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Cost of Solar Panels in 2023

Caitlin Ritchie
Editor:Jamie Cesanek
Updated:03/30/2023

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The cost of solar panels in 2023

The average cost of home solar panels in 2023 is approximately $31,558 before tax credits, based on data from the Lawrence Berkeley National Laboratory (LBNL). A typical residential solar system is 8.6 kilowatts (kWs), and most systems in the U.S. cost about $3.67 per watt. The total cost of a home solar system is determined by several factors, including installation prices, local tax credits, and the size of your solar system.

For many homeowners, the upfront price of residential solar panels is too high. The good news is that solar panel costs have decreased substantially in the last decade. According to the Solar Energy Industries Association (SEIA), the price of solar panels has dropped by 50% in the past 10 years as more people invest in home solar arrays. Lower costs plus a growing number of solar incentives have led to increased popularity in solar. The Energy Information Administration estimates residential solar generation has grown approximately 29% every year in the last decade.

If you are interested in a residential solar system or curious about the cost of solar panels in 2023, Choose Energy can answer the most common questions.

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You can significantly lower your energy costs by investing in solar panels. Enter some basic information below and we’ll provide an instant, free estimate of solar cost and savings for your home.

Solar panel cost by state

California leads the country in solar energy generation, but many other states are quickly expanding their presence in the solar industry. Energy savings through solar are impressive in every state. The following chart displays the top states for solar generation and how much you could save by investing in solar panels. Solar system prices are based on data from FindEnergy.com and the LBNL’s Tracking the Sun report.

Cost of solar by state

State Average price per watt Price of solar system Savings from 30% tax credit Final price with federal tax credit
California $3.93 $19,659 $5,897 $13,762
Texas $3.77 $33,902 $10,170 $23,732
Florida $3.70 $33,318 $9,995 $23,323
North Carolina $3.76 $33,841 $10,152 $23,689
Arizona $3.50 $27,980 $8,394 $19,586
Nevada $3.52 $24,631 $7,389 $17,242
New York $3.80 $22,774 $6,832 $15,942
New Jersey $3.76 $22,543 $6,762 $15,781
Virginia $3.95 $39,542 $11,862 $27,680
Colorado $4.22 $21,105 $6,331 $14,774
U.S. average $3.67 $31,558 $9,467 $22,091

Cost of solar panels per square foot

Some sources estimate solar panels cost between $4 and $10 per square foot. However, measuring by square foot is not the most accurate or efficient way to estimate solar panel cost. Instead, most installation companies offer a quote measuring the cost per watt (W). That’s because the capacity of a solar panel — or how much electricity it can generate — is the main factor for how much a company charges. 

Most home solar systems cost between $3 and $5 per watt, with the average solar system price at $3.67 per watt. 

Price factors for a home solar system

Several common features influence the total cost of solar panels in 2023.

  • Solar equipment. The manufacturer and capacity of solar panels that you choose will influence the total cost. Keep in mind that the capacity of a solar panel directly correlates to how much a solar company charges for it. Thoroughly research the different brands of solar panels to find the best one for you.
  • Installation costs. The solar panel installation costs normally account for about 11% of the total system cost. Based on the average price of a home solar system, installation normally costs about $3,470.
  • Roof and home maintenance. Before installing solar panels on your roof, you’ll need to make sure it can handle the weight and installation of the solar system. If your roof is older or requires maintenance, you will need to account for that cost. Your solar installer should be able to assess  your roof, although you should consider having a third-party maintenance company inspect it, too.
  • Other soft costs. There are several other cost factors to consider, including sales tax, supply chain costs, permit fees, and installer profit.

Cost of solar panels vs. fossil fuels

Factoring in tax credits can significantly reduce the total cost of a home solar system. But the savings can continue into long-term energy costs, too. The U.S. Solar Energy Technologies Office (SETO) launched its SunShot Initiative in 2011, aiming to reduce solar costs. The initiative is on track to bring the residential solar rate down to 5 cents per kWh by 2030. 

How does that translate into energy bills? Our Choose Energy analysts compared the average rate consumers paid in 2022 for traditional energy to the residential solar rate projected by SETO. Using each state’s average electricity usage and energy rates from the EIA and SETO’s projected solar rate, here is how traditional energy bills compare to solar energy costs.

State Monthly Traditional Bill Monthly Solar Bill Monthly Savings
Alabama $150.14 $57.00 $93.14
Alaska $131.39 $29.70 $101.69
Arizona $131.63 $52.40 $79.23
Arkansas $122.65 $54.90 $67.75
California $132.57 $27.10 $105.47
Colorado $100.25 $35.20 $65.05
Connecticut $167.56 $35.65 $131.91
Delaware $138.80 $47.50 $91.30
Florida $155.30 $54.80 $100.50
Georgia $128.21 $53.60 $74.61
Hawaii $237.78 $26.55 $211.23
Idaho $101.00 $48.05 $52.95
Illinois $117.86 $36.40 $81.46
Indiana $147.58 $47.30 $100.28
Iowa $96.43 $43.05 $53.38
Kansas $118.90 $44.50 $74.40
Kentucky $140.81 $54.20 $86.61
Louisiana $146.38 $59.60 $86.78
Maine $131.52 $29.20 $102.32
Maryland $151.40 $48.65 $102.75
Massachusetts $183.15 $29.80 $153.35
Michigan $119.19 $33.50 $85.69
Minnesota $103.44 $38.80 $64.64
Mississippi $146.96 $58.55 $88.41
Missouri $114.71 $51.95 $62.76
Montana $102.98 $43.60 $59.38
Nebraska $98.89 $50.25 $48.64
Nevada $143.56 $47.95 $95.61
New Hampshire $195.11 $31.55 $163.56
New Jersey $114.87 $34.35 $80.52
New Mexico $87.60 $32.30 $55.30
New York $136.51 $29.95 $106.56
North Carolina $125.97 $53.15 $72.82
North Dakota $100.14 $52.05 $48.09
Ohio $124.11 $43.95 $80.16
Oklahoma $122.18 $54.40 $67.78
Oregon $103.52 $46.80 $56.72
Pennsylvania $152.07 $42.55 $109.52
Rhode Island $160.88 $29.25 $131.63
South Carolina $154.26 $53.90 $100.36
South Dakota $115.05 $50.95 $64.10
Tennessee $145.39 $59.15 $86.24
Texas $156.00 $54.70 $101.30
Utah $81.69 $38.75 $42.94
Vermont $114.25 $28.35 $85.90
Virginia $152.50 $54.70 $97.80
Washington $98.70 $49.20 $49.50
West Virginia $136.02 $53.30 $82.72
Wisconsin $102.60 $34.50 $68.10
Wyoming $90.08 $43.35 $46.73

Paying for solar panels

Despite the substantial savings that solar panels offer, the upfront costs are still too high for many people. Thankfully, there are several solar incentives and financing options to help lower the cost of residential solar panels.

The federal solar tax credit

The federal solar tax credit offers 30% of the total cost of a home solar system in credit. The Residential Clean Energy Credit (formerly called the Investment Tax Credit) was created in 2005 to help make solar panels more affordable.

After you apply for the federal tax credit and are approved by the IRS, you receive 30% of the cost of your solar panels in credit when you file your annual tax return. Based on the average cost of a solar system, this tax credit alone could be worth as much as $9,467. 

Solar tax credits and rebates by state

Many states offer solar tax credits and rebates that you can benefit from in addition to the federal tax credit.. 

  • California solar incentives: California offers a net metering program that allows residents to sell any extra solar power generated by their home solar panels back to the power grid. In December 2022, California voted to change its net metering terms. NEM 3.0 will lower the amount consumers receive for selling excess solar energy. If you install a solar system and apply for permission to operate before April 15, 2023, you can lock in NEM 2.0 rates, which are more favorable.
  • Texas solar incentives: There aren’t any state-wide solar incentives in Texas, but many local options are available. For example, Austin homeowners are eligible for a $2,500 rebate for investing in solar panels.
  • North Carolina solar incentives: In North Carolina, cities and counties can offer low-interest loans for energy-related projects, including solar panels. The state also allows a property tax exemption to ensure that your property tax does not increase after installing solar panels.
  • Arizona solar incentives: Arizona residents who purchase solar panels can receive 25% of the cost or up to $1,000 in credit through the Residential Arizona Solar Tax Credit. They will also be exempt from sales tax on their purchase, and their property taxes will not increase.
  • Florida solar incentives: Florida residents who buy a home solar system won’t be charged sales tax for the panels. They are also eligible for net metering programs that allow them to sell excess electricity back to the grid.

Are solar panels worth the cost?

The bottom line is yes, solar panels can be a good investment. Investing in home solar panels can lead to substantial energy savings over time because you can generate your home’s electricity instead of paying for electricity from the grid. Based on average electricity rates in the U.S., most residents could save thousands over the span of 20 years by switching to solar.

Solar panels also allow for increased energy independence. This is important because you will not need to rely as heavily on the power grid and will be protected from energy price increases during times of high demand and supply issues (like power outages) affecting rates in your area.

Finally, residential solar systems generate clean, renewable electricity. Green energy sources such as solar power are much better for the environment because they do not emit greenhouse gases like carbon dioxide into the atmosphere.

Overall, the energy savings (and environmental benefits) of investing in solar panels make them well worth the upfront cost. And as the overall price of solar systems continues to decrease, home solar panels could become even more affordable in the coming years.