reduced to 22%.) That means you can deduct that percentage of the purchase cost from your federal income taxes during the year in which the equipment is installed.

State and local tax incentives. Federal, state, and local incentives change over time. To look up state policies, check the Database of State Incentives for Renewables & Efficiency. States looking to encourage renewable energy, such as California and Massachusetts, may offer higher solar incentives.

Sell back energy. If your panels produce more electricity than your home uses each month, you may be able to sell power back to the utility or receive a credit on your energy bill. Check with your local electric company to find out if you’re eligible.

Warranties. To ensure your investment pays for itself over time, choose a system that’s the right size and price for your home, and look for a warranty of 20 years or longer. (Top manufacturers offer 25-year-warranties, but cheaper imports may only be guaranteed for 12 years.)

Consider leasing. With a solar panel lease, you don’t own the panels on your roof, but you eliminate all of the up-front purchase costs. Some companies also offer free installation and maintenance. You pay a set monthly fee for your home’s electricity (which can sometimes rise over time). Among the downsides: You don’t benefit from tax credits, and you’re locked into a 20-year lease—which may be a problem if you decide to sell your home.

Solar panel installation isn’t a DIY job—it requires the careful attention and skills of a trained professional. Ask neighbors about their experiences, and search online reviews to find a reliable solar company.

Get quotes from 3–5 installers before making a decision. (There should be no charge for the bids themselves.) Carefully evaluate the details, including the type, brand, and warranty of the panels they plan to use. Also ask about additional discounts they may offer, such as a reduced installation price. 

How much do solar panels cost for a 2,000-square-foot house?

Depending on several variables, the cost can range from $4,500–28,000, including installation. Homeowners should consider the kind of solar panel that’s best for their house, the amount of electricity they use every year, and any solar rebates and tax credits that are available in their area.

Do you really save money with solar panels?

Over time, yes. After a period of years, the savings on your monthly electric bill will be enough to offset solar panel installation costs. Reaching what’s called the break-even point (or “payback period”) depends on the cost of purchasing and installing your solar-energy system, your average energy usage, and the amount you currently pay your local utility company.

What are the disadvantages of solar energy?

Primary downsides to consider include the following: 

Find a solar panel installation professional in your area.