App version: 0.1.0

Installing Solar Panels: What Are the Typical Costs?

Installing Solar Panels: What Are the Typical Costs?
Austin Kilham
Austin KilhamUpdated October 12, 2022
Share this article:
Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Solar energy is becoming increasingly popular with homeowners, thanks to declining costs, increasing demand, and tax breaks. In fact, in the first quarter of 2022, solar energy represented 50% of all new electricity-generating capacity that was added to the U.S. electrical grid.Installing solar panels helps you reduce your carbon footprint, lower your utility bills, and take advantage of government tax breaks. But how much do solar panels cost to install?  On average in the U.S., solar panels cost about $20,498 in 2022. If you break down the cost down by watt, the average price is $2.77 per watt.There are a number of factors that affect the cost of a solar panel installation, including the type of system you install, where you live, and the tax breaks you qualify for. If you don’t have the cash on hand to pay for installation, home improvement financing might be able to help you pay for it. Read on to learn more about the cost of solar panel installation and how to pay for it.

Benefits of Installing Solar Panels

Solar panels allow you to harness the power of the sun’s energy and convert it into usable electricity. They work even if you live in places not traditionally considered sunny, like Alaska or the Pacific Northwest. Solar panels help lower your energy bills and shrink your carbon footprint. They reduce greenhouse gas emissions, such as carbon dioxide, as well as other pollutants like sulfur dioxide and nitrogen oxides. In addition to the environmental benefits they provide, solar panels can help you save money. After the up-front cost of purchase and installation, solar panels will help you save on your electricity bill, which can add value to your home. And you can help cover the cost of solar panels up front with solar panel financing.

What Influences the Cost of Solar Panels?

The cost of a solar panel system will be impacted by a number of factors, including:

Labor and Installation

Labor represents a sizable chunk of the cost of installing solar panels. In fact, you can expect it to account for 15% of the overall price. On average, labor costs work out to an average of about $0.50 per watt. These costs will vary depending on where you’re installing your solar panels (on the roof or on the ground), and the size and complexity of the system. 

Type

There are three types of solar panel systems. Monocrystalline is the most efficient option and tends to cost between $1 and $1.50 per watt. The solar cells in these panels are created using whole silicon crystals, which allows them to make more power per cell. They are long-lasting and come with a warranty of up to 35 years. Polycrystalline solar panels used crushed silicon, which puts them at a lower price point of $0.70 to $1 per watt. These panels are less efficient, and produce slightly less energy,  than monocrystalline models. However, they last about as long as monocrystalline panels do.Thin film solar panels cost $1 to $1.50 per watt. They are flexible, lightweight, and take less time to install, making them versatile and a popular option. They are not as efficient, however, which means you’ll need more panels to generate an equivalent amount of power. They also tend to have a shorter lifespan of about 14 to 17 years. However, they can be a good choice for some sunny climates. 

Brand

Solar panels come in varying degrees of quality and the cost can vary depending on the manufacturer. Generally, the better the quality of the solar panels, the higher the price.

Permits

The permit required to install solar panels will vary depending on your city and state. Permits can cost as much as $600, and can ultimately represent about 3% of your budget. The permit price is usually rolled into the estimate for the overall cost of installation. 

Location

Where you decide to install solar panels also has a big impact on price. Roof-mounted panels are cheaper to install than ground-mounted systems, and range from $15,000 to $21,00 for a 6 kilowatt (kW) system. Ground-mounted systems can cost between $18,000 and $25,000, and they may be a good option if your roof can’t support the weight of a system or it’s too shaded. Ground-mounted systems are also easier to access and maintain. You may even want to think about making improvements to your roof before you install solar panels. There are roof financing options that can help you cover that cost.

Size

You choose a solar panel system size based on how much energy you need to power your home. This will vary by your yearly average usage, the size and age of your home, and your location. A house in a hot climate that requires air conditioning most of the time may require a bigger system than a home in a milder climate. System sizes tend to range from 2 kW to 10 kW.Recommended: How Much Can You Borrow With a Personal Loan?

Government Regulations

Federal and state tax incentives can significantly reduce the cost of installing a solar panel system. As part of the Inflation Reduction Act President Biden signed into law in August 2022, individuals can now deduct 30% of the cost of installing a solar panel system from their federal taxes, using the investment tax credit (ITC), which is also known as the Federal Tax Credit for Solar Photovoltaics. In addition, depending on where you live, there may be state and local incentives. All combined, you could save more than 50% of the cost of purchasing and installing solar panels.One important note: You may come across offers to lease solar panels, which can help you avoid the upfront cost of installation. However, the government incentives apply to only to a solar panel system that you purchase. 

Average Cost of Solar Panels by State in 2022

The average cost of solar panels can vary quite a bit, depending on the state you live in. Here’s a look at the typical starting costs for a 6 kW solar panel system in each state.Alabama: $13,260 - $16,200Alaska: $12,960 - $15,900Arizona: $12,900 - $15,180Arkansas: $14,220 - $17,340California: $14,460 - $19,260Colorado: $16,740 -$21,180Connecticut: $15,240-$18,480Delaware: $12,540 - $16,740 District of Columbia: $15,600 - $24,840Florida: $13,380 - $17,220Georgia: $16,020 - $19,740Hawaii: $14,400 - $17, 580Idaho: $14,400 - $24,480Illinois: $16,500 - $20,100Indiana: $14,760 - $19, 080Iowa: $19,440 - $20,400Kansas: $12,900 - $15,780Kentucky: $12,660 - $15,480Louisiana: $16,020 - $20,100Maine: $14,760 - $17,400Maryland: $15,180 - $20,340Massachusetts: $16,020 - $19,860Michigan: $15,540 - $20,580 Minnesota: $16,860 - $20,340Mississippi: $14,280 - $17,400Missouri: $16,200 - $21,960Montana: $15,060 - $19,380Nebraska: $15,300 - $18,660Nevada: $12,420 - $15,300 New Hampshire: $16,860 - $20,460New Jersey: $12,780 - $16,980New Mexico: $14,760 - $20,880 New York: $16,380 - $21,060 North Carolina: $13,440 - $16,380 North Dakota: $13,080 - $16,020Ohio: $14,580 - $17,460Oklahoma: $14,160 - $17,280Oregon: $14,760 - $18,840Pennsylvania: $14,640 - $19,950 Rhode Island: $15,780 - $20,220South Carolina: $16,380 - $19,620 South Dakota: $12,900 - $15,780Tennessee: $13,440 - $16,380 Texas: $14,280 - $18,840 Utah: $13,800 - $17,880Vermont: $12,900 - $20,820Virginia: $15,540 - $19,500Washington: $14,100 - $17,700 West Virginia: $14,280 - $17,400Wisconsin: $16,800 - $19,800Wyoming: $13,860 - $16,920

Average Savings With Solar Panels

The amount of money you’ll save on the cost of energy will vary over the life of your solar panels. It depends on how much electricity costs in your area, how much energy you use, the size of your solar panels, and how efficient they are. A solar panel system that’s shaded part of the day may not give as high a return on investment as a system that’s in full sun, for example. In general, most people who install solar panels can expect to save between $10,000 and $30,000 on electricity over the lifetime of their system.

Personal Loans for Financing Solar Panel Installation

If you don’t have the cash on hand to pay for the installation of a solar panel system, you may want to consider financing with a personal loan. Because they are a flexible type of financing, there are various ways to use personal loans, including for solar panel installation.The different types of personal loans available offer borrowers a lump sum they can use for almost anything, including home improvement projects. Borrowers pay back the loan in monthly installments with interest. Although the interest rates you may qualify for depend on factors such as your credit history, there are personal loan options for those with low income. As you’re shopping for personal loan options, Lantern by SoFi can help simplify the process. By filling out one quick form, you can conveniently compare personal loan interest rates and terms from different lenders in our marketplace to help find the best option for your situation. Find and compare personal loan options with Lantern.
Photo credit: iStock/Eloi_Omella
This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice. LCPL0622006

Frequently Asked Questions

How much does installing solar panels cost?
Can you use a personal loan to cover the cost of solar panels?
What factors affect the cost of solar panels?

About the Author

Austin Kilham

Austin Kilham

Austin Kilham is a writer and journalist based in Los Angeles. He focuses on personal finance, retirement, business, and health care with an eye toward helping others understand complex topics.
Share this article: