Solar Panel Cost In 2023: It May Be Lower Than You Think

*Based on a $31,467 10.5 kW system before incentives. These are averages for the whole U.S. Costs will always vary from installation to installation. 
**Based on a 2021 study by the National Renewable Energy Laboratory (NREL). 

Solar equipment costs

The panels themselves are probably the first thing that comes to mind when you think about going solar, but solar panels represent less than a third of the total solar equipment costs. You can expect all required solar equipment, including supply chain costs and sales tax, to cost $14,500–about 46% of the total system price.

This price depends on the brand and quality of the equipment you select. Systems with SunPower panels, known for a strong warranty and high efficiency, see the highest average prices at about $27,400 after tax credits for a 10.5 kW system. Sometimes the bigger price tag is worth it: Investing in high-quality equipment can lead to better long-term savings. But reaching for the highest-priced panels often isn't the best choice. There are many high-quality options with varying price points. 

The type of panel you install also directly impacts the quality of your installation. Monocrystalline solar panels offer the highest efficiency and power output and are used in most home systems today. They're often more expensive than polycrystalline solar panels, but you need to buy more polycrystalline panels for the same amount of power, so your overall installation costs may be similar. Thin-film solar panels are the cheapest type of panel but they aren’t often used for home installations due to their low production. They're a great option for RVs, campers, and DIY home setups.

Inverters can cost almost as much as solar panels depending on the type you select. They convert the direct current electricity your solar panels produce into alternating current that household appliances use. Microinverters and optimized inverters are similar in price but cost a few thousand dollars more than string inverters. If you have a complex roof with multiple planes or shading, it's usually worth it to select a pricier microinverter or an optimized inverter to maximize your system's production. 

Racking and mounting equipment attaches solar panels to your roof, but it's a relatively low-cost portion of the installation. You'll also need wiring to connect your rooftop system to the grid and your electrical panel, which can add a few thousand dollars. 

Installer costs

Another piece of the solar installation puzzle is the company performing the job. Solar installers charge varying amounts for their services. The final price they offer depends on their track record, warranty offerings, and internal operations. A well-regarded solar installer with premium warranty offerings will often charge more–and it will usually be worth the money. 

Installer costs are about the same as equipment at around $14,500 or 46% of the total installation. Labor is only about 15% of installer costs and profit is generally around 20%. Your biggest installer costs go toward sales, marketing, and overhead.

Multiple unique factors go into the price of solar panels, and they are related to your electricity use and home. Here’s what to consider when calculating costs:

Solar Companies

The cost of solar panels is dependent on the solar panel company you choose. From the solar equipment system itself to installation costs and add-ons, the price will vary from company to company and the first step is to consider your options for the best solar companies.

Size, Weight and Number of Panels

When assessing solar panel cost, the size, weight and number of panels are important. For instance, when determining how many solar panels to buy, there are a few pieces of information you’ll need to know:

• How much energy your household uses
• How much space you have on your roof
• How many hours of sun your home gets and the wattage and relative efficiency of the photovoltaic (PV) solar panels you’ll be installing

Once you determine those, you can begin to calculate the cost. Divide your annual energy usage by 12 to get your monthly average in kWh. The average energy output of a typical solar panel is about 45 kWh per month. Use that number to determine how many panels you’ll need to cover your monthly usage.

You’ll need 20 to 25 panels to fully power most homes. However, that number can range anywhere from 15 to 34 panels depending on the size of the home, the efficiency of the panels and where they’re located. A solar panel installer should be able to give you an accurate estimate using your energy usage information.

Federal Solar Tax Credit

Installing solar panels earns you a federal solar tax credit. That means you’ll get credit for your income taxes, which lowers your tax bill. Congress renewed the federal tax credit so that systems installed from 2022 through 2032 can now receive a 30% tax credit.

Type of Panels

There are three main types of solar panels available for residential use: monocrystalline, polycrystalline and thin-film. The most energy-efficient and best solar panels for your home, monocrystalline solar panels, cost $1 to $1.50 per watt. Less energy-efficient, polycrystalline solar panels cost $0.90 to $1 per watt. Thin-film solar panels cost between $1 and $1.50 per watt.

Solar Panel Manufacturer

Since solar panels come in varying quality, the cost can depend highly on the solar panel’s manufacturer. Although most manufacturers generally see similar cost ranges, the better the solar panel quality, the higher the price.

Efficiency

The efficiency of solar panels is determined by the amount of sunlight reflected on the panels’ surface, which is then transformed into electrical or thermal energy. It’s also important to note that solar panels can be very efficient in colder weather which can improve energy production.

Monocrystalline solar panels are the most efficient, but their price point is high because of their complex construction. Polycrystalline solar panels are simpler to create, making them less expensive than monocrystalline ones. Thin-film PV cells are easier and less expensive to produce but are the least efficient type of solar panel.

Location

Solar panel costs also vary by state due to local quoting trends and system size differences. States have different average system sizes and incentives, causing prices to differ depending on where you live.

Roof Pitch

Your roof’s characteristics, like its pitch, will also determine solar panel cost. Typically, your solar company will charge for the difficulty of the installation, and having a complex roof will make your system cost more.

Type of Mount

Solar panels tend to come with mounting equipment that can be set up or adjusted to catch the maximum amount of sunlight. Technology has given some panels the ability to self-adjust after mounting, though this capability comes at a higher cost.

• Fixed mounts stay in place and are ideal in areas that get constant sun from all angles. They cost $10 to $15 each.
• Adjustable mounts can be shifted throughout the day for maximum efficiency. They cost $50 each.
• Tracking mounts self-track the sun for up to 45% more energy production. They can cost $500 to $3,000 each.

Type of Solar Power System

There are three types of solar power systems. Material and installation costs for each vary depending on how much equipment is needed.

• Grid-tied solar systems interact with your municipal power grid and don’t require a solar battery. This makes them the most affordable with the lowest installation cost.
• Grid-tied solar systems with storage offer a hybrid solution where panels are tied to the grid but have solar battery backups. Each battery can add $9,200 or more to your installation costs.
• Off-grid systems are the most expensive option at $45,000 to $65,000. They require high-capacity solar battery storage and a backup generator.