The average cost of an 11 kW rooftop solar installation after federal tax credits is $20,552, said marketplace operator EnergySage. What will your utility-provided electricity cost over the next 25 years?
The average solar shopper in the U.S. needs about 11 kW to cover their electricity usage, said solar marketplace provider EnergySage. After receiving the 30% federal investment tax credit, the average system cost is about $20,552.
The average cost-per-watt across the United States is $2.56 per watt before incentives, based on EnergySage data. Costs have fallen considerably, as ten years ago average installation costs were about $3.36 per watt, according to data from the National Renewable Energy Laboratory (NREL). In the meantime, utility electric rates have increased precipitously, meaning each year that a ratepayer waits to pay solar is another year of missing out on savings.
Residential solar prices increased temporarily during the pandemic, but have since fallen to low, pre-pandemic rates.
Based on current utility-provided electricity rates and expected annual rate increases, systems installed today are expected to on average have a 7.1 year payback or return on investment.
Savings vary widely based on electricity rates and solar installation costs in a given state. Expected 25-year savings for states with relatively low electricity rates like Georgia, Iowa and Indiana are expected to save about $25,000 to $30,000 on bills over 25 years, while ratepayers in Massachusetts, California and Connecticut can expect savings exceeding $100,000 over a 25-year period. Find your state’s expected solar savings here and calculate a more customized estimate for your home here.
EnergySage also provided an expected cost breakdown, including components and installation services. Interestingly, solar panels only represent about 12% of the total average cost in the United States. Average costs below are based on a $29,926 system before incentives sized at 10.8 kW.
| Component | Average Cost | Percentage Of Total Cost |
| Solar panels | $3,656 | 12% |
| Solar inverter(s) | $2,991 | 10% |
| Racking equipment | $997 | 3% |
| Electrical wiring | $2,548 | 9% |
| Supply chain costs | $2,659 | 9% |
| Sales tax | $665 | 2% |
| Installation labor | $1,994 | 7% |
| Sales & marketing | $5,318 | 18% |
| Overhead costs | $3,102 | 11% |
| Solar installer profit | $3,102 | 11% |
There are three main ways of adopting solar at your home, including a cash purchase, a solar loan or a solar lease, sometimes referred to as a power purchase agreement (PPA).
“We recommend buying your solar panels outright or financing them with a loan when possible. However, if you can’t afford the upfront cost or prefer not to take out a loan, a lease or power purchase agreement (PPA) is another option to consider. Paying in cash is usually the best financial choice, as it leads to greater long-term savings. But if you don’t have the cash on hand or don’t have a tax bill to take advantage of the 30% federal solar tax credit, a lease or PPA can be a good alternative,” said Alix Langone, senior research analyst at EnergySage.
