Solar panels are becoming increasingly popular in US homes. More than 500,000 home solar systems were installed in the US last year, for the first time, according to the Solar Energy Industries Association.
Electricity is also becoming more expensive each month: there was a 12% increase in average kilowatt-hour prices between May 2021 and May 2022, making solar power an even more attractive investment for homes and businesses.
A solar panel system can seem expensive when you only consider its upfront cost, but the savings achieved over time are much higher. Also, a home solar system has minimal maintenance requirements, and you can get excellent warranty coverage if you use high-quality brands.
In this guide, we will discuss the typical cost of installing solar panels in a US home, based on the data provided from three reliable sources:
The exact cost of going solar depends on several factors, including your location and the condition of your roof. However, US homeowners can normally expect to pay between $2.50 and $3.50 per watt of installed capacity. Your out-of-pocket cost can be much lower if your state government or utility company has an incentive program for solar panels.
Also, keep in mind you can deduct a percentage of your solar system costs as a federal tax credit: 26% for systems installed in 2022, and 22% for systems installed in 2023.
All the prices provided below are for traditional solar panel systems without energy storage. Generally, a home battery will increase the cost of your project by around $10,000 or more.
The federal tax credit also covers the cost of your battery, but only if the unit is charged exclusively by solar panels. Any home batteries that are charged with the grid, fully or partially, are not eligible for the tax credit.
Typical Cost of a Home Solar System According to the SEIA
The SEIA publishes quarterly reports that provide a detailed picture of the US solar industry, in collaboration with the leading consulting firm Wood Mackenzie. The latest report was published on June 7, 2022, and they determined an average cost of $3.07 per watt of installed capacity. The following table summarizes the average cost of several PV system sizes, based on this value, and the net cost after subtracting the 26% federal tax credit:
| Solar PV System Size | Typical Cost (Based on SEIA Price per kW) | Net Cost After 26% Tax Credit |
| 5 kW | $15,350 | $11,359 |
| 6 kW | $18,420 | $13,631 |
| 7 kW | $21,490 | $15,903 |
| 8 kW | $24,560 | $18,174 |
| 9 kW | $27,630 | $20,446 |
| 10 kW | $30,700 | $22,718 |
The SEIA calculates average prices based on monocrystalline PERC modules and other high-efficiency models. In other words, you’re looking at the average price of top tier solar panels.
EnergySage and the NREL consider a wider variety of products in their calculations, including less efficient and more affordable solar panels. As a result, the average solar costs they report are lower than those provided by the SEIA.
When comparing solar PV system prices, also keep in mind that the solar panels themselves are only a small fraction of the total cost. The average prices reported by the SEIA consider all the following cost items:
- PV modules
- PV inverter
- Overhead and margin
- Customer acquisition
- Logistics
- Design and engineering
- Electrical balance-of-system (BOS)
- Civil engineering
- Taxes
- Permitting, interconnection and inspection
- Structural balance-of-system (BOS)
According to the SEIA, photovoltaic modules only represent around 15% of the total price of a home solar system, while the inverter only accounts for 10% of the price. Keep this in mind if you check solar panel prices online: in many cases, the prices shown are for the PV modules only.
Typical Cost of a Home Solar System According to NREL
The National Renewable Energy Laboratory is a leading scientific institution in the energy industry, which means their approach is more technical than commercial. NREL publishes average costs once per year, and their latest data was released in November 2021.
- NREL estimated an average price of $2.65 per watt, assuming a 7.15-kW rooftop solar system.
- With the addition of a 5-kW and 12.5-kWh energy storage system, the system price increases to a range of $4.26 – $4.72 per watt.
NREL also provides a detailed breakdown of solar PV system costs, considering specific components and soft costs like labor:
| Solar PV System Cost Items | Typical Cost |
| PV module | $0.34 per watt (<13% of total cost) |
| PV inverter | $0.15 per watt, single-phase string inverter
$0.28 per watt, string inverter with power optimizers $0.31 per watt, microinverter for each PV module |
| Racking and other structural BOS | $0.09 per watt |
| Electrical BOS | $0.19 – $0.30 per watt, depends on inverter type |
| Sales tax | 5.1% national average |
| Permits, inspection, interconnection | $0.21 per watt for small installers
$0.23 per watt for national integrators |
| Overhead | $0.42 per watt for small installers
$0.58 per watt for national integrators |
| Profit margin | Typically, 17% |
Since the NREL report uses data from 2021, it doesn’t account for the recent impact of high inflation. The SEIA provides cost data each quarter, while EnergySage is constantly updating price figures, based on how the solar energy market is behaving. However, NREL is an excellent source when you need technical information about solar panels, energy storage, and other renewable technologies.
Typical Cost of a Home Solar System According to EnergySage
EnergySage also keeps track of solar PV system costs: You can check updated information about the top brands and their typical prices, and you can also check solar costs by state. As of June 2022, EnergySage reports an average cost of $2.77 per watt, which falls between the values provided by the SEIA and NREL.
- The average cost reported by EnergySage is based on a 7.4-kW home solar system.
- Prices can range from $17,538 to $23,458, with an average value of $20,498.
- This is equivalent to a unit cost of $2.37 – $3.17 per watt, and $2.77/W on average.
Keep in mind that these prices don’t consider the solar federal tax credit, and locally available incentives. The following table summarizes the typical prices of some common system sizes, based on the $2.77/W value from EnergySave, before and after the 26% tax credit.
| Solar PV System Size | Typical Cost (Based on EnergySage Price per kW) | Net Cost After 26% Tax Credit |
| 5 kW | $13,850 | $10,249 |
| 6 kW | $16,620 | $12,299 |
| 7 kW | $19,390 | $14,349 |
| 8 kW | $22,160 | $16,398 |
| 9 kW | $24,930 | $18,448 |
| 10 kW | $27,700 | $20,498 |
Unlike the SEIA, which focuses on high-efficiency solar panels, EnergySage provides average prices based on a wider variety of products. As a result, the average solar price reported by EnergySage ($2.77/W) is around 10% lower than the SEIA average price ($3.07/W).
Knowing the average price of home solar systems is useful before you start comparing actual quotes from solar installers. For example, you can easily tell if a price is too high or too low, which may indicate an excessive profit margin or low-quality products.
Note that the average solar prices reported by the SEIA, NREL and EnergySage are before subtracting incentives such as rebates and tax credits. The net cost of your solar PV system can be greatly reduced if you live in a place with many incentives. These may include:
- Sales tax exemptions
- Property tax exemptions (no tax applied to the increase in home value resulting from solar panels).
- State tax credits, in addition to the 26% federal tax credit
- Solar panel rebates, which can be a variable amount per kilowatt, or a fixed amount per system.
Generally, you won’t find all types of incentives available in the same location, but having just a few can drastically reduce your upfront investment. Keep in mind that the 26% Investment Tax Credit (ITC) is available everywhere in the US, being a federal incentive.
Upfront Costs and Ownership Costs: Understanding the Difference
If you only look at the price tag, a home solar system can seem expensive. However, the total ownership cost is low when you consider the entire service life of your solar panels. High-quality PV modules are often covered by 25–30-year warranties, and costs are minimal once the upfront investment is covered.
- The highest cost you can expect is an inverter replacement after 10-12 years, but the inverter only represents around 10% of the cost of a solar panel system.
- Solar panels have very simple maintenance needs. They remain productive as long as their surface is kept clean, and malfunctions are not an issue if you purchase high-quality modules with a long warranty – the manufacturer replaces any faulty units for free.
A diesel generator would be the opposite example: a power generation system with a low price but very high ownership costs. You can get a 10-kW unit for less than $3,000, while a 10-kW solar panel system can have a price of around $30,000.
However, a diesel generator needs a constant supply of expensive fuel, and maintenance is demanding. In most cases, running a diesel genset is much more expensive than simply using power from the grid.