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Average Cost of Solar Panels (How Much Does a Solar System Cost in 2022?)

Solar energy is free, abundant, and comes with no expiry date. But while the energy is free, there are costs associated with installing equipment that harnesses this free energy. Most of these are upfront costs, though solar owners are expected to pay for the periodic maintenance of their systems. 

Before proceeding, note that when we talk about the cost of solar panels, we do not refer to the cost alone. Solar panels are only one part of the solar installation system.

Other costs in addition to buying solar panels:

  • racking to mount the panels
  • inverters to convert direct current (DC) to alternating current (AC)
  • batteries to store electricity for later usage
  • wires to transmit the electricity produced by panels to your home
  • labor and installation cost if your hire a solar contractor

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Solar prices have fallen by nearly 70%.

Claim Federal Income Tax Credit. This tax credit puts 30% of your installation cost BACK INTO YOUR POCKET.

Cost of solar panels in the United States

In 2022, the average cost of solar panels in the United States is between $17,000 and $21,000. On a cost-per-watt basis, solar panels cost roughly $2.74 to $3.34. These are only median costs; if you intend to go solar, the price you incur may be lower or higher, depending on your energy needs and other factors. 

For instance, a 4kW solar system costs around $13,000, meaning the cost per watt is $3.25. This is before taking into account the Federal Income Tax Credit—after ITC, the cost becomes $9,100. In contrast, 6kW and 10kW systems cost about $17,700 ($2.95/watt) and $27,500 ($2.75/watt), respectively, before factoring in the ITC. 

These prices are falling every year—since 2014, the cost of solar panels has dropped by 70%. Installing a residential solar system that cost $40,000 in 2010 costs less than $18,000 today. This drop is due to the investment in solar research and development and some exciting incentives. In addition, , the growing competition between solar manufacturers and installers has also played a part in making solar affordable for all. 

Factors affecting the cost of solar panels

The cost of solar panels may remain the same throughout the country. Still, installing a system to generate 1100 kWh in one part of the country may cost more than another—or it may cost more to your neighbor than to you. This is because solar installations are unique and much depends on, among others, what property owners interested in solar expect from their system. 

Below, we discuss some factors that influence the cost of solar panels.   

Size of the solar system 

It is a no-brainer. A bigger solar system with more panels will cost more than a system with fewer panels. The size of your solar system depends on your energy usage and goals. If you need to install a 10kW system, it will cost more than installing a 5kW solar panel system.

However, for larger systems, the average cost per watt is lower—as seen above, the cost-per-watt is $2.75 for a 10kW system but $2.95 for a 6kW system. Installing a bigger system, although it would cost more initially , will also save you more in the long run. It will generate more electricity, reducing your reliance on the grid and saving you on your bills. 

Location 

Your location may affect  your solar system’s upfront cost. This difference is based on a few factors outlined below. 

1) How  much sunlight does your state receive? If your home receives more sunlight, you will need fewer solar panels, and consequently, you will have to pay less. And vice versa. 

2)  Are  there any state and local incentives? The federal income tax credit is in place for residents of all states. Some states  offer additional incentives to homeowners installing solar systems. For example, Massachusetts offers an extra $1,000 tax credit that residents can claim in combination with federal tax credit upon going solar. 

Similarly, Florida and many other states have exempted solar from sales and property taxes. These incentives can save homeowners a lot of money upfront!

3) Solar trends in the state. Competition between local solar installers, cost of business, state policies, and labor costs also affect the final price of your solar system.

State Cost per watt*Price of 10kW SystemAfter 30% Federal Income Tax Credit
Alabama$2.45$24,500$17,150
Alaska$2.41$24,100$16,870
Arizona$2.33$23,300$16,310
Arkansas$2.63$26,300$18,410
California $2.65$26,500$18,550
Colorado $2.51 $25,100$17,570
Connecticut $2.86$28,600$20,020
District of Columbia$2.88$28,800$20,160
Delaware $2.65$26,500$18,550
Florida $2.58$25,800$18,060
Georgia $2.33$23,300$16,310
Hawaii$2.67$26,700$18,690
Idaho$2.52$25,200$17,640
Illinois$2.57$25,700$17,990
Indiana $2.49$24,900$17,430
Iowa $2.53$25,300$17,710
Kansas $2.39$23,900$16,730
Kentucky$2.34$23,400$16,380
Louisiana$2.38$23,800$16,660
Maine$2.87$28,700$20,090
Maryland $2.74$27,400$19,180
Massachusetts $2.87$28,700$20,090
Michigan $2.66$26,600$18,620
Minnesota $2.74$27,400$19,180
Mississippi $2.64$26,400$18,480
Missouri$2.59$25,900$18,130
Montana $2.42$24,200$16,940
Nebraska $2.83$28,300$19,810
Nevada $2.61$26,100$18,270
New Hampshire$2.83$28,300$19,810
New Jersey$2.78$27,800$19,460
New Mexico $2.44$24,400$17,080
New York $2.86$28,600$20,020
North Carolina$2.49$24,900$17,430
North Dakota$2.42$24,200$16,940
Ohio $2.50$25,000$17,500
Oklahoma$2.62$26,200$18,340
Oregon$2.50$25,000$17,500
Pennsylvania$2.38$23,800$16,660
Rhode Island$2.69$26,900$18,830
South Carolina$2.62$26,200$18,340
South Dakota$2.39$23,900$16,730
Tennessee$2.49$24,900$17,430
Texas$2.77$27,700$19,390
Utah$2.66$26,600$18,620
Vermont$2.85$28,500$19,950
Virginia$2.66$26,600$18,620
Washington$2.77$27,700$19,390
West Virginia$2.64$26,400$18,480
Wisconsin$2.60$26,000$18,200
Wyoming$2.57$25,700$17,990

*These prices are taken from Solar Reviews and Energy Sage, both online marketplaces. Actual prices may vary.

Roof structure 

Ideally, solar panels need to be installed south-facing at a 30° angle. Installing solar panels on south-facing, angled roofs is easier and would cost less. Homes with flat roofs or irregular rooflines, skylights, and dormers, could make the installation more challenging, as additional equipment and labor would be required to install the panels for the ideal setup. 

Roof age also plays a role. Solar panels come with a lifespan of 25+ years. If your roof is old, you would have to replace the roof to install the system. If you choose to install solar panels on the old roof, you might run into problems, say, eight or ten years after your roof expires. You will have to call the solar installer to bring the system down and reinstall it, increasing your costs. 

If you don’t want to replace your roof, you can install panels on the ground. But that would also cost more, as you will have to clear the land, build a new structure—racking, etc.—and run wiring farther. Ground-mounted panels are also more susceptible to damage than the roof-mounted system.

Solar panels and other equipment brands

Another factor that may influence the cost of your solar panel system is the brand of solar panels and other associated equipment—inverters, batteries, etc. The market has  many  options you can choose from. Some brands may cost less upfront, but you will have to consider their track record, warranty offerings, customer service, efficiency, lifespan, etc. 

Example pricing and warranty from top solar panel manufacturers

ManufacturerPrice Per WattWarranty
SunPower$3.14-$3.5625 Years
Tesla$1.84-$2.4410 Years

Based on the warranty alone, SunPower is a clear winner. But it’s not that simple. This all depends on the circumstances and needs of the individual homeowner. 

Type of solar panels 

Different types of solar panels are available in the market, all with varying prices and efficiency. Monocrystalline solar panels are the most efficient but also more expensive. Polycrystalline solar panels, in comparison, are affordable but have lower efficiency than monocrystalline.  Also, you would need more polycrystalline solar panels to meet your electricity requirements, which adds more costs to  your bill. 

Basically, the prices of individual solar panels vary based on the type, but it would not affect the overall cost significantly. 

There is another type of solar panels, thin-film solar panels. They are the cheapest, but their efficiency is much lower than the above two. Since they require more space, they are not often used for residential solar installations.  

With batteries or without?

The cost of solar panel systems also varies based on attached batteries. You can choose not to have batteries, and your system will cost less than installing a system with batteries. If you want to use solar energy at night or in cloudy weather, you will need batteries to store the excess energy your system generates during the daytime. That will increase your upfront costs. 

But installing batteries with the solar system also saves you more, as your electricity needs will be met mainly by your system and not the grid. 

Solar installer cost 

You will also have to factor in your solar installer’s compensation in the overall cost of your solar panel system. National level installers usually cost more than small local installers, as the former will have to make up for their administrative, engineering, marketing, sales, and other costs.   

Solar incentives 

Solar incentives make a big difference. As mentioned in the table above, the cost of installing a 10-kW solar panel system in Florida is $25,800—this price may vary based on the factors discussed above. After claiming the 30% Federal Income Tax Credit, this price becomes $18,060. 

Similarly, there may be other incentives in different states that  may decrease the system’s final cost. . Net metering is a notable incentive offered in most states, through which solar system owners can sell electricity to their grid. While this may not decrease the cost upfront, it significantly reduces  the solar payback period, helps homeowners save more, and increases their return on investment. 

Solar permitting requirements and interconnection costs 

Lastly, solar permitting and interconnection fees may also add up to the cost of your solar panel system. When installing solar, property owners  have to obtain certain permits, such as electrical and building permits, from their local governments. These costs are not high; some states even have imposed a cap on permitting fees. 

For instance, the permitting costs in Colorado cannot exceed $500 for residential and $1,000 for commercial installations. The same goes for California, except they have capped the residential permitting fee at $450. 

In addition, you also need to pay for connecting your solar system to the grid, i.e., the interconnection fee. You often won’t pay these costs, as they are already included in the installer’s quote. Nevertheless, it is better to ask your installer whether they are taking care of these fees and how much they are paying.

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