Home Solar Panel Guide to Savings, Incentives, and Cost

More than five million homes have solar panels, and 13% of homes could have solar panels by 2030. But if you're considering home solar panels for the first time, you might still have some questions.

Here's what you need to know about solar panels at home, how they can save you money, and what you need to know about the different ways to go solar.

How Solar Panels Work

Solar panels, also known as photovoltaic panels, convert light from the sun into electricity. Materials within the solar panel, known as semiconductors, generate an electric current when exposed to sunlight. 

This is called the photovoltaic effect. 

1. Photovoltaic cells in the solar panels absorb energy from sunlight.
2. The sun’s energy causes electrons to move around in the cells, creating direct current (DC) electricity.
3. Wires capture that DC electricity from the surrounding cells and move it out of the solar panel.

How much of the solar energy is turned into electricity is determined by the solar panel’s efficiency. Most home solar panels have efficiency ratings over 20 percent.

An inverter changes the DC electricity to alternating current (AC) electricity, which is used by most home appliances and the wider grid. Electricity moves through the electrical panel and is distributed throughout the home to power electronic devices.

Any electricity you don’t use is either stored in a battery or fed back into the electric grid.

How Can Solar Panels Save You Money?

How much money solar panels can save you comes down to the specifics of your home, your electricity bill, and local policy. Here are the more common ways solar panels can save you money.

Avoiding utility electricity: Solar panels reduce the amount of electricity you need to buy from your utility, shrinking your electricity bill.

Bill credits: Electricity you send back to the grid can earn you credits through a net metering or net billing policy. Under net metering, every kilowatt-hour you send to the grid earns you a credit that offsets one kilowatt-hour you might buy later. Under net billing, the credit is worth less. Both policies are set by your utility and public utility commission.

SRECs: In some states, solar panels generate solar renewable energy certificates whenever they generate one megawatt-hour of electricity. SRECs can be sold in statewide marketplaces.

Property values: Research shows that purchased solar panels increase the value of a home for a large majority of homes. While it won’t show up on your electricity bill, you can think of a higher sale price for your home as a source of savings.

Solar Panel Incentives

For many people, solar savings are only worth it if they’re greater than the cost of going solar. The good news is that solar panels can earn national, and in some cases, state and local incentives that bring down the cost.

One important and longstanding incentive is the federal solar tax credit, called the Residential Clean Energy Credit. It can earn solar panel owners a tax credit worth 30% the cost of the system, which can be rolled over to future years and has no dollar amount limit. Since everyone’s tax situation is different, consult your tax advisor about your eligibility.

The federal tax credit is going away sooner than previously expected. It's now slated to go away at the end of 2025.

States may offer their own tax credits or exempt solar panels from state and property taxes. In some cases, you might be able to get a rebate from your state or utility for installing solar. Since policies vary by location and can change over time, confirm incentives are available in your area before moving forward. A reputable solar company will help you identify incentives that might be open to you.

How Much Do Solar Panels Cost?

The cost of solar panels varies depending on lots of factors: the size of the system, the complexity of your roof, the local cost of labor and permitting, whether you have a battery attached, and more.

The best way to nail down pricing at your home is to reach out for a quote.

Nationally, the average cost of solar was $3.36 per watt, according to Wood Mackenzie and the Solar Energy Industries Association.

According to Palmetto data, here’s how the price varies across select states.

*Cost and savings numbers are estimates. Actual cost and savings may vary. Data gathered of 6/16/2025.

Paying for Solar Panels

Incentives can bring the price of solar down, making it easier to afford. The most common ways of going solar are paying in cash, getting a loan, and leasing or entering into a power purchase agreement.

Cash: Paying for your panels upfront is the most straightforward and can deliver the greatest savings, since you own the panels outright and avoid paying loan fees and interest.

Loans: Loans let you work toward owning your system with more manageable monthly payments, but interest and fees mean you might have lower lifetime savings.

Lease: Third-party ownership describes leases and power purchase agreements, two ways to go solar without actually buying the system. Under a lease, you pay a monthly fee for the panels on your roof, which can reduce your electric bill with the electricity they generate. A power purchase agreement is similar, but you pay for the electricity the solar panels generate.

Palmetto’s LightReach Energy Plan lets you go solar and skip the upfront cost for predictable monthly payments. LightReach also has options to buy out your system starting in year five.

Types of Home Solar Power Systems

There are three types of home solar power systems: grid-tied, hybrid, and off-grid.

• Grid-tied: Your solar panels are always connected to the grid. You get power when your panels aren’t producing, but they’ll shut down with a power outage.
• Hybrid: Includes a backup battery and can disconnect from the grid, providing you backup power during an outage.
• Off-grid: A home that is not connected to the public electric grid, so all power needs must be met through solar panels, batteries, and other sources of self-generated power.

Benefits of Solar Panels

Here are five benefits home solar panels can provide.

1. Savings on your electric bill: When your solar panels generate much of your home's electricity, you reduce your utility bills.
2. Clean, renewable energy: Solar energy is clean and generating it doesn’t create harmful air pollution.
3. Tax incentives: The federal solar tax credit can help you with the upfront costs of the installation, and some states have similar solar incentives.
4. Long-lasting benefits: Current solar panel technology will continue generating electricity for 25 years or more, and solar panels are built to withstand extreme weather conditions.
5. Greater energy independence: When you produce your own electricity, you have more control over where your energy comes from, what you can do with it, and how much it costs. In addition, battery storage can help you avoid power outages and blackouts, which provides peace of mind during a storm.

Do You Need a Battery?

Homeowners are increasingly installing batteries with their solar panels. Adding a battery costs more, but provides additional benefits, like additional savings or backup power. In 2024, about 28% of residential solar installations also had a battery, up from approximately 12% in 2023, according to the Solar Energy Industries Association.

Depending on the capacity of the installed battery and the electricity demand of the house, batteries can keep at least parts of a home powered up through an outage. In 2022, the average American utility customer experienced five and a half hours without power, according to the US Energy Information Administration.

In places with weaker net metering policies, battery storage can be a way to avoid even more utility electricity and increase your savings. After California shifted to NEM 3.0, a net billing policy with smaller credits for electricity sent to the grid, 60% of solar installations had batteries, up from 10% before the shift.

Solar Panel Maintenance

Solar panels can be low maintenance equipment, though you might want to clean your solar panels from time to time. When something does go wrong, it’s best left to a professional, as amateur tinkering can void warranties or create fire risks.

Be sure to review the warranties offered with your equipment and understand who is responsible for repairs. Some companies offer post-installation protection and maintenance plans with extended warranties, proactive monitoring, and speedier service, depending on your level. With a solar lease, maintenance and service is included.

How Does Net Metering Work?

Net metering and net billing are two ways utilities compensate you for the solar electricity you send back to the grid. Since you won’t use every electron you generate (and you might not even be home when your panels generate the most), net metering can be an important way to save.

Under 1-to-1 net metering, any electricity you send to the grid offsets the cost of the same amount of electricity you draw from the grid. If you send 200 kilowatt-hours of electricity to the grid in a month and use 100 kilowatt-hours from the grid, you’d earn a bill credit that would offset 100 kilowatt-hours of future consumption.

Net billing works the same way, but credits are worth less.

Still, each system can be a key source of savings.

Curious about your local policies and how much you could save? Check out Palmetto's solar savings calculator or contact a solar advisor today.

Frequently Asked Questions

How do I start planning for a home solar power system?

Start by reviewing your electricity bills, and assess your needs based on your energy usage, the age and size of your roof, nearby shade trees, and more. You can get easy help from Palmetto’s free solar design and savings estimate tool.

How long do solar panels last?

Solar panels typically come with 25-year warranties that guarantee a certain level of performance at that point. Solar panels get less efficient over time but still produce electricity after 25 years.

How much do residential solar panel systems typically cost?

​​The exact solar panel cost and long-term savings of your system may vary depending on several factors.

• The size of your system
• Your energy usage
• Your electricity rates
• Any incentives in your area
• The size and layout of your roof
• Preference for cash or loan financing

How long does it take to install a residential solar power system?

The actual installation will only take a few days of work on average, but getting to that stage can take weeks, and sometimes months. Much of that time is spent designing the system and getting the necessary permits and approvals from your local government and your utility. Watch our 3-step “Timeline to Solar Savings” video to learn more:

What is net metering?

Net metering is a solar incentive program where you can earn bill credits from your utility company if your solar panels produce more electricity than you use in your home, and feed that extra electricity back into the grid. You can then use those bill credits to cover the future cost of electricity you use from the grid.

Do solar panels require maintenance?

Solar panels require very little maintenance, as they are made of durable materials like tempered glass and aluminum and have no moving parts. Most solar panel manufacturers include solar warranties of up to 25 years. However, panels do occasionally require service or maintenance to keep them operating at peak efficiency.

Can I install solar panels myself?

In limited cases you may be able to install solar panels yourself. If your panels are going to connect to the grid, you may not be legally allowed. Residential solar systems typically require permits and other paperwork, not to mention technical electrical work, that are best left to professionals.

Disclaimer: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors.