How Much Do Solar Panels Cost?
The average cost of solar panels as of Spring 2023 was $3.30 per watt, excluding financing. This price includes hard costs, like hardware and equipment, and soft costs, like installation labor and required permitting.
This cost data comes from a March 2023 Report by the Solar Energy Industries Association (SEIA) in partnership with Wood Mackenzie Power & Renewables.
All that to say, there is no set price for a solar panel system, despite what the internet may say. In reality, your system price will be custom to your specific situation and will depend upon a variety of factors that each solar installation company accounts for a bit differently, including:
- Your energy usage and electricity bill
- System size and efficiency
- Solar panel make and model
- Your location within the U.S.
- Eligible tax credits, incentives, and solar rebates
- Local permitting and utility requirements
- Condition and layout of your roof
Now, we introduced lots of concepts in the first two paragraphs: price per watt, incentives, hard costs, soft costs. It can be a lot to take in. In the rest of this article, we’ll break down these ideas and key terms so you can understand them better. We’ll even provide you with an average savings amount per state so you can get a better sense of how much money you could potentially save on monthly costs should you make the decision to go solar.
If you’re ready to estimate your costs now, head on over to our solar panel cost calculator. Using proprietary Mapdwell technology, we analyze the solar potential of your specific roof to provide you with a preliminary system size recommendation, along with cost and savings estimates.
How Are Solar Energy Systems Typically Priced?
There are many ways solar companies share the price of solar panels. The three most popular include:
- Gross cost
- Price per watt
- Price per panel
In our opinion, the most comprehensive method for pricing solar panels is the gross cost. Let’s explain why and then discuss each pricing model in detail.
A lot of work goes into ensuring that you can safely turn on your solar power system–much more than simply attaching solar panels to your roof. The gross or total cost of solar panels will typically encompass everything you need to lawfully turn your system on before financial incentives, such as the Federal Solar Tax Credit, are applied.
Yes—that’s right. You cannot lawfully install or power on your system without getting permission from the “authority having jurisdictions” (AHJs) for your area, which are often government entities. Other entities requiring permission may include your local building department and utility company, though the specifics will vary by location. If your home is part of a homeowners association or HOA, there may be additional approvals required.
Other costs not often mentioned but necessary to the successful completion of your solar panel system include:
- System design and engineering
- Equipment and hardware (e.g. module, inverter, racking, and electrical wiring)
- Permitting and inspections
- Installation cost and labor
At Palmetto, our solar estimate factors in these costs so you can better understand what it takes to begin generating electricity with your solar panels.
Price Per Watt
While we prefer using gross cost as our metric, we cannot discount the importance of price per watt. Price Per Watt—or PPW—is based on the maximum power output of a solar energy system, and is shown as the dollar amount per watt of solar energy a system can produce.
Because solar panels vary in both size and efficiency, this allows homeowners to compare costs based on overall system performance, rather than the number of panels or square feet of roof space. PPW is calculated by taking the gross cost of a solar panel system and dividing it by the total wattage, or power capability, of that system.
How do you calculate the size of the solar system you’ll need? That will depend on your energy usage (which you can see on your electricity bill) and how much of that electricity you want to come from solar panels. This is called solar offset, or the percentage of your total energy needs that can be offset by the electricity your solar panels generate in optimal conditions.
Many homeowners target a 100% solar offset when selecting the right system size for their home. The ability to do this will depend on preference, roof specifications, and utility guidelines. To calculate yours, you can use our free solar design and savings estimator tool.
The difference between gross cost and PPW is that the former already factors in system size, while the latter does not. Using PPW, you’ll be able to measure the comparable value of several solar power system quotes that may differ in solar panel types, wattage, and more.
Price Per Panel
You might also see solar panel systems priced by the panel. This metric is often used to price DIY solar panel kits, which we may recommend for your RV or boat, but not for your home.
It’s true that panels do differ in price depending on their make, model, and efficiency. Higher efficiency panels will likely cost more; however, you will not need as many of those panels to generate the same amount of energy created by a larger system that uses cheaper, low-efficiency panels. You could even spend more on those lower efficiency panels because you need to buy more panels for the same amount of electricity.
We rarely see this metric used to price residential solar energy systems because it leaves a lot of valuable information out of the equation.
Understanding the Hard and Soft Costs of Solar
It’s important to understand that the price tag of solar almost always includes more than just the equipment costs. It includes the costs necessary to install and get your system online. Let’s go over hard costs and soft costs so you can better understand them.
Hard Costs of Solar
The hard costs of solar refer to the physical equipment of your solar panel system, including the following:
- Solar panels
- Solar inverter
- Electrical panel
- Mounting and racking
- Electrical equipment
These prices will vary by solar company, as not all installers offer the same equipment.
Soft Costs of Solar
The soft costs of solar include labor and time taken to make sure you have all the relevant permits and licenses needed to operate your system. This may include but is not limited to the following:
- Permitting fees
- Inspection fees
- Interconnection fees
- Sales taxes (if applicable)
- Supply chain costs
- Installation costs
- Customer acquisition costs
- Transactional fees
The benefit of choosing a solar installer like Palmetto is that we factor these services into the cost of our system. We work on behalf of our customers to make sure their installations meet strict quality standards and that their system receives the correct permits in order to lawfully operate.
What Does It Cost to Lease Solar Panels?
A solar lease is a financial arrangement where the company that installs your solar panel system retains ownership, and you pay a fixed monthly amount to use any electricity the solar panels produce. Leasing solar also helps you lower your utility bill, and is often ideal for homeowners who are on fixed incomes and/or may not be eligible for the solar tax credit.
With this arrangement, you typically don’t pay any upfront costs for the residential solar installation, and your costs are just the subsequent monthly "rent." You'll make that monthly payment for the duration of your lease, and the solar installer is fully responsible for installation and maintenance.
To learn more about solar leases, visit our article that compares leasing vs. buying solar panels.
How Much Do Solar Panels Save?
Because savings may vary by state, we’ve compiled a table of Palmetto customers' median system size and median estimated total savings. We sorted the data by state, and forecasted savings based on a 25-year lifetime of the system, before breaking that down into monthly savings.*
|State||Median System Size (kW)||Median Estimated 25-Year Savings||Equivalent Monthly Savings|
*Monthly savings figures are based on median estimated total savings over 25 years for recent Palmetto customers. Actual savings may vary. This information is current as of March 2023.
Calculate the Cost of Going Solar with Palmetto
Want to see how much you could save by installing solar panels on your home? Using Mapdwell technology, Palmetto has mapped the solar potential of more than half of all rooftops in the United States. To see what your roof could look like with solar panels, and to get a custom quote, use our free solar design tool and cost calculator. You can begin your journey toward a cleaner energy future today!