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Jul 29, 2023

Are Solar Panels Worth It in 2023?

Faith Wakefield is a writer based in North Carolina. She holds economics and

Faith Wakefield is a writer based in North Carolina. She holds economics and English degrees from UNC Chapel Hill, and her work has been featured on EcoWatch, The World Economic Forum and Today's Homeowner. In her free time, she loves to binge-watch personal finance videos on YouTube, collect books and spend time in nature.

Karsten Neumeister is an experienced energy professional with subject-matter expertise in energy policy and the solar and retail energy industries. He is currently the Communications Manager for the Retail Energy Advancement League and has prior experience writing and editing content for EcoWatch. Before EcoWatch, Karsten worked for Solar Alternatives, curating content, advocating for local renewable energy policy and assisting the solar engineering and installation teams. Throughout his career, his work has been featured on various outlets including NPR, SEIA, Bankrate, PV Mag and the World Economic Forum.

In most cases, installing residential solar panels is worth it. Solar panels typically last 25 years or more and can dramatically reduce or even eliminate your electricity bills — you can save an average of $1,346 annually on energy bills by going solar.

Solar is a large upfront investment. But the cost of installing a system has decreased by more than 50% over the last 10 years, and incentives like the 30% federal solar tax credit can lower your cost even further.

However, certain conditions and roof features can mean solar isn't worth it for you. For instance, if your roof is shaded, does not have enough space or is oriented north, your panels may underperform. Additionally, if you live in an area that experiences many cloudy days and has few solar incentives, you may see fewer savings over the lifetime of your panels.

Every roof and solar project is different. Before completing your solar project, your solar installer will survey your home and determine if your property is suitable for solar panels. Get connected with a trusted professional today to see if solar is worth the investment.

Several factors can play a role in whether or not solar panels are worth it for you, including:

For instance, if you live in a state that receives a lot of sunlight and has ample solar incentives, in addition to having a large, south-facing roof, the savings you’ll see from solar will be very high. On the other hand, if you live somewhere with less sunlight, fewer solar incentives and a steep roof, solar may still be worth it for you, but your overall energy savings will likely be lower.

The location of your home plays a vital role in the value of a solar power system. If you live in a part of the country that gets lots of sunlight exposure throughout the year, you will get more out of using solar panels than others.

The data analysis site Stacker determined the following 10 states receive the most exposure to sunlight in the U.S.:

Though sunny states like Florida, Texas, California and Arizona are excellent regions to install a solar system, your panels may not generate enough energy to offset the upfront cost if your home experiences a lot of shade from trees or buildings. But if your roof is unshaded or faces south, southwest or west, your panels will receive more direct radiation from the sun and generate more solar energy.

As mentioned, locations that see more extreme weather events and power outages are also better suited for solar systems with independent power storage. You can use a solar battery to store excess energy during the day to use during blackouts, at night or on cloudy days.

The size, shape and slope of your roof are also important factors to consider. According to Garrett Nilsen, the deputy director of the U.S. Department of Energy's Solar Energy Technologies Office, roof structures can be one of the biggest roadblocks to going solar.

"If there are trees near your home that create excessive shade on your roof, rooftop panels may not be the most ideal option," he said. "Solar panels perform best on south-facing roofs with a slope between 15 and 40 degrees, though other roofs can be suitable too. Installers can model roofs to determine if the orientation and slope are suitable for energy generation."

Steep roofs make installation challenging and can increase labor costs or require additional mounting equipment. Roofs with plenty of surface area and few obstructions — such as skylights and chimneys — are ideal. You can still add solar panels to smaller roofs but should choose more efficient panels, such as monocrystalline panels, that generate more power using less space.

Solar tax incentives and rebates are available at the federal and state levels. The federal tax credit, formally called the solar investment tax credit (ITC), allows you to claim 30% of your total system cost as a credit toward your federal tax burden.

It's worth mentioning that if you don't owe thousands of dollars in taxes each year, you won't be able to make as much use of the ITC. You may need to work with a tax adviser and re-evaluate your withholdings to fully capitalize on the credit.

Other solar incentives vary from state to state. Many state governments and local utility companies offer solar rebates, credits, sales and property tax breaks, net metering and more that can make solar more affordable. We encourage you to use the Database of State Incentives for Renewables & Efficiency to learn what other rebates and solar tax credits are available in your state.

Before installing solar, you should take stock of your monthly energy consumption. According to the U.S. Energy Information Administration, the average household uses around 893 kilowatt-hours (kWh) of electricity per month. On average, a residential solar setup can produce between 350 to 850 kWh per month. Therefore, going solar can help you save as much as 95% off your utility bill.

If you live in a state with high electricity rates, switching to solar will likely be a good investment. However, if your home does not require a lot of energy consumption to operate day-to-day, you may not save enough to offset the installation cost. Residential solar systems can cost anywhere from $15,000 to $25,000 or more.

You should also contact your local utility company to see if it offers an established net metering program. Many states mandate net metering, which can help maximize your energy savings. Net metering allows you to send the excess energy your solar system produces back to the grid in exchange for billing credits. Your utility company will deduct any credits from your monthly electricity bill, saving you money by providing clean energy for your home.

According to our 2023 survey of 1,500 homeowners with solar, respondents reported paying an average of $15,000 to $20,000 for their solar panel systems. However, every solar installation is different, and the Solar Energy Industries Association (SEIA) reports that a solar installation can cost upwards of $25,000.

The total cost of your solar panel system can vary depending on where you live and the solar provider you choose. You can compare average price points for some of the top solar providers in the U.S. below. Cost figures represent the total cost of a solar panel system with installation.

*Cost figures are based on results from our 2023 survey of 1,500 homeowners with solar. Your costs may vary depending on individual factors.

The state you live in can also factor into how much your solar panel installation will cost:

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In addition to your location and the provider you choose, other factors can influence the cost of your solar system, including:

The only way to know exactly how much your solar panel system will cost is to get a quote from a trusted solar installer in your area. To get matched with a top provider, click here for a solar estimate today.

The average payoff period for a solar panel system in the U.S. is around 8.5 years. After paying off your solar system, you’ll enjoy significant savings by drastically reducing or eliminating your energy bill. Considering the average solar system lasts 25 years or longer, that's over 16 years of net savings. Most people who install solar on their homes will save thousands of dollars in energy costs over the lifespan of their solar energy system.

There are, however, some instances when solar panels may not yield as high of returns as you want. According to Nilsen, local electricity rates, your total system cost and whether you pay up-front, take out a loan, or lease your system can all affect your return on investment (ROI). Changing compensation patterns with your local utility or an unexpected lapse in your system's performance may cause your payback period to take longer.

In these rare instances, Nilsen advises contacting your solar installer about your system's expected production and any discrepancies with the current output.

In addition to offering protection against rising electricity prices, a solar installation with a storage system provides a valuable backup during power outages. If you live in an area prone to severe weather or blackouts, installing solar panels with a backup battery can be more worthwhile.

Three major pros of switching to solar include reducing your carbon footprint, saving on energy costs and taking advantage of solar incentives.

When you install a photovoltaic (PV) system, your panels will generate electricity from the sun, reducing your reliance on fossil fuels. The National Renewable Energy Laboratory (NREL) estimates that for every 1,000 kWh of clean electricity your solar panels generate, you save 1,400 pounds of carbon dioxide emissions from traditional energy sources. This is the equivalent of saving nearly 17,000 pounds of carbon dioxide emissions for the average U.S. household every year.

Although the initial cost of solar panels can be high, the long-term benefits can significantly outweigh the upfront investment. Because you’ll be generating your own electricity, you can reduce or even eliminate your monthly electricity costs. Additionally, as the cost of going solar has decreased significantly over the last decade, the return on investment homeowners see when installing a solar array has also increased.

Additionally, installing solar panels can increase the value of your home and protect you from fluctuating utility rates, helping you save even more over time.

Both the federal and state governments offer solar incentives like tax credits or exemptions, net metering, rebates and more as a way to encourage solar adoption. As previously mentioned, all U.S. residents are eligible for the federal solar tax Credit, worth 30% of the overall cost of your solar system. Most states and utility companies offer additional incentives that can help you save even more when installing a home solar system.

High up-front costs, weather dependence and home aesthetics are three reasons that homeowners may hesitate to go solar.

Although most homeowners with solar save money in the long run by dramatically reducing or eliminating their energy bills, solar is still an expensive investment. According to our 2023 poll of 1,500 homeowners with solar, most respondents reported paying between $15,000 and $20,000 for their system. While paying the total cost of your system upfront will result in the most savings, many installers offer multiple financing options, including solar loans and leases.

Clouds, seasonal variations and obstructions like trees can cause your solar panels to generate less energy. Additionally, solar panels do not generate energy at night when the sun isn't out. All of these factors can cause inconsistencies in the efficiency of your solar panels.

Energy storage solutions like solar batteries can help abate these problems, as you can store your energy for later use. Most states also offer net metering, which allows you to sell back the excess energy your solar panels generate to the grid in exchange for a credit on your utility bill. Net metering credits can offset the cost of the energy you’re purchasing at night when your panels aren't operating.

Some people prefer the appearance of a traditional roof and dislike how rooftop solar looks on a home. To address this issue, several solar manufacturers have developed solar shingles that blend into the roof and accommodate concerns about solar panel appearance. However, solar shingles are typically more expensive and not offered by many solar installers.

A solar energy system is not suitable for every homeowner. But if your home has the right location, roofing and state tax incentives and you experience high energy bills, you might generate significant savings with solar energy. For the right home, solar energy is an investment that pays for itself over time, so be sure to take some time to consider the factors listed in this guide to determine if solar panels are worth it for you.

We recommend you use our tool below to find local solar installation companies in your zip code. These companies will conduct a consultation to provide accurate information and estimates on your possible solar savings.

According to the U.S. Department of Energy, the average payback period for solar panels is between six and 10 years.

For most homeowners, solar panels are worth it. Over the lifespan of your panels, you will likely see thousands of dollars in energy savings. Plus, you can generate clean, renewable energy for your home.

The average lifespan for solar panels is 25 to 30 years.

Faith Wakefield is a writer based in North Carolina. She holds economics and English degrees from UNC Chapel Hill, and her work has been featured on EcoWatch, The World Economic Forum and Today's Homeowner. In her free time, she loves to binge-watch personal finance videos on YouTube, collect books and spend time in nature.

Tori Addison is an editor who has worked in the digital marketing industry for over five years. Her experience includes communications and marketing work in the nonprofit, governmental and academic sectors. A journalist by trade, she started her career covering politics and news in New York's Hudson Valley. Her work included coverage of local and state budgets, federal financial regulations and health care legislation.

Karsten Neumeister is an experienced energy professional with subject-matter expertise in energy policy and the solar and retail energy industries. He is currently the Communications Manager for the Retail Energy Advancement League and has prior experience writing and editing content for EcoWatch. Before EcoWatch, Karsten worked for Solar Alternatives, curating content, advocating for local renewable energy policy and assisting the solar engineering and installation teams. Throughout his career, his work has been featured on various outlets including NPR, SEIA, Bankrate, PV Mag and the World Economic Forum.