When you buy a home solar photovoltaic system, these are the factors that make up the price that you pay:
These factors vary from state-to-state, and even cities in the same state can have different prices due to local incentives. The quickest way to understand what your costs would be is to use our solar price calculator. You can also check our map and see the actual prices your neighbors paid for solar, using data collected from utility companies and government agencies.
Read this article if you want to get a deeper understanding of the elements that go into the price you pay for a solar system.
The most impartial assessment of solar photovoltaic prices comes from the annual Tracking the Sun study published by the Lawrence Berkeley National Laboratory. Using data collected from state agencies and utility companies since 1998, the report uses a dataset of 732,777 home solar system purchases to give us the most accurate picture of residential solar prices across the United States.
The most recent reporting shows that the median price across the six largest solar markets in the US is $3.50 per watt.
This price represents the installed price - that is, the actual price paid by the customer, including sales taxes, but excluding tax rebates such as the federal income tax rebate. This most recent data is from Arizona, California, Connecticut, Massachusetts, New Jersey, and New York.
The price per watt is the gross cost of a photovoltaic system, including all hardware and installation costs, that is paid by the customer. It does not include rebates. This means that the sticker price for a 6,000 watt system would be around $21,000 before incentives.
If this seems high compared to other websites that also report solar pricing data, understand that this is all-in pricing, including sales taxes, and not just hardware costs alone or the costs to the installer.
Also note that this is the median price, which means that half of customers paid more, and half paid less. There is quite a bit of variability between installers and different states. This is illustrated in the following graph:
Note that while most installations are close the median price (the thin black lines represent the 20th and 80th percentile) there are many that fall sigificantly outside the middle range of prices. Continue reading to understand some of the reasons why this happens.
The majority of the price you pay for a home solar system doesn’t come from hardware costs, but what are called “soft costs”. Soft costs include all non-hardware costs such as labor, the sales and marketing required by installers to find customers, permitting, and the installer’s profit. A recent study by the US Department of Energy gives a detailed breakdown:
As you can see, in the average residential solar system, only 36% of the price comes from hardware costs such as the inverters and solar modules. The rest are soft costs.
This is why larger systems are cheaper, especially when you get to utility-scale installations that are in the range of hundreds of kilowatts or even megawatts. Because soft costs are often the same whether the system being sold is large or small, those soft costs become a smaller percentage of the total system cost when the system is larger.
Soft costs are also the reason why the price declines of a home solar installation hasn’t exactly mirrored the very rapid price declines of solar modules. Here’s a chart by Bloomberg New Energy Finance of the price of solar panels since 1976. Note that the y-axis is logarithmic:
Solar modules cost $79 per watt in 1976 but only $0.37 per watt today! This incredibly dramatic price drop is due to economies of scale, more efficient manufacturing, and improved module efficiency. But labor, sales, and marketing costs haven’t experienced the same kind of transformation, which is why they now form the majority of the price you pay for a home solar system.
In the graph above of installed prices for home solar, you can see that most systems fall close to the median price range, but there are quite a few outliers. Here are some of the reasons why prices can differ so much:
Let’s look at a few of these in greater detail.
Because soft costs are relatively fixed no matter the size of the system, your cost per-watt will generally be lower with a larger system. According to data from Tracking the Sun, if you install a very small system (less than 2,000 watts) the median price is $4.50/watt, versus a large system (more than 12,000 watts) which has a median price of $3.20/watt.
The practical upshot is that if you think your electricity usage might increase in the future - for example, if you plan to add square footage to your home with a renovation, switch from a gas furnace to an electric heat pump, or buy an electric car - it would be better to buy a larger system at the outset rather than expand the system later.
Knowing that the national median price for home solar is $3.50/watt is less useful than understanding the solar installation prices in your local area, because prices are different between states and even cities.
There are a lot of factors that can come into play:
Here’s another useful chart from the Tracking the Sun report:
The green bars shows the median price in each of the 19 states in the chart, while the black “I” bar shows the range of prices within each state. (Note that some states don’t appear in this chart, because the solar markets are too small to supply enough data for the study.)
Again, you can see a lot of variation in prices, which is why as a consumer it’s important to become informed about hardware choices and to get price quotes from multiple installers.
If you want to get a rough idea of what solar costs in your state after federal, state, and local incentives, you can refer to this table, which lists the estimated median prices for a 6 kilowatt system in the 19 states listed in the graph above. A 6 kilowatt system is a pretty typical home solar system size. First, a few definitions:
(6 kW system)
|Federal credit||Local rebates||Total|
|California||$23,400||$7,020||up to $2,200*||$14,180*|
|Minnesota||$24,000||$7,200||up to $7,088*||$9,712*|
|Oregon||$22,200||$6,660||up to $3,000*||$12,540*|
|Texas||$22,200||$6,660||up to $3,600*||$11,940*|
Remember again that these are median prices, and what you pay may differ significantly depending on your installer, hardware choices, and whether your city or utility company provides rebates. To get real price estimates, you can fill out our form to get quotes from qualified local solar installers.
Six kilowatts, or 6,000 watts, is around the average size of a home system that’s purchased in the United States. The number of panels this translates to depends on the efficiency of the panels:
|Panel wattage||Number of panels needed for 6 kW|
|260 watts||23 panels|
|320 watts||19 panels|
|400 watts||15 panels|
Fewer panels are great, but higher efficiency panels generally cost more. On the other hand, because there are fewer panels to deal with, you might save money on labor and racking costs. I recommend reading our guide on understanding solar panel specifications to learn more about this.
Many people ask questions such as, “How many solar panels do I need to power my 2,000 square foot home?” This is not really the question to ask: what you actually want to know is, how many panels do you need to match your average electricity usage in a year?
Homes of the same size can have very different electricity needs, and a well-insulated and highly efficient 3,000 foot home could use less electricity than a leaky 1,500 square foot home with inefficient heating and cooling systems. This is why it’s important to know your actual electricity consumption. So, what you need to do is get a copy of your latest electric bill and understand how many kilowatt hours of electricity you use in a year.
Once you have your electric usage in hand, you can calculate how many solar panels you need, which will depend on your local climate and how ideal your roof is for solar. The solar calculator on this site makes it as easy as possible, and we wrote an entire article to help you understand how to read your electric bill and find out how much money you can save with solar.
There are three major factors that determine how much power each one of your panels will produce. These factors determine your cost, because if each panel can produce more power, the fewer panels you need.
There are other factors as well, such as inverter efficiency, but these are the major ones. Obviously, trying to do this power output calculation yourself would be pretty complicated. Fortunately, our solar calculator does all this for you. Just enter your zip code, and estimate the tilt and orientation of your roof. We’ll take these factors into account along with your geographic location and climate, and tell you how much power you should expect in a year with average weather.
Hopefully this guide gives you a better understanding of how solar prices work. It’s important to know that the best deal isn’t necessary the lowest price. The process of hiring a solar installer is much like hiring a contractor to do a home renovation. Installer experience, equipment quality, warranty, and being able to interview your installer in person are factors that should be considered along with price. The process can be a little intimidating, so we wrote a guide with 9 tips on how to hire a solar installer.
When you’re ready, use our service to get quotes from solar installers in your area. We do the work of prescreening contractors and getting you up to three quotes. It’s a free service, and it just makes the process a little less stressful.
Buying Solar For Your Home: The Complete Guide
This is our 11-part free guide for homeowners who are going solar.
New Energy Outlook 2018
An annual report from Bloomberg that covers the state of renewable energy, including solar.
Tracking the Sun - 2018 edition
The Tracking the Sun report from Berkeley Lab is a comprehensive annual update on the price of solar.