How Much Do Solar Panels Cost? (And Are They Worth It?) – The Wall Street Journal

How much solar panels cost

The cost of an average-size residential solar panel system is about $25,000 including installation, according to the SEIA. The exact cost you’ll pay for your home may be more or less than this, though. Generally speaking, you can expect to pay between $18,000 and $37,000, according to home repair platform Angi.

Where you live will play a role in how much you’ll pay for solar panels. “Labor rates can vary dramatically by location,” explains Jeff Chapin, founder of solar battery company Haven Energy. “Solar installs in Northern California will cost more than solar installs in East Texas, for example.”

Homeowners in Arizona currently have the lowest average solar panel cost, according to solar marketplace EnergySage, clocking in at about $19,500 for an 8-kilowatt system (the typical home requires between 6 and 10 kilowatts). Indiana and New Hampshire have the highest costs at nearly $30,000.

Here’s a look at some of the factors that will play a role in your upfront costs:

Your roof

How much sun exposure your roof gets is one of the biggest factors in solar panel costs. Roofs that have more hours of exposed sunlight—throughout a day and across the year—will need fewer panels and therefore have a lower cost. Roofs with less exposure will see the opposite effect.

If your roof has poor sun exposure or you don’t have much roof space, a ground-mounted solar panel system could be an option, though these are typically more expensive, adding about $5,000 to $8,000 to the total price tag, Chapin says.

The slope of your roof and the material it’s made of are also important. “Steeper roofs cost more to install,” Chapin says. “They require more safety precautions and are generally harder to work on.” Roofs with slopes over 30 degrees fall into this “steep” (and more expensive) category, he says.

As for material, asphalt shingle roofs and metal roofs tend to be the easiest and cheapest to install panels on, while membrane, tile and slate roofs are costlier, as they need specialty mounting hardware and are more likely to get damaged during installation.

In many cases—and especially with older roofs, Chapin says, homeowners will actually want to replace their roofs before installing panels. The average cost of a roof replacement is about $9,000 nationwide, according to home repair platform Angi.

“Removing and replacing the solar panels at a later date is expensive,” he says. “If your solar panels last for 25 years, you don’t want to install them on a roof that only has five years of life left on it.”

Type of solar panels

The type of panels you choose—and, more specifically, their efficiency—is also a contributor to cost.

• Thin film panels, which are the least effective and last the shortest amount of time—about 10 to 20 years—are also the least expensive to install. On an 8 kilowatt system, you’d pay $5,600 to $8,000 for these.
• Polycrystalline panels, which last about 25 years, cost between $7,200 and $8,000. 
• Monocrystalline panels—the most efficient option—would run you $8,000 to $12,000. These last up to 40 years, create the most energy and are ideal for smaller roofs. 

Other factors that impact solar panel cost

Other factors that influence the costs of solar include your energy needs (a large house that uses lots of power will require more panels and cost more) and what type of inverter you choose.

Inverters turn the solar energy into usable energy for your house. String inverters are the standard and come with most systems. But if you have a lot of shading on your roof you may want a microinverter, which allows you to turn off individual panels and increase the overall efficiency of your system. This could increase your total system costs from 10% to 30%.

Other costs that will play into your solar panel installation include:

• Landscaping (trimming or removing overhanging trees, for example)
• Inspections ($150 to $300)
• Permitting ($100 to $2,000)

The costs of permitting and interconnection (to local power grids) can vary by locale—ranging from $100 to $2,000 in one-time fees.

If you opt to install a solar battery along with your system, which can serve as an emergency backup similar to a generator, this can add to your costs as well. (It could increase your total project cost by 50% or more, in some cases, according to Chapin.)

Are solar panels worth it?

For solar panels to save you money, you need to be in the home long enough for your energy savings to outweigh the costs to install the system. While it’s difficult to determine this payoff point on your own, Google’s Project Sunroof tool can help.

The tool uses your roof size, local weather patterns, average electric costs and other data to determine how much exposure your roof gets and the likely savings you’d see across a 20-year period. It then gives you the estimated year you’d break even on installation costs.

If you’re not sure you’ll be in the home at that break-even point, then it may not be worth it to install solar panels on the property.

Ongoing solar panel costs

Once your system is installed, solar panels generally carry few recurring costs, and in many cases, come with a full warranty for 20 to 25 years. You will need to have your panels cleaned annually, which costs $150 to $750, according to Angi, and you should have a yearly inspection done, too.

You may also need to trim surrounding trees regularly to keep them from blocking the sun, and in some cases, you may need to replace individual panels because of weather damage (though your warranty should cover this).

“One of the great things about solar panels is that the maintenance required is very minimal,” says Vincent Curcie, chief executive officer of solar company OC Solar in Orange County, Calif.

Does installing solar increase your home value?

Generally speaking, solar panel systems increase the value of a home. Homes with solar energy systems sell for about 4% more than homes without, according to 2019 research from Zillow. On a median-priced home—$417,700 today—that’d mean adding over $17,000 to your home’s value.

That doesn’t necessarily mean adding solar panels is a sound financial decision—as they may cost more than they add to your value. If you’re not sure the move is right for your property, get estimates from a few solar panel companies in your area and ask a real-estate agent about its potential impact in your specific market.

How to pay for your solar panels

If you have enough in savings, the smartest option is generally to purchase your solar panel system in cash. If you can’t, though, there are several other options to explore.

These include:

• Solar loans: These work like any other loan, allowing you to slowly pay off your system’s costs over time. They’re offered by banks, credit unions, solar companies and other entities. Typically, you don’t need a down payment for a solar loan.
• Solar leases: With this a solar lease, a solar company pays for and installs the panels on your home. You then pay a monthly leasing fee in exchange for using the system. The solar company retains ownership of the panels and handles its maintenance. When a solar lease ends, you can either renew, buy it out, or end the lease and have the panels removed.
• Power purchase agreements, or PPAs: These work much like leases, with the solar company installing and owning your panels, though instead of paying a monthly leasing fee, you instead pay for the energy you use from the system (a fixed rate per every kilowatt-hour used), just as you would with traditional electricity. The company also takes any surplus energy the panels produce and sells it back to local utility grids. A quick note: PPAs aren’t allowed in every state, so check with your state energy department before exploring this option.
• Home-equity loan or Heloc: These let you borrow from your home equity and use the funds however you’d like. Home-equity loans come with a lump sum upfront, while Helocs offer a line of credit you can withdraw from over time. 

Chapin says to opt for a lease or PPA if you can’t pay cash, as these will keep your upfront cost low and help you avoid paying the high interest rates that often come with solar loans. Just keep in mind that having a solar lease can complicate selling your home. You’ll need to buy out your lease or find a buyer willing to take over the lease if you want to sell before your contract is up.

Also, note that you won’t own the system in these scenarios, so you can’t take advantage of any tax credits or rebates (more on these below). Still, it should save you compared with traditional electricity. “The rate is typically much more affordable than your typical utility bill, netting you savings right away in the short term,” Curcie says.

If you want to own your system but don’t have the cash outright, you can use a solar loan for the installation. Just make sure to compare lenders and be mindful of the interest rates you’re being offered. In many cases, lenders may offer lower rates in exchange for a hefty fee tacked on elsewhere. And as Chapin puts it, “Most sellers don’t disclose the dealer fee.” (Chapin says to expect rates around 12% to 14% in today’s market.)

How to make solar panels more affordable

If you own your solar panels—meaning you purchased the system in cash or took out a solar loan—then you’re likely eligible for a few tax incentives or even rebates, which can make going solar a little more affordable.

The Solar Investment Tax Credit, for instance, gives you a dollar-for-dollar reduction of your tax bill worth 30% of your solar panel system’s installation cost. So, if your total cost to install the system was $25,000, you’d get a $7,500 tax credit. There are no limits or income caps.

Some states and cities have other incentives, too, as do many utility providers. You can check the Database of State Incentives for Renewables & Efficiency to find potential savings in your area.

Getting quotes from several installers and negotiating can help lower your costs, too, Chapin says. “More than a third of what Americans pay for solar goes to customer acquisition and sales commission costs,” Chapin says. “There’s always wiggle room.”

You can also participate in grid services programs, which allow you to sell your excess energy to local utility grids. According to Chapin, these can “generate a few hundred to a few thousand of dollars of income a year.”

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