Key takeaways


hen it comes to going solar, the first concern for many people is the cost. Photovoltaic panels can be quite expensive, so it's natural for potential buyers to have questions about the average price of a solar inverter system and what factors influence it. By reading this article, you'll be armed with the information you need on the upfront expenses of solar.

What does the price of solar equipment actually include?

The total cost of the solar project is made up of several components, with the price for solar panels being just one of them. In one of its reports, the National Renewable Energy Laboratory (NREL)1 presents the cost breakdown in the following way:

  • 12,6% for solar modules;
  • 6,9% for an inverter;
  • 12,6% for all other components, such as wiring, switches, a mounting system, etc.;
  • 11,0% for labor costs;
  • 56,9% for other soft costs like permitting and inspection.

Remember, all these components are integral if you want to have an efficient solar panel system.

What impacts the cost of solar panels?

Like with most products and services, the price of solar systems is hugely affected by different variables. The list below outlines the crucial aspects which can substantially change the cost of solar.

  • Solar system size

If you have a large house, you will likely need a bigger solar panel system to meet your energy needs. This will, of course, increase the cost of solar installation. However, the cost-per-watt of a larger solar system is often lower in the long run, making it a more attractive option. So, it's important to consider the size of your solar system and how much electricity you need.

  • Your location

As a matter of fact, your solar system size is largely predetermined by your place of living. In areas with less sun, you will need more solar panels, which will increase the initial cost of your solar installation. Additionally, each state in America has its own solar incentives and rebates, which is why the cost of solar varies from state to state. In a later section, we will examine the average solar costs per state and analyze the patterns in the formation of solar costs based on location.

  • Type of solar cells and other equipment

The price of a solar panel depends on the cell technology used, as solar cell prices vary considerably. There are three main types of solar cells, each with its own pros and cons. Monocrystalline cells are the most efficient and, therefore, the most expensive option. Polycrystalline cells have slightly lower performance compared to monocrystalline cells but are more affordable to produce. Thin-film cells are the least efficient but are the cheapest to make and have the added benefit of being flexible.

As we have already mentioned, a solar panel system has a lot of components, and the type of each of them has an impact on the cost. For example, microinverters are typically more expensive than string inverters, but they can offer a 5-15% increase in electric energy production. Additionally, the upfront costs may vary depending on the durability of the racking system.

  • Your roof’s solar potential

The characteristics of your roof also play a role in determining the initial costs of installing a solar system. If your roof is large enough, faces south, and has a slope of 30 degrees, installing solar will be relatively easy. However, if your roof lacks south-facing sections, has many obstructions, and is absolutely flat, this may result in additional installation costs.

  • Professional installment or DIY solar project

If you're looking to save money upfront, a DIY solution for small projects may be the way to go. However, for larger installations, it's best to seek professional help unless you have relevant experience.

  • Brand

Generally, solar manufacturers tend to have similar cost ranges. Still, there are some premium brands that deliver the highest performance and cost more than some less efficient panels. The amount of money you pay for a panel brand is reflective of panel quality, but this is not always the case. Sometimes, it’s just the brand name that drives the cost.

How the cost of your solar equipment can be reduced

Before talking about the average upfront cost of solar panel systems, it is necessary to mention that there are plenty of opportunities to reduce the initial price through solar incentives. The Federal Tax Credit (also called ITC) is the main governmental incentive that gives you a nonrefundable credit off your federal income taxes amounting to 30% of your solar upfront expenses. What is more, there is no upper limit; you are entitled to that 30% tax break whether you spend $5,000 or more than $100,000 on costs associated with a residential solar system. To qualify, you must meet the following requirements:

  • You must own your solar panel system, not lease it.
  • You must have a taxable income.
  • The solar system must be installed at your primary or secondary residence.
  • The credit can be claimed only on the original installation of solar equipment.

You may be eligible for additional solar incentives specific to your state. To find out what incentives are available in your area, visit the Department of Energy website or search online.

U.S. average cost of solar panels

Over the last decades, solar panels have experienced an incredible fall in price due to advancements in solar technology and infrastructure. And by using the word “incredible,” we really mean it. According to the data of the Solar Energy Industries Association (SEIA)2, solar panel prices in the United States have declined by roughly 90% since 2010. Today, the U.S. average cost of a residential solar system is about $3.07 per watt. On the national scale, the price of solar installed ranges between $2.75 and $3.35 per watt, which translates to around $18,000 to $20,000 before applying the Federal Tax Credit. After the solar credit, the overall price will drop to an average of between $12,600 and $14,000. Don’t forget that the upfront cost depends largely on the size of your solar system; for a large commercial installation, you will need to pay at least twice as much as for a residential solar system, and a small 2 kW kit will cost you just around $4,100 after the Federal Tax Credit.

Solar system design involves planning and implementing the arrangement of solar panels, batteries, and other components to maximize energy efficiency and sustainability.

Solar panels average costs by state

The table below presents the average state prices of a typical residential 6 kW solar system after applying the Federal Tax Credit3. As a rule of thumb, the average cost of solar per watt is lower in warm regions with lots of sunshine, like Georgia, Kentucky, Kansas, or Louisiana. This can be easily explained – in such sunny places, homeowners tend to install big solar panel systems to cover most of their electricity needs, and the larger your solar system will be, the lower the cost per kilowatt-hour from solar installers. But this is not the only factor that determines the cost variation by state – other essential aspects are solar initiatives and tax exemptions available in your area.

District of Columbia $2.88/W $12,096.00
Delaware $2.65/W $11,130.00
Florida $2.58/W $10,836.00
Georgia $2.33/W $9,786.00
Hawaii $2.67/W $11,214.00
Idaho $2.52/W $10,584.00
Illinois $2.57/W $10,794.00
Indiana $2.49/W $10,458.00
Iowa $2.53/W $10,626.00
Kansas $2.39/W $10,038.00
Kentucky $2.34/W $9,828.00
Louisiana $2.38/W $9,996.00
Maine $2.87/W $12,054.00
Maryland $2.74/W $11,508.00
Massachusetts $2.87/W $12,054.00
Michigan $2.66/W $11,172.00
Minnesota $2.74/W $11,508.00
Mississippi $2.64/W $11,088.00
Missouri $2.59/W $10,878.00
Montana $2.42/W $10,164.00
Nebraska $2.83/W $11,866.00
Nevada $2.61/W $10,962.00
New Hampshire $2.83/W $11,886.00
New Jersey $2.78/W $11,676.00
New Mexico $2.44/W $10,248.00
New York $2.86/W $12,012.00
North Carolina $2.49/W $10,458.00
North Dakota $2.42/W $10,164.00
Ohio $2.50/W $10,500.00
Oklahoma $2.62/W $11,004.00
Oregon $2.50/W $10,500.00
Pennsylvania $2.38/W $9,996.00
Rhode Island $2.69/W $11,298.00
South Carolina $2.62/W $11,004.00
South Dakota $2.39/W $10,038.00
Tennessee $2.49/W $10,458.00
Texas $2.77/W $11,634.00
Utah $2.66/W $11,172.00
Vermont $2.85/W $11,970.00
Virginia $2.66/W $11,172.00
Washington $2.77/W $11,634.00
West Virginia $2.64/W $11,088.00
Wisconsin $2.60/W $10,920.00
Wyoming $2.57/W $10,794.00

Are solar panels a worthy investment?

Nowadays, the price of solar panels is lower than ever before, which makes a solar investment especially attractive. Not only can going solar help you live a more environmentally-friendly lifestyle, but it can also save you money by providing a significant portion of your electricity needs. Additionally, the government supports solar owners by allowing them to monetize solar energy through initiatives such as net metering and SRECs.

The most common estimate of the average payback period for solar panels is 6 to 10 years, while solar panels usually last approximately 25 years, with at least 80% efficiency at the end of that period. So, even though the initial cost of solar systems can be significant, the benefits of solar power can offset any inconvenience.


Key takeaways

Jul 16, 2023
Solar News

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