How Much Do Solar Panels Cost in 2024?
The average cost of solar panels in the US amounts to roughly $16,000, but that figure doesn’t exactly show the full picture.
Depending on the size of your home, model and quality of the panels, as well as a number of other factors, the cost of installing solar panels at your house could end up being much higher.
Does that mean that solar panels are not worth it in 2024? Absolutely not. In the long run, having a solar installation at home can save you tons of money that would otherwise be spent on electricity bills. With that being said, though, making the switch to this renewable energy source does require spending a fair bit of money upfront.
Factors That Influence the Cost of Solar Panels
Investing in solar power is an advantageous choice for many homeowners. Still, understanding the cost of solar panels can be complex as it isn't a one-size-fits-all price. Several dynamic aspects factor into the total price of a solar energy system. These factors encompass aspects related to your location, personal energy consumption, specifics related to your house or property, and the equipment and services chosen for the project. Knowledge of these various influences empowers you to maximize your budget and determine the most cost-effective solutions for your solar journey.
The key lies in understanding the implications of each factor individually to help comprehend how they interplay and influence the final cost of the solar panels. It’s important to bear in mind that investing in this renewable energy source is not merely an expenditure; it's a forward-looking financial decision that can save you considerable sums in the long run while positively contributing to environmental sustainability.
The State You Live In
The price of solar panel installations varies significantly among the 50 states in the U.S due to the different state policies, the amount of sunlight received, and local electricity rates.
Some states, such as California, New Jersey, and Massachusetts have excellent tax incentives which substantially reduce the overall cost of solar panels. In contrast, states with less favorable policies and lower electricity costs offer fewer incentives, resulting in higher net costs for solar systems. Additionally, states with more daily sunlight hours typically require fewer panels for the same amount of energy generation, reducing installation costs.
Your Household’s Energy Needs
Your household's energy needs play a major role in determining the size, and consequently, the cost, of your solar panel system. A larger household tends to consume more electricity and would therefore necessitate a larger system to cover its needs. The average American household uses around 10,649 kilowatt-hours (kWh) per year; however, energy consumption varies considerably by location and lifestyle.
Size of the Planned System
The size of your solar panel system directly impacts its cost - larger systems require more panels, increasing materials and labor costs. However, there's an economy of scale to consider: installing a larger system often results in a lower cost per watt (the unit measurement for solar power) as some costs like permits and overhead are fixed regardless of system size. The bigger your roof or installation area, the bigger the system you can install.
Financing Options
Contrary to common perception, solar panel installation does not require upfront cash payment. Various financing options are available including leasing, power purchase agreements (PPAs), and solar
loans. Each financing option has different costs attached to it. Owning your solar panels through outright purchase or loan allows you to benefit from federal tax credits and local rebates, whereas leasing or PPAs don't require upfront cost but often result in smaller savings over time.
The Type of Panels
Solar panel type can also influence the cost of your system, primarily through differences in efficiency and aesthetics. Monocrystalline and thin-film panels often come with higher price tags due to their superior energy efficiency and sleek design. Meanwhile, polycrystalline panels are usually cheaper with slightly lower efficiency. Newer technologies, like bifacial or solar tiles, tend to be more expensive but may offer additional benefits.
Your Solar Installation Company
The solar company chosen for your installation project can significantly impact the overall cost. Factors such as the company’s reputation, workmanship warranties, and their offerings in terms of design services and monitoring software can all affect the price. Established companies might charge more for their expertise and customer service, while newer companies might offer lower prices to attract more customers. Hence, it's crucial to get multiple quotes from different providers before committing.
The Cost of Solar Panels: Example Scenarios
To help you visualize your own solar panel cost calculations, we’ve come up with the following six example scenarios taking place in three different states. In each state, we’ve assessed the cost per square foot of solar panels in 2000 and 3000 sq ft houses.
We’ve based our selection of regions on the current market conditions and ended up with three states that encapsulate the shape of the US solar panel market. California is generally considered to be the best state for solar right now, Kentucky is one of the least attractive states for solar investors, and Maryland falls in the middle of the pack.
How Can I Save Money On My Solar Installation?
Installing solar panels isn’t just an environmentally-conscious decision. It is also a significant investment. Thankfully, there are several federal and state incentives that can help you save substantial amounts of money on your solar panel installation.
Federal Incentives
The Federal government offers a remarkable incentive known as the Federal Solar Investment Tax Credit (ITC). The ITC allows you to deduct a sizable portion of your solar panel installation costs from your federal taxes. Established in 2005, it initially allowed for a 30% tax credit. Over the years, however, this percentage has reduced. For installations completed in 2024, the tax credit is set at 26%. This means that you are allowed to subtract 26% of your solar installation costs directly from the amount you owe in federal income taxes.
For example, if your system cost is $20,000, the ITC would reduce your federal tax bill by $5,200 (26% of $20,000). And if you don’t owe that much in taxes in the same year as installation, the remaining credits can be carried over to subsequent tax years.
It’s essential to note that this tax credit applies only to those who buy their solar panel system outright (either with cash or a loan), and it’s not applicable if you lease your system or enter into a power purchase agreement (PPA).
State Incentives
On top of federal incentives, many states offer separate incentives to make going solar even more affordable. These incentives can come in various forms – direct rebates, tax credits, performance-based incentives (PBIs), and solar renewable energy certificates (SRECs).
Direct rebates work similarly to discounts, reducing the cost of your solar panel system right off the bat. Some states offer thousands of dollars in rebates, significantly bringing down the total cost of your system.
State-level tax credits are separate from the Federal ITC and can further reduce the burden on your wallet. For instance, South Carolina offers an impressive state tax credit amounting to 25% of your total solar costs.
Performance-based incentives (PBIs) pay you based on how much power your solar system generates, providing you with a constant stream of income over a certain duration. These incentives are widespread in states like California and Arizona, where solar power generation is at maximum capacity due to plentiful sunshine.
Next is the Solar Renewable Energy Certificates (SRECs). Whenever your system produces 1,000 kWh of electricity, it earns an SREC, which you can then sell to utilities. In states like Massachusetts, New Jersey, and Washington D.C., these SRECs can be extremely valuable due to their high demands.
Lastly, don’t overlook the net metering policies in various states. This policy allows you to export your excess solar power back to the grid and receive credits on your utility bill. These credits are used to offset your energy usage when your solar panel system isn't producing enough electricity, leading to significant savings over time.
Are Solar Panels Worth It In 2024?
Determining whether solar panels are worth it for you essentially boils down to calculating how long it would take solar panels to pay for themselves – also known as the payback period.
To calculate the payback period, divide the total net cost of your system (after deducting all incentives and tax credits) by your annual electricity bill savings. For example, if your solar system costs $18,000 and saves you $1,500 in electricity expenses per year, your payback period would be 12 years.
In terms of return on investment, if your system lasts 25-30 years, which is typical, you'll have nearly a decade or more of virtually free electricity after it's paid for itself. Also, solar power can increase the value of your home by up to 4.1% according to the U.S. Department of Energy's National Renewal Energy Laboratory (NREL), which could translate into an additional $9,274 for a median-valued home.
Besides the financial benefits, there are also environmental advantages. Solar panels help decrease greenhouse gas emissions and reduce reliance on fossil fuel energy sources that contribute to climate change.
In addition, with solar energy becoming more affordable, and the promise of continuous advancement in solar technology making systems more efficient and long-lasting, it stands to reason that the true value of a photovoltaic purchase in 2024 could lead to even greater returns on investment over time.
To conclude, while the initial upfront cost of installing a solar panel system may seem high, when analyzed from both economic and environmental perspectives, it is quite likely that adopting solar technology will prove financially viable and environmentally beneficial over time. Therefore, in most cases, solar panels could very much be worth it in 2024.
How to Calculate My Solar Savings?
The estimates we’ve provided above for Ohio are useful reference points you can use to gauge roughly how much money you will need to spend on your solar installation, as well as how much you stand to save from making the switch. However, your own expenditures will differ rather significantly.
Estimating your own solar panel installation costs can be a daunting, difficult task. You’ll need to take into account a whole host of factors, such as the size of your house or your average household energy consumption, and that’s before you even get down to searching for the actual panels and installation companies!
There are dozens of solar panel manufacturers you can choose from in any given state, and probably even more businesses who will be more than happy to carry out the installation. Not everybody has the time to sift through all their offers to find the optimal one.
This is where Local Solar Columbus comes in. We’ll help you through the entire solar transition process. From connecting with trusted, top-quality manufacturers all the way to assessing which rebates and incentives your household is eligible for, Local Solar Columbus has got you covered.