The average solar shopper in the U.S. needs about 11 kW to cover their electricity usage, said solar marketplace provider EnergySage. After receiving the 30% federal investment tax credit, the average system cost is about $20,552.
The average cost-per-watt across the United States is $2.56 per watt before incentives, based on EnergySage data. Costs have fallen considerably, as ten years ago average installation costs were about $3.36 per watt, according to data from the National Renewable Energy Laboratory (NREL). In the meantime, utility electric rates have increased precipitously, meaning each year that a ratepayer waits to pay solar is another year of missing out on savings.
Residential solar prices increased temporarily during the pandemic, but have since fallen to low, pre-pandemic rates.
Based on current utility-provided electricity rates and expected annual rate increases, systems installed today are expected to on average have a 7.1 year payback or return on investment.
Savings vary widely based on electricity rates and solar installation costs in a given state. Expected 25-year savings for states with relatively low electricity rates like Georgia, Iowa and Indiana are expected to save about $25,000 to $30,000 on bills over 25 years, while ratepayers in Massachusetts, California and Connecticut can expect savings exceeding $100,000 over a 25-year period. Find your state’s expected solar savings here and calculate a more customized estimate for your home here.
EnergySage also provided an expected cost breakdown, including components and installation services. Interestingly, solar panels only represent about 12% of the total average cost in the United States. Average costs below are based on a $29,926 system before incentives sized at 10.8 kW.
| Component | Average Cost | Percentage Of Total Cost |
| Solar panels | $3,656 | 12% |
| Solar inverter(s) | $2,991 | 10% |
| Racking equipment | $997 | 3% |
| Electrical wiring | $2,548 | 9% |
| Supply chain costs | $2,659 | 9% |
| Sales tax | $665 | 2% |
| Installation labor | $1,994 | 7% |
| Sales & marketing | $5,318 | 18% |
| Overhead costs | $3,102 | 11% |
| Solar installer profit | $3,102 | 11% |
There are three main ways of adopting solar at your home, including a cash purchase, a solar loan or a solar lease, sometimes referred to as a power purchase agreement (PPA).
“We recommend buying your solar panels outright or financing them with a loan when possible. However, if you can’t afford the upfront cost or prefer not to take out a loan, a lease or power purchase agreement (PPA) is another option to consider. Paying in cash is usually the best financial choice, as it leads to greater long-term savings. But if you don’t have the cash on hand or don’t have a tax bill to take advantage of the 30% federal solar tax credit, a lease or PPA can be a good alternative,” said Alix Langone, senior research analyst at EnergySage.
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