Solar Panel Cost & Savings in 2024: 5 Key Factors

Solar panels are a popular green energy home improvement, but they aren't the smartest money move for everyone. There's not just one easy way to answer the question — are solar panels worth it? — since a lot depends on your location, the tax credits you're eligible for, how long you plan to stay in your home, and how solar panels might impact your home’s value.

If you're trying to figure out if solar panels will help you save money on utilities to the point where they'll justify their cost, there’s an easier way to break down this decision. Thinking through the following five aspects of solar energy will help you figure it out.

In this article

• Understand your current electric bill
• Assess your sun exposure
• Estimate the cost of solar electric system installation
• Research incentives
• Consider your home value
• How to make the decision
• How to pay for your solar panels
• FAQs
• Bottom line

Understand your current electric bill

Solar panels tend to provide the maximum benefit in markets where electricity is very expensive. After all, if you're paying a lot for electricity, then generating even some of your electricity usage via solar could provide substantial savings.

To get an idea of your current costs, take a close look at your price per kilowatt (kW). This should be listed on your electricity bill. The national average is 10.48 cents per kilowatt hour (kWh) according to the utility website Electric Rate. If your rate is much higher, you may be able to get above-average savings if you switch to solar power.

Consider your usage too. If your goal is to generate all of your electricity from solar, this becomes more difficult the more electricity you use. For higher usage, you will need a larger, thus more expensive, system.

By contrast, if you don't use much electricity at all, you may be able to get by with a smaller system size. The benefit is you won't need as many panels, yet by buying a larger system you gain cost advantages due to economies of scale. Adding each additional panel costs less once you're already paying for the installation cost of the solar system. Of course, you could opt for a lot of panels anyway and sell the excess electricity back to your utility provider to defray some of the upfront costs.

Assess your sun exposure

Installing a solar panel system only makes financial sense if it’s going to generate quite a bit of electricity which helps you reduce your bills. If you don't have much sun exposure, the panels may not produce enough power to be worth their cost.

If your home faces south and gets a lot of direct sunlight, you might be a good candidate for a solar installation. But if you have lots of trees around your home or the roof is at the wrong angle, solar energy may not be your best option.

Google actually has a helpful tool called Project Sunroof that allows you to provide your address and some details about your home to see if your property might be a good candidate for solar.

Estimate the cost of solar electric system installation

The cost of solar panels plus the cost of system installation will also determine whether going forward makes financial sense. Obviously, the more you pay for a system, the more electricity it would have to generate to be worth its cost.

HomeGuide reports that the average cost to install solar is around $1.77 to $2.20 per watt, with the typical homeowner who installs a 6-kilowatt system paying around $10,626 to $13,230 after receiving tax credits. However, your location and the type of system you want can have a big impact on its price.

For example, if you want your system to be off-the-grid entirely — which means it is your sole source of electricity and you aren't connected to an electric company, i.e. “the grid” — you'd need to also pay for an off-grid inverter and batteries to store excess energy. After all, you'll still need power when your panels aren't producing at night or during bad weather. This adds considerably to your cost.

Most solar companies provide free, no-obligation estimates. So as part of this step, you might contact a few reliable solar installers in your area to get quotes and compare prices.