Cost Of Solar

To add some much needed transparency to the industry, the cost of solar power will be completely explained here.

The typical solar installer does not make the price of solar easy to find online. This is unfortunate, as more homeowners would go solar if they knew how much they could save over the long term. The average homeowner would save at least $25,000 over 25 years by investing in a solar panel system.

So what is the current low-end cost of residential solar power? As of 2017, it’s approximately $3.00 per watt, installed. The average sized solar panel system is 5,000 watts, so this brings the total cost to $15,000. That 15k figure is just an average amount. Systems can cost more or less mostly depending upon a homeowner’s energy usage.

Here is summarized solar cost information found on this page (4 different ways to measure the cost) –

    Pre Tax Incentive Cost

  • As low as $3.00 per watt.
  • Average total cost – $15,000.
  • 8 cents per kilowatt hour.
  • $159/mo for a $15,000 ten year loan at 5% interest.

Solar pricing is significantly lower taking into account the 30 percent solar Investment Tax Credit. Here’s the pricing accounting for the tax credit –

    Post Tax Incentive Cost

  • As low as $2.00 per watt.
  • Average total cost – $10,500.
  • 6 cents per kilowatt hour.
  • $111/mo for a $10,500 ten year loan at 5% interest.

That $3.00 per watt is, again, on the low side for the average installer. According to the Solar Energy Industries Association, the average price for a residential system is “just above $3.50/watt.” Pricing can vary due to specific brand of panels used, inverter brand, and regional pricing differences. Most installers can achieve sub $4.00/watt pricing. Some are now installing for less than $3.00/watt, though this pricing is not widely available yet. Marketing and other “soft costs” have prevented many installers from offering even cheaper prices for their solar installation services.

There is still a federal tax credit and many states have incentives that will bring this cost down a few thousand less. Plenty of no money down financing options are also available. An average non-financed system payback time period is about 5-8 years.

What is the cost from a payment point of view? Monthly payments on a ten year solar loan are about the same as what the average homeowner pays for a typical utility bill, sometimes less. Of course, after the loan is paid off, you’ll get to benefit from free solar power.


The large solar leasing companies are still charging $5.00 to $6.00 per installed watt or more, but their customers only see the lease payment. They simply have too much overhead, advertising costs, and investors seeking a good return on investment to offer a fair price on solar power. This is effectively $10,000 or more than what is needed to be paid.

While the cost of solar power has fallen drastically in recent years, the pace of that change is slowing. A common misconception is that a reduction of the price of the panels themselves will result in a significant overall reduction in the total cost of an installed system. This is not true because an installed system has three main cost categories;

1. Cost of equipment – panels, inverter, wiring, etc.
2. Cost of installation service.
3. Cost of permitting, inspection, and interconnection.

The “soft costs” of solar – items 2 and 3 above – will also decrease in the coming years, but not as substantially as the historical reduction in the cost of solar panels. Solar contractors and installers will still need to make a reasonable profit, as seen in the cost of solar installation, and utilities will most likely continue to charge connection fees. A high percentage of the total cost of going solar is attributed to the cost of equipment and installation service. See this post for more reasons why now is a great time to buy solar panels.

Another misconception is that the price for residential solar power is still more than what utilities are charging their customers across America. This is no longer true. The effective rate for solar power spread across the life of a system is $0.08/kWh. The average cost for conventional energy is $0.12/kWh and rising.

The price for solar panel installation will be continued to be updated on this page. I’m sure homeowners will appreciate more transparency from the solar power industry. This is just one site doing its part to help shed some light where it is needed.

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