A quick guide to the cost of solar panels

If you’re looking to lower your energy costs and go green, you should strongly consider installing solar panels.

Take a look at just some of the benefits that solar panels can bring: They can help you save money, live greener, and minimize the strain on your HVAC system. Seems like a pretty good deal, right?

Indeed, solar panel installation is growing in popularity across the country, as many homeowners are exploring the cost of this upgrade. There are now 255 gigawatts direct-current of solar capacity installed nationwide – or enough to power over 43 million homes, according to the Solar Energy Industries Association. Over the last 10 years, solar deployments have experienced an average annual growth rate of 28%.

So is installing solar panels right for you? Let’s examine the cost of a renewable energy system for your home and see what works.

Understanding the cost of solar panels for homes

Let’s start by looking at how many panels your home will require. The answer comes down to this: The greater your energy needs, the more panels you’ll need.

The good news is that the cost of solar panels has come down considerably in the last decade. Between 2010 and 2024, the cost benchmarks for photovoltaic (PV) systems in 2024 U.S. dollars (USD) decreased 65% for residential systems, according to the National Renewable Energy Laboratory.

If this optimistic outlook makes you want to move forward, the best way to know how many panels you need is by looking at your energy bills and considering your climate. If you live in a sunny climate, you won’t need as many solar panels to produce the same amount of energy as in an overcast climate. For example, a solar energy system in San Diego will produce more solar electricity than one in Seattle.

Also, solar panel costs vary by manufacturer and model. In general, high-efficiency solar modules with long warranties cost more, but there are many parts that comprise a home solar energy system. They include:

• Inverters: Solar panels turn light into direct current (DC), and inverters turn that power into alternating current (AC) for our homes and the grid. Inverters essentially act as the brain of your setup, sending data to your solar monitoring platform so you know how much power your system is producing.
  • Central inverters: One or two large inverters link all the panels together. However, there’s a limit on how many modules the inverter can handle, and the system will produce less solar power if the inverter is undersized.
  • Microinverters: Some solar panels have inverters on each module instead of a central inverter for the whole system. One advantage to this setup is that you can add more panels as needed in the future without worrying whether a central inverter can handle the increased load. This is especially common if a family starts driving an electric vehicle (EV) and consumes more power than before to charge it. 

• Ground mounts: Although most residential solar systems are installed on the roof of the home or garage, some are mounted on the ground or on a pole. Ground mounts – and especially pole mounts – typically increase the total cost of the system due to additional hardware, labor, and permitting fees.
  • However, it might be worth the extra cost if this type of system results in additional energy production. You might have to use this type of setup if you have infrastructure issues, such as problems with your roof. 

• Solar panel trackers: These devices turn the solar panels to face the sun more directly as it moves across the sky, and they are available in single-axis or dual-axis models. Solar trackers are used for ground-mounted systems only and can increase solar energy production. However, these gadgets also increase the total system cost and require maintenance because they feature moving parts.

• Electrical panel upgrades: Your electrical panel distributes energy from the panel to the circuits throughout your home. Most homes, especially new ones, do not require an electrical panel upgrade before installing solar panels. But if you have an old electrical panel or don’t have sufficient amperage to accommodate the energy from your solar panels, an electrical panel upgrade will be necessary.

• Other signs that you need to replace your electrical panel include breakers often tripping, which results in a burning smell near your service panel (which likely indicates a safety concern), or the panel making strange sounds.
  • Most homes require a 200-amp panel as a minimum. If needed, upgrading the electrical panel can add $1,000 – $3,000 to the solar installation cost.

• Solar storage battery: Some homeowners want to have backup power during blackouts, and solar batteries are a great way to create this setup. Also, batteries can reduce electricity bills more for homes with time-of-use rates, where the electricity rate varies by the time of day. Adding a battery can significantly increase the cost of the solar power system, but most states have net metering policies that enable homeowners to sell surplus power to the utility grid, so adding a battery doesn’t necessarily increase the utility bill savings.

The additional cost varies depending on the type and capacity of the batteries, and installing PV batteries can add anywhere from $5,000 – $20,000 to the system cost before solar incentives.

How your electricity consumption affects your solar panel costs

It only stands to reason that you’d want to install a solar system that produces all the electricity for your home year-round, but metering restrictions may mean this is not feasible. Here’s why: If you produce more electricity than you can use, you can’t just sell it back to your utility and pocket the difference. Any production beyond your annual consumption might be compensated at a much lower “wholesale” rate – or not at all.

So thoroughly examine your solar panel needs by exploring your energy use and costs for the entire year.

Home energy use

Typically, residential utility bills use kilowatt-hours (kWh), which are a measurement of electricity use over time. A kWh is equal to consuming 1,000 watts for one hour. To calculate the daily consumption of a device, multiply the number of hours used per day by its wattage.

For example, running 10 100-watt light bulbs for 1 hour will consume 1 kWh. If your refrigerator consumes 500 watts when it runs and it cycles on and off for a total of 2 hours, it will consume 1 kWh. Or consider the power consumption for charging an EV (which varies by the battery’s capacity and the current battery level). A Mini Cooper SE has a capacity of 54.2 kWh, while a GMC Hummer has a battery capacity of 213 kWh.

Residential utility bills

There are many variables that affect energy costs, including: location, home size, personal temperature preference (as the film says: some like it hot), and more. The average household uses around 10,500 kilowatt-hours of electricity each year (or 875 per month), according to the U.S. Energy Information Administration (EIA).

The EIA reports that the average electricity bill is around $0.1807 per kilowatt-hour, as of its most recent report in September 2025. Hawaii had the most expensive cost ($0.35/kWh), while North Dakota had the most affordable ($0.09/kWh).     

Energy-efficiency upgrades before going solar

One way to reduce the cost of your solar energy system is by making your home more energy efficient. You can start by using a home energy-monitoring system to determine if your appliances waste electricity.

For example, if you have electric heaters and live in a cold climate, upgrading to a heat pump and air sealing cracks and gaps can save a lot of electricity. Or if you have an old refrigerator that doesn’t properly seal or runs a lot, consider replacing it with an energy-saving model. In homes with electric water heaters, installing a water-saving showerhead and washing clothes in cold water can save a lot of energy. Whenever possible, replace incandescent light bulbs with LEDs.

These smaller measures can add up and save you a great deal, in the long run.

Average cost of solar panels

When determining the potential cost of your solar energy system, keep in mind that myriad variables affect the average price tag: the system size, where it’s located, and whether it includes batteries.

That said, here are some good figures to keep in mind as you ballpark the inevitable cost: For starters, one solar panel will produce 25 – 60 kWh of electricity each month, and most homes need 15 – 19 solar panels. Solar panels cost around $1,200 each, so a full set of solar panels may cost $24,000 – $36,000 after applicable credits.

Once you’ve finalized your research, explore additional incentives by visiting the Database of State Incentives for Renewables and Efficiency (DSIRE). You might find that your state has solar energy incentives that will lower your costs even more.

Do Tesla solar roofs cost more?

Tesla solar shingles have gained a lot of attention in recent years because of their sleek appearance – indeed, it can be nearly impossible to tell a roof with solar shingles apart from a non-solar roof. Tesla solar roofs contain photovoltaic cells within the roofing materials, so the shingles serve two purposes.

Unfortunately, solar shingles tend to be considerably more expensive and have lower efficiency. That means that some roofs just aren’t big enough to generate the required amount of power. Although it does seem practical to have a roofing product that serves a dual purpose, this option might not work for everyone.

Solar shingles tend to be popular for aesthetic reasons as some solar shoppers don’t like the look of traditional solar panels and are willing to pay the additional cost.

However, Tesla also sells its own line of solar panels, and many shoppers wonder if Tesla solar panels cost more than other panels. The short answer: yes, they do cost more. A typical Tesla Solar Roof can cost near $100,000 and averages some $62 per square foot depending on the size and complexity of your roof, according to one article. Meanwhile, that same article found that the average replacement and solar installation costs around $66,000 less than a Tesla roof.

Typically, Tesla solar panels are put in by the company’s own network of installers, so it is difficult to determine the cost of the panels themselves. However, the panels have a sleek, all-black appearance, which is attractive to many solar shoppers. But many other solar manufacturers also offer all-black solar panels, including SunPower, LG, Panasonic, Q CELLS, and Trina Solar.

Build your solar system with future needs in mind

Solar systems are designed to last about 30 years, so it’s a good idea to consider your future needs before designing your array. For instance, consider these potential changes: are you planning an addition to your home? This could have a huge impact on energy use due to air-conditioning or if there will be additional occupants.

• Do you plan to get an EV soon and charge at home? Often, EV owners will add a few extra solar panels to charge their vehicles with solar energy.
• Are you swapping out any energy-hogging appliances or converting from gas to electric appliances? For example, replacing a gas clothes dryer with an electric one will increase your electricity consumption. The same is true for replacing a gas stove with an induction range.
• Conversely, replacing an inefficient water heater with a hybrid water heater can reduce your energy consumption. Even installing a water-efficient washing machine could conserve energy if you currently use a top loader and wash clothes in hot water.

In some cases, you can plan to add additional photovoltaic capacity later. For example, if you use microinverters or oversize the central inverter and save space on the roof, you can easily add solar panels in the future. Also, some solar batteries are relatively easy to add to an existing solar system.

The bottom line: The cost of solar panels varies widely

Solar energy systems bring myriad benefits to people who install them, including lower bills, cleaner living, and the satisfaction of making a positive impact. 

That said, it takes some homework to figure out your total electricity costs, conclude which type of system you should install, and learn what incentives are available for you. After all, the cost of solar panels varies depending on numerous factors, such as the size of your home and where you live.

But that research might be well worth it in the long run, giving you lower bills and a lighter footprint. If you want to turn sunshine into savings, consider a personal loan with Rocket Loans^SM to make your solar dream a reality.