Are residential solar panels worth it in 2020?
With the 26% federal tax credit reducing at the end of 2020, millions of American homeowners are asking themselves whether or not installing solar panels is worth it this year.
The answer depends on many factors including where you live, how much roof space you have, if your roof is shaded, how much power you use, what your local utility charges you for electricity, and the prices offered by local solar companies.
Our solar panels cost and savings calculator takes all of these factors into account when calculating the payback period and investment return for your specific home.
You can either dive straight into our calculator and get an accurate estimate of how much a solar installation can save you, or you can read on to get a closer look at how to determine if solar is worth it for your home.
1. What is the average payback period for residential solar panels in 2020?
The solar payback period refers to the amount of time it takes for the electric bill savings from your solar panels to equal the amount you paid for the system. The average payback period for a residential solar system in 2020 is about seven years.
A payback period of seven years equates to a return on investment of approximately 14%. However, this varies greatly by state and even by regions within states.
Once you have generated an accurate payback period, you can compare this to the returns you see on other types of investments:
- Long-term government bonds currently have returns between 0.1% and 2%
- Zillow estimates that home prices increase between 3% and 5% annually
- The stock market has risen around 9.5% historically
As you can see, residential solar panels stack up favorably against all of these other investment options - and this is even before we consider the increase in a home’s value caused by the solar panel installation.
2. How much do residential solar panels cost for an average 2000 square foot home?
Solar panel cost is often measured as the “cost per watt” of solar. This makes it easy to compare the relative value of solar systems of different sizes in terms of the watts of power they can produce.
Our data shows that the average cost of a residential solar system in 2020 is $3.18 per watt, before the federal tax credit. At that price, a typical 7 kilowatt (kW) home solar system would cost $22,260. The cost would fall to $16,472.20 after claiming the 26% solar tax credit.
The cost of residential solar panels has dropped dramatically over time. In fact, it has fallen over 70% in the past decade.
In 2019 alone, the cost of solar dropped by 5%.
3. How much will solar panels cost for your specific home?
To calculate solar panel cost for your home, it is first necessary to calculate how many solar panels are needed to power your home. The number of solar panels you need depends on how much electricity your home uses.
Our calculator can easily determine how many solar panels you need just by using the cost of your most recent electric bill.
4. How long do solar panels last?
Most standard solar panel warranties ensure that your solar panels will last at least 25 years. As solar panels age, their power output decreases. It’s normal for a warranty to guarantee that they will produce over 80% power output at the end of 25 years.
5. What maintenance is required for solar panels?
There is very little maintenance required for solar panels. It is recommended that you clean your solar panels once or twice a year to avoid dirt and buildup. However, this might not be necessary if your area gets regular rainfall or if your roof is steep, which allows debris to easily fall off.
It is worth checking to see that all junction boxes are sealed and watertight once every five years.
Because there is almost no maintenance required, you don’t need to worry about additional maintenance costs.
6. Is my roof suitable for installing solar panels?
There are a number of factors that determine how suitable your roof is for solar panels, including:
- The size of your roof
- The direction your roof faces
- The pitch of your roof
- How much of your roof is shaded
When trying to determine if solar panels are worth it for you, consider the size, direction, pitch, and the amount of shading your roof has. Large, unshaded, southern-facing roofs are the most ideal for solar production.
Our solar panel layout tool will allow you to draw solar panels on your roof to see how many can fit, where they should go, and how much electricity they will produce.
7. Does my roof have to face due south for solar panels to produce enough electricity?
While solar panels facing due south do produce the most overall electricity, it’s perfectly fine to have panels facing southwest and southeast.
As solar prices continue to fall, panels are being put on west-facing roof spaces even though they produce about 15% less electricity.
This is especially common for those with time-of-use electricity billing, who wish to move their solar generation to later in the afternoon (when their power company charges peak rates) in order to save money on their electricity bills.
8. Can you buy and install your own solar panels to save money?
It is possible to buy solar panel kits and then organize the installation, permitting, and inspections yourself. Doing this could save you between $2,000 and $3,000 - potentially more.
However, there are some potential pitfalls to install solar yourself. The installation of solar panels is dangerous, as it requires you to do electrical work at great heights. It’s also possible that you could damage the equipment, and it can be very difficult to claim a solar warranty when you install on your own. DIY solar projects typically suit those who are contractors, or those who know a qualified solar electrician to help them out.
If you order a DIY solar kit, you can contact a local solar contractor to assist you if you are not comfortable performing the installation on your own. In some cases, however, installers will charge you more for the installation of a DIY solar kit, making it cost the same amount it would have if you hired an installation company to do all of the work. If this is the case, it might not be worth it to install solar on your home with a DIY kit.
Therefore, if you are considering DIY solar panels, we suggest that you get at least one quote from a full-service solar company that will supply the equipment, perform the installation, and handle permitting.
If you think a DIY solar project is right for you, you can use our solar calculator to find out how many solar panels are right for your home. Then, check out our price comparison of popular DIY solar installation kits of that size. We have prices on hundreds of kits from around 20 different online stores.
9. Which solar panels are best for home?
There are many ways to rank the best solar panels, including by value, efficiency, and performance. These brands tend to have the best overall solar panels:
You can read our expert summary and justifications for the ranking of top solar panel manufacturers in 2020 on our best solar panel brands expert reviews page.
10. How many solar panels are needed to power a house?
The number of solar panels you will need to power your house will depend on two factors:
- The amount of electricity you use
- Your location, as where you live determines how much electricity your solar panels can produce
Our online solar calculator can take your monthly power bill and location to work out how many solar panels you need, as well as the cost based on the prices of solar companies near you.
11. Do I need to buy a solar battery if I install solar energy panels on my house?
In short, no.
In most areas, it is not necessary to buy a solar battery when you install solar panels on your roof. This is because most utilities offer some form of net metering, which effectively allows homeowners to sell the excess energy their solar panels produce to the power company, instead of physically storing it in a battery.
Even though battery storage is getting cheaper, it still has a relatively long payback period. For example, the Tesla Powerwall only costs around $9,600, including installation, but it will still take almost 10 years for it to pay for itself.
Another important factor when deciding are solar panels worth it is how high your electricity rates are and whether or not your utility offers retail net metering. Places with high electric rates and full retail net metering are often some of the best places to install solar.
With that said, it may be worth considering installing solar with a battery system if you live in an area that does not offer net metering.
12. Who are the best solar panel installation companies near me?
As the largest consumer reviews site for the residential solar industry, we have reviews of most solar panel installation companies.
We also have rankings for solar energy companies by state and city so that you can refine your search for the best local solar company to only those companies that service your local area.
13. Do solar panels increase the value of your home?
A 2015 study showed that a typical solar panel system added a $15,000 premium to the selling price of a home. They did this by studying comparative sales of similar houses with and without solar panels.
Separately, Zillow released a study in 2019 which concluded that solar panels, on average, added 4.1% to the value of a home, effectively making installing solar panels a worthwhile investment, even if you plan on selling your home in the future.
So, are solar panels worth it for your home?
As you can see, there are many factors that go into determining if solar panels are worth it for your home. The return on a solar investment depends on where you live, your roof’s features, your electric rates, and who installs your panels.
The easiest way to answer the question “are solar panels worth it?” is to use our solar calculator to get an accurate cost and savings estimate tailored to your home and energy usage.
Then you can be on your way to powering your home with clean energy - all while cutting your electric bill.
Author: Andrew Sendy | Home Solar Journalist
Andy is deeply concerned about climate change but is also concerned about cost of living pressures on American families. He advocates for solar energy and solar battery storage only to the extent that they make financial sense for homeowners. He is not affiliated with any particular solar company in the United States.