Cost of Installing Solar Panels in 2023

The cost of home solar installations varies from state to state and roof to roof. The cost also depends on the type of panels and whether you add things like battery storage.

For most 2,500 square-foot homes, a 6 kW array with around 16-18 panels will meet household energy needs. This sort of set-up typically costs around $28,500, or $18,000 after tax rebates and other incentives. In some states, a 6 kW system might cost as little as $14,000, however.

Don’t want a full rooftop array? Installing just a few solar panels can help cut your electricity bill and cost less than $10,000. Or, start super simple with free-standing panels on a sunny deck or in the yard. These typically cost around $200 to $250 per panel or $1 per Watt.

How much does it cost to install solar at home?

Many solar installers and solar advocacy groups offer online calculators that provide an estimate of the cost of installing solar. These are helpful when dipping your toes into solar but don’t necessarily offer consumers the full picture when it comes to costs. 

For a more realistic estimate of the cost of installing solar at home, we can look at data from Rystad Energy and the National Renewable Energy Laboratory (NREL) on installed solar systems. These figures reflect the real-world cost of solar installations in the U.S.

Rystad Energy states that in the U.S. a 3-kilowatt residential rooftop PV system costs $4.6 per Watt direct current (W_DC) to install. The average solar array for a 2,500-square-foot home is around 6 kW, giving us an estimated cost of $27,600 to install home solar, using Rystad’s figures (before rebates).

The NREL more closely monitors the cost of solar installations, however, which is why we use its figures for our calculations below. The NREL gathers data three times a year from residential photovoltaic installers, i.e., the companies that actually install rooftop solar panels on homes. For a similarly sized standard 6 kW system, then, NREL gives comparable figures of $4,900/kW_DC or $5,300/kW_AC. For 2021, this amounted to an average cost of $29,400 to install solar at home (before rebates) across the U.S.

The trouble with even these estimates, however, is that the cost of home solar installations varies significantly depending on where you live. For example, the median price of a 10–100 kW system in New York was 13% lower than the median in Arizona in 2021, and in Arizona itself the cost was less than the national average. 

Averages are helpful as a general guide, then, but it’s essential to do your research and get detailed quotes to figure out how much it will cost for you to install solar at home.

The cost of solar is falling in most places

NREL also noted that for the third quarter of 2021, large residential PV installers reported higher costs for the average installation. Why? Likely because more people are choosing to add battery storage to their home solar energy system.

NREL suggests that rising material costs may be responsible for the increase in prices for larger systems (where cost increases are harder to absorb because of lower margins). 

How much does a rooftop solar array cost?

To work out the likely cost of a residential solar array, let’s look at the figures from the NREL. Specifically, we’ll rely on 2021 data for residential PV systems with a capacity of 2.5 kW to 10 kW in Arizona, California, Connecticut, Massachusetts, and New York. These systems had a median system price of $3.90/W in 2021. 

Why not use the higher national average from the NREL? Because the cost of solar has decreased year on year for residential arrays and more states are jumping on the solar bandwagon. This means the cost in these five solar-savvy states likely offers a better reflection of what home solar would cost you in 2022 or 2023.

A standard residential rooftop solar array has around 16 to 18 panels and a capacity of 6 kW. This will generate somewhere between 720 kWh and 900 kWh every month, meeting the electricity needs of many typical U.S. households (which average 893 kWh monthly).

Putting all this together, for a standard 6 kW array, you’d be looking at installation costs of $3.90 x 1,000 (to convert Watts to kilowatts) x 6 = $23,400. 

How about for a bigger array? Well, let’s say you use twice as much electricity as the average household and want to be sure to produce enough solar energy to cover all your needs. For a 12 kW array, you’d be looking at a cost of $3.38/W. So, your calculation would be $3.38 x 1,000 x 12 = $40,560.

These figures could be higher if you also need work done on your roof, have a non-standard roof, are in a location that’s hard to reach, and so forth. Costs could be lower if, for instance, you club together with neighbors, friends, or colleagues to bulk order panels and/or contract an installation company and get a discount for the larger overall project. Rates will also vary depending on regulations where you live, the experience of your contractor, and the availability of labor and parts.

Is solar more expensive in the U.S.?

In general, it costs more to install a solar energy system in the U.S. than it does to install a similar-sized system in, say, Germany or Australia. In large part, this is because of the many layers of municipal, state, and federal regulation in the U.S., as well as the wider variety of housing types and installation sites.

In Germany, roofs are fairly standard and so are solar arrays, making photovoltaic installation a trade. In the U.S., installers have to know much more about local regulations and be able to install arrays safely in a wider variety of situations. This means more training (often college degrees) and higher pay, resulting in higher overall installation costs.

It’s also cheaper to install residential solar in Australia compared to the U.S. According to Rystad Energy, a 3-kilowatt system costs just $0.96 (USD) per W_DC in Australia. Again, this discrepancy is largely due to purchase costs, sales taxes, permitting, inspection, interconnection, and profit margins. In the U.S., these ‘soft costs’ comprise 64% of the total cost of a home solar system, or $3/W_DC for the 3-kilowatt system. 

All of this wouldn’t be so bad if retail electricity prices weren’t also substantially lower across much of the U.S. This can make it hard to break even on a home PV set-up in some places, but it doesn’t mean a home solar array isn’t worth the trouble. For some households, the payback happens pretty quickly, in just five or so years. And even when payback takes longer, there are other benefits to installing solar at home, such as reducing reliance on the grid and on fossil fuels, and better overall air quality.

How to reduce the cost of solar power

The good news overall is that the cost of installing solar is going down year on year. In the early 2000s, the average U.S. solar energy array cost $10 per Watt. These days, costs have more than halved, with NREL’s latest figures showing a cost of just $4.90/W.

This is, in part, because the average cost of solar PV panels has decreased nearly 70% since 2014. NREL calculates that the average price of a PV module in the U.S. before tariffs dropped from $0.36/W in Q3 2018 to $0.27/W in Q3 2021.

Most solar panel manufacturing continues to happen in China and India using cheap labor. Imported products are subject to various tariffs though, which increases consumer costs. Biden’s (stalled) Build Back Better bill contains funding for domestic manufacturing of solar wafers and other components. Once/if the bill passes, the cost of solar panels in the U.S. will likely decrease further and their production will also be more sustainable and environmentally friendly.

The heterojunction specialist Meyer Burger is also reportedly planning to open a U.S. factory which should further reduce costs for better quality PV panels.

Panels only make up one part of a solar power system, though. Interestingly, in Hawaii, nearly all new residential solar systems are now built with storage. This is becoming increasingly common worldwide (about half include storage in Germany), and it’s likely that the contiguous U.S. will see similar PV plus storage systems becoming the norm going forward. This will all help to reduce the cost as systems become more efficient, easier to install, increasingly standardized, and less confusing for the average homeowner.

Overall, the cost of storage for solar power has also decreased over time. However, energy storage capital costs increased during the COVID-19 pandemic due to supply chain constraints and inflation. Manufacturers are now looking to switch to lithium-iron-phosphate (LFP) storage technology from lithium-ion batteries for solar. This type of storage is less expensive and better able to hold a charge in extreme temperatures.

As more people train to be solar installers and more states streamline permitting, these costs should also decrease.

How much does solar electricity cost?

So far, we have looked at the cost of installing solar panels at home. This is only one way of thinking about the cost of solar power though. For many people in the U.S., a home solar array isn’t practical or possible. This doesn’t mean, though, that they can’t power their homes with solar.

In fact, the cost of solar power is typically lower for larger, utility-scale projects compared to residential rooftop arrays. Community solar falls somewhere in the middle, with cost benefits for larger community solar programs. The cost of generated solar power varies greatly from state to state and even roof to roof.

In 2011 the U.S. Office of Energy Efficiency & Renewable Energy launched the SunShot Initiative. Overseen by its Solar Energy Technologies Office (SETO), this initiative had the goal of making solar electricity costs competitive with conventionally generated electricity, without subsidies, by 2020. 

By 2017, SETO had already achieved its goal. Costs for utility-scale PV power had dropped to $0.06 per kWh compared to $0.05 to $0.17 per kWh for fossil fuels. Even the cost of residential- and commercial-scale solar had dropped to $0.16 and $0.11 per kWh, respectively, by 2017, again meeting SETO’s targets three years early. 

The U.S. Office of Energy Efficiency & Renewable Energy noted in 2017 that costs for utility-scale photovoltaic (PV) solar power had dropped to $0.06 per kilowatt-hour (kWh). Cost targets for residential- and commercial-scale solar had also dropped to $0.16 and $0.11 per kWh, respectively. In comparison, in 2017, electricity produced by fossil fuels typically ran from $0.05 to $0.17 per kWh.

The future cost of buying solar electricity

Building on its success, SETO has laid out more ambitious goals for 2030. This time, it wants to cut the levelized cost of energy (LCOE) of PV solar to $0.03 per kWh for utility-scale, and to $0.05 and $0.04 for residential and commercial PV solar respectively.

SETO also aims to cut the LCOE of concentrating solar power to $0.05 per kWh for baseload power plants by 2030. Other goals include addressing grid integration challenges and market barriers to support greater solar adoption.

Final thoughts on the cost of going solar at home

Your total cost for solar installation will depend on where you live, the size of the array, and whether you want to include battery storage and other add-ons. 

A rooftop solar array isn’t the only way to access renewable energy at home though. In some states, utility companies offer solar generated electricity for the same cost, if not less, than electricity produced from coal, gas, or nuclear.

There are also thousands of community solar projects across the U.S. and many more popping up every month. These offer a great way to go solar at home, by buying shares in a community solar array or a pay-as-you-go subscription.

Finally, while the cost of solar electricity generated by a utility company is far lower than from home arrays (given efficiencies in larger, professional systems), once you’ve recouped the costs of a rooftop installation, you’re essentially getting power for free. In some cases, you may even be paid by the utility company if you’re connected to the grid and can take advantage of net metering.

If you have the enthusiasm, the means, and the roof (or yard!), installing a home solar array is a great way to lower your electricity bills and contribute to a greener, healthier planet and economy.