Key points
The solar industry is still relatively new, but there is a growing awareness that clean energy sources such as solar have a lower carbon footprint than fossil fuels. Additionally, falling equipment prices and government incentives have made solar increasingly affordable for homeowners.
Solar panels are often worth it if your roof is properly oriented, and you can access state and local incentives. It’s important to talk to a few solar companies about the climate and regulations in your area. Professional solar providers can typically help you navigate tax credits and other benefits for which you may be eligible.
But solar panels aren’t for everyone. “Solar is very bespoke,” explained Aaron Nichols, a solar researcher for Exact Solar in Newtown, Pennsylvania. “Every home is different. Every roof is different. You really want to consult with an installer about your situation.”
What determines whether solar panels are worth it?
As you consider whether solar panels might be worthwhile for your home, keep the following factors in mind.
Energy usage
Household energy consumption partly determines solar system size. Larger households that run more devices and appliances tend to require additional panels and other components.
Any solar estimate you receive should factor in your energy usage to ensure your home solar system can cover all or most of your energy costs.
You should also talk to your solar installer about your expectations and goals for installing solar panels — some homeowners may want to entirely offset their energy consumption, while others just want to slightly reduce their utility bills.
Location
The more sun your roof gets throughout the year, the more energy your solar panel system can produce. While some regions are known to get more sun than others, solar panels can be viable in every state. However, the direction your home faces and how much shade it gets are also factors.
“Have a professional look at your home and see if there’s potential,” Nichols said. “Even if you have one or two trees in the way, you might still get enough sunlight.”
Roof size and conditions
The number of panels required to cover your household’s energy needs determines how large your roof should be to accommodate those panels.
Other key factors include your roof’s age and condition. Older roofs with more wear and tear will likely need to be replaced before your solar panels’ average life span of 25 years is up.
“Some installers will include roofing removal and reinstallation in the total cost of a system and some won’t, so that’s something you want to make sure you have negotiated up front,” Nichols advised.
It’s best to have your solar company handle panel removal and reinstallation as needed, since roofing pros won’t have experience with your specific system’s components.
Net metering
A net metering program allows solar owners to earn credits for any unused energy their panels generate. When a net-metered system generates more energy than the home uses, the meter will run backward to credit the home’s utility bill, according to the Solar Energy Industries Association. The excess energy goes into the grid to serve other customers.
If your state or local utility company doesn’t offer a net metering program, you won’t be able to earn money with your system.
What are the pros and cons of solar panels?
Solar panels offer many benefits, but you should also consider these potential drawbacks.
- Solar power can eliminate or significantly reduce your household electricity costs.
- A solar energy system with a battery backup provides reliable power during outages.
- Solar panels have no moving parts and minimal routine maintenance requirements.
- Solar panel installation requires a significant upfront cost — around tens of thousands of dollars.
- How much you save or earn is partly based on federal, state and local policy decisions.
- Earning back the money you spend on solar panels takes an average of eight to 12 years, according to Exact Solar.
How much do solar panels typically cost?
Solar panel installation costs vary widely due to many factors, including the following:
- Energy usage
- Equipment costs
- Labor costs
- Local climate
- Local permitting requirements
- Roof slope and position
“The cost of solar panels is so case by case and so regional,” Nichols said. “It depends on how hard it is to negotiate with your power company, what kind of components you need, the quality of inverters and panels you need, and how much sunlight you get in your area.”
For example, homeowners in Pennsylvania spend $10,000 to $30,000 for a residential solar panel system, on average — though net metering and federal tax credits help offset these costs, per Exact Solar’s website. Still, these numbers should be taken with a grain of salt since system costs in every state and municipality can differ.
Financing options
You have several options for financing a solar energy system.
Purchasing upfront
Maximize your return on investment by purchasing your system outright. Although the upfront cost can be high, you’ll have a lower monthly electricity bill or none at all. As the system owner, you can also take advantage of tax credits and incentives, reducing upfront costs and saving money over time.
According to our November 2023 survey of 1,000 homeowners who purchased solar panels within the last five years, 57% paid upfront for their solar panels.
Another path to ownership is a solar loan, which tends to require lower payments than typical energy bills. A loan still allows you to own the system and utilize incentives while you pay it off.
Alternatively, you can lease a solar system. In this case, the system installed on your property is still fully owned by the installer. You’ll typically put no money down, but you’ll have to purchase the electricity generated. While a solar lease gives you lower utility bills in most cases, you won’t eliminate your bills or have access to the same benefits as solar owners.
“Homeowners should watch out for solar leasing agreements,” Nichols advised. “You don’t own the tax credits or the benefits. The company owns the renewable energy credits that some states have. They also own the tax refund.”
That isn’t to say that solar leasing can’t be beneficial in some scenarios. “There are situations, like if you know you’re going to move soon and you’re okay with a short lease and you just want your power bills to be lowered,” Nichols explained. “It’s just something to be wary of and do your due diligence on.”
How can you save money with solar?
Regardless of what payment option you’re considering for your solar energy system, you can offset the cost by taking advantage of credits and incentives, as well as considering a do-it-yourself approach.
Tax credits
A federal solar tax credit is in effect through 2035 — this is sometimes referred to as the Investment Tax Credit (ITC). The ITC currently provides solar owners with a 30% tax credit for the tax year of their solar power system installation. It is set to start tapering off in 2033.
For example, if you pay $30,000 to install your solar panel system, you may be eligible to receive a tax credit of $9,000.
The United States Office of Energy Efficiency and Renewable Energy recommends seeking professional tax advice before purchasing a solar system to check whether you’re eligible for the ITC and then completing the proper IRS forms to claim it.
State and local solar incentives
The federal ITC is just one incentive available to residential solar owners.
“Look at local and state incentives where you live, because those are all different,” Nichols said. Some examples include the following:
- State income tax credits
- Sales tax and property tax exemptions for equipment purchases
- Net metering programs
- Solar rebates
- Solar stipends
- State-specific financing options
- Assistance programs
- Solar rewards programs
Some states, including California and Massachusetts, have a robust array of solar incentives. Other states don’t offer any at all. For a complete list of solar incentives organized by state, visit the Database of State Incentives for Renewables & Efficiency.
According to our solar survey, 40% of respondents took advantage of state credits and incentives, while 36% claimed the federal credit.
DIY vs. professional installation
Some DIY solar panel systems on the market can save you money on both equipment and installation labor. However, DIY panel installations have several drawbacks:
- Improper installation can damage your roof
- Not all DIY systems can be connected to the grid
- The panels tend to be of a lower quality
- They don’t generate as much power
- They tend to require more maintenance
- Warranties often don’t apply to DIY installations
Every home is different. Every roof is different. You really want to consult with an installer about your situation.
Aaron Nichols
What are solar panels and how do they work?
As you debate whether solar panels are worth it, it’s helpful to understand how they work. A solar panel is a device installed on a rooftop or the ground that uses radiation from sunlight as an energy source to generate electrical current. Devices called inverters convert that current into usable household electricity. This process is called photovoltaics (PV), and solar panel systems that use it are sometimes called PV systems.
“Panels generally don’t require a lot of maintenance. They just sit there and generate clean electricity from sunlight,” Nichols explained. “They often do it for 20 to 30 years without much of a loss in efficiency, and are generally warrantied for between 20 and 25 years depending on the manufacturer you go with.”
The energy from a solar energy system can power the appliances and other devices in your home. If your system is tied to the local electrical grid, excess energy produced can sometimes be sold to your utility company in exchange for credits. This type of policy is called net metering, and its availability depends on where you live.
Solar batteries
In addition to getting solar panels, many homeowners spend extra money to invest in one or more backup solar batteries. These components can store excess energy produced by your system for later use.
“If you have battery backup, you can have reliable power during any sort of extreme weather event,” Nichols said.
What’s next?
To learn more about your local solar market and find out if solar panels are worth it for your home, search for local companies that install solar panels. Some national companies, such as Trinity Solar, operate more locally than other large companies, which means its staff will be knowledgeable about your local tax incentives and rebates.
Nichols emphasized the importance of hiring a well-established installation company. “Find someone who’s been around for a long time,” he advised. “If they go out of business, then you wouldn’t be able to service your warranty.”
Read reviews and talk to multiple providers to get quotes and recommendations for your home. A good rule of thumb is to compare at least three companies before deciding.
“It’s a wonderful thing once you’ve done your research and you’re connected to the right people,” Nichols said.
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