Solar panel installation cost for a typical house in 2020
Written by Andrew Sendy
Updated August 12, 2021
5 minutes read
Advancements in technology and market competition have steadily driven the cost of solar down to a record low average of roughly $3.00/watt. The federal investment tax credit (ITC) and other incentives have also contributed to solar energy being more affordable than ever before.
How much will solar panels cost me?
Generally speaking, solar can cost anywhere between $2.30–$3.50 per watt, with $2.80–$3.10 being the norm. The quality of the system components, the ease or difficulty of the installation and your location affect the price of your solar system. Here is an example scenario so you can see how the price of a solar system for your home would be calculated.
A typical 2,000 sq. ft. California home uses 880 kilowatt hours (kWh) of power per month. At this usage level, a customer with the utility Pacific Gas and Electric (PG&E) would have a monthly summertime bill of roughly $257.
Let’s calculate how big a system we would need to cover 100% of the household’s electricity usage, and how much it would cost:
- Daily electricity usage: 880 kWh divided by 30 gives us approximate usage of 29.3 kWh/day.
- Solar panel output: This solar production map shows that in California each kilowatt of installed solar produces 4.5 kWh each day.
- System size required: To calculate the system size required, we divide 29.3 kWh by 4.5 kWh. This tells us that a 6.5 kW (6500 watt) system is needed.
- Total cost: We can now multiply the system size by price per watt to get the total cost. 6,500 watts multiplied by $2.80 comes to $18,200–before claiming any incentives.
[What do watts and kilowatts mean? Click here for a brief explanation.]
What solar incentives am I eligible for?
All Americans who pay federal taxes may claim 26% of their solar system;s cost as a tax deduction. For the California household we looked at above, the tax credit would be worth $4,732. That brings the total cost of their solar system down to $13,468.
Some states and utilities also offer their own incentives alongside the federal ITC. For a free estimate of how much solar will cost you after accounting for all applicable incentives, enter your zip code below.
How does a solar system save me money?
Sometimes your system will produce too much energy for your home and need to send the excess power to the grid. An incentive called net metering requires utilities in most of America to compensate for each kWh of energy sent to them at the same rate you pay for power. The concept is to use excess day power to pay off the energy drawn from the grid at night. Provided your system is sized correctly, you should be able to wipe out almost all of your electric bill.
How many solar panels do I need?
Most solar panels today have a rated output of between 300-360 watts; this means a 6.5 kW solar system will normally require 18-22 panels. How many solar panels you need may be different, a great way to find this information is to request a quote from a local installer.