How Much Does Solar Energy Cost?

The first question most people have about home solar is what the total cost will be. Unfortunately, there’s no quick answer to this question — it depends on numerous factors which we’ll discuss below, and then give you some options for estimating the cost of solar for yourself.

Which State do you live in?

This is really important. While some incentives are nation-wide, like the Federal solar tax rebate, most of the cost of your system has to do with where you live. Here are some of the state-dependent factors that will reduce the cost of a solar energy system for your home:

  • State rebates – These can be tax write-offs or money back in your pocket.
  • State Renewable Energy Credits – Many states, like New Jersey and Massachusetts, have developed credit markets. You get credits for producing solar and you can sell them for money.
  • Net-metering – In some areas your utility will pay you for an extra electricity you send back to the grid.
  • Local Incentives – Local utilities and municipalities (LA is a great example) have their own solar energy subsidies.

Each of these local factors can have profound effects on the total cost of a solar array. If you’d like to get a local estimate, you can use our free solar quote signup form. You can also use the free online solar cost estimator here.

How much Solar Energy do you Want to Produce?

This is also extremely important: are you looking to offset part of your bill or all of it? Sometimes just knocking off a part of the bill can give you huge monthly electricity cost savings, as in the case of tiered electricity rates.

The amount of energy you need directly translates into hardware, in this case the number of solar panels your system will require. The primary variables that determine the cost-benefit here are your electricity usage now (big or small bill?) as well as local electricity rates (average or expensive).

Another thing this highlights is the importance of energy efficiency first: if you can cut your power bill before you go solar, everything will cost less. Consider a home energy audit before upgrading to solar energy.

Do you want to own the Solar Panels?

If you haven’t shopped around yet you might not understand the two major ways put a solar array on your roof: buy, or lease. If you buy the system you’ll see big up-front costs, but you also reap all the benefits of tax credits, renewable energy credits, and other financial incentives. Once the system pays itself off (by saving you money on electricity as well as other rebates), which generally takes about 5-10 years, it’s like having free electricity.

If you decide to lease a system (generally called a PPA or Power Purchase Agreement), you get the benefits of electricity savings without the big up-front cost. The only catch is that another company owns the system, so you might not get to claim all the credits and rebates available. Generally this option trades long-term financial gain for low (or no) up-front cost.

Confused? Don’t worry, your local solar installer will be able to explain the options available in your area.

Solar Energy Cost – A Visual

The image above comes from a fantastic infographic (credits on the image). Click on the image to view it full-screen.

Solar Energy Cost