How to accurately estimate solar panel installation cost for your specific home

Updated

two men standing on top of solar panels
Solar panel installation costs vary from home to home because each one is unique! Image source: LA Times

There is no single accurate answer to the question, “How much does it cost to install solar panels on a home?” Every home is different, so the cost to install enough solar to meet each home’s energy needs is different. 

The good news is that we can share the average solar panel installation cost data from 2021 to give you a better understanding of what solar might cost for your specific home. We also have a great solar panel cost calculator that gives an extremely accurate estimate of how many solar panels you need, what they’ll cost you, and more importantly, what they’ll save you. 

See how much it’ll cost to install solar on your home based on your location & electric bill

Solar panel installation cost data 

The average cost to install a 7 kilowatt (kW) solar panel system on a home is around $21,000. When you take the 26% federal solar tax credit into account, that cost drops to around $15,500. The price could be even lower, depending on what other state or local incentives are available in your area. 

If you are already familiar with the cost of solar energy installation and average solar panel savings and would rather know more about the steps involved in the solar panel installation process, you can read more about that here.

For those of you who are just beginning your solar installation research or just doing general industry research, our solar panel cost guide is a great place to start. We show the most up-to-date data of the average cost of a residential solar panel installation in each state and the average cost for systems using the best solar panel brands on the market, as well as labor costs.  

The averages in our guide are great as a starting point for your solar journey, but they’re just that - averages. Those numbers won’t be 100% accurate for your situation because your home probably isn’t average. Each house is unique - houses in different states can be different, even houses in the same state are different! 

This is where our solar calculator comes in. You can find an accurate cost and savings estimate for your specific home based on your location and how much you spent on your last electric bill. Our calculator, which you can find here, doesn’t require you to enter your name or contact details but still shows all the results. 

For a more detailed estimate, you can enter your zip code in the calculator below and get all of our solar panel cost estimates, plus you’ll be able to see exact bids from solar companies in your area.   

Find out how much you can save annually with solar

Solar batteries add new complexity to estimating average solar system cost in 2021 

Prior to 2020, more than 90% of residential solar power installations were simple, grid-tied solar systems. Grid-connect systems are so popular because they are the cheapest to install and they offer the shortest payback period. 

However, because they’re connected to the grid, they have no source of backup power in the event of a power outage. Now, many people are considering adding a solar battery to their solar systems in 2021.

There are four reasons for this:

  • The frequency of storms and wildfires has made utility power less reliable in recent years, which is increasing demand for a backup power supply when the power goes out.
  • Utilities across the country are changing their net metering programs to offer below-retail rates for excess solar energy production that is sent to the grid.
  • Time-of-Use electric billing makes home energy storage solutions more attractive because the battery can be charged when utility rates are cheap and discharge when rates are most expensive, allowing homeowners to avoid paying peak pricing.
  • The 26% solar investment tax credit can be used to cover a battery as long as it is connected to a solar power system. There are also a number of state and utility incentives, like California’s SGIP incentive, that help reduce the cost of battery installations. 

The type of solar power system has a big impact on installation cost 

There are three different types of residential solar power systems: simple grid-tied systems, hybrid systems, and off-grid systems. The following videos show how each of these work:

Grid-tied solar system

A grid-tied system is the most common type of solar system. It has no solar battery for backup power and utilizes net metering to maximize savings. Solar panels are mounted on your roof then wired together, and the power generated flows into an inverter where direct current (DC) electricity is converted into alternating current (AC) electricity. This electricity is either used by your home or is exported to the utility grid.

Hybrid solar system

In hybrid solar systems, rooftop solar panels are connected to both a solar battery and the electric grid. The solar electricity generated by your panels that your home does not use is stored in the battery instead of being sent to the grid, which reduces your reliance on the utility while also providing backup power when needed. Battery storage is still expensive but you may be able to reduce costs by using state incentives.

Off-grid solar system

Off-grid solar systems are not connected to the grid at all, so all of your energy needs must be met by the sun. There is no utility to fall back on. The solar installation needs to power your home not only during the day, but after dark as well, so many solar panels and a large battery system are required. These systems are often expensive and don’t make sense for homes that have access to the grid.

How much does a hybrid solar system with battery storage cost? 

When you see the average price of a residential solar system, like the one we mentioned earlier in this article, it’s usually talking about a grid-tied system. So, an average 7 kW system will cost $21,000 not including battery storage

Hybrid systems include a battery backup, so with the purchase of a battery, you can expect to add another $10,000 to the cost of the installation. This would bring the average cost of a hybrid system to around $31,000 before the federal tax credit. After the tax credit, the system cost will be around $23,000. 

Of course, the installation price will vary, based on the brand of battery you purchase and how many batteries you install. The Tesla Powerwall, for instance, costs $10,500 for 13.5 kWh of storage, while the LG Chem costs around $9,000 for 9.8 kWh of storage. 

How much does installation of an off-grid solar panel system cost? 

Off-grid solar systems are much more expensive than both grid-tied and hybrid solar systems. Off-grid systems require more solar panels and more battery storage capacity because there is no grid for you to fall back on during times of low solar generation or high electric use. 

A typical off-grid system for a family home that wants to live a relatively normal lifestyle is in the range of $50,000-$70,000 before the federal tax credit and $37,500- $51,000 after deducting the current 26% tax credit. 

How can the solar panel installation cost calculator work it all out accurately? 

There are only two things you need to enter into our solar installation cost calculator: your address and the amount of your most recent electric bill. Our calculator knows the electric rates charged by your local utility, so it can determine how much electricity you used based on how much your bill was. 

From here, we use information from the Energy Information Administration (EIA) that contains the average electric usage of a home in your area for each month of the year. The calculator uses this to estimate what your annual usage looks like. For example, if the average customer in your area uses twice as much power in July as they do in January, then we assume you will too. These usage estimates are typically very accurate. 

So now that we know your electric usage, we can figure out how much solar electricity you need to cover it all. The amount of sunshine your area receives allows us to calculate how much electricity a solar panel will produce on your roof, which, in turn, tells us the size of the system you need.  

Once we know what system size will work for you, we can figure out the cost. We simply apply the average cost of solar offered by installers in your area to estimate the cost of a fully installed and commissioned solar panel system that will offset 100% of your electric usage. 

For readers who like to know the averages, the average solar system needed to cover a home’s electricity usage is about 7.4 kilowatts (kW) in size. That comes out to around 21 solar panels total if you use 360-watt panels. 

How many solar panels do you need to eliminate your electric bill?

Why does solar installation cost change from home to home? 

There are many reasons why solar installation costs vary a lot between regions and even between similar homes in the same region, but the two most significant reasons are climate and electricity consumption.

How much does regional climate affect solar panel installation costs? 

The table below shows how much electricity 1 kW of solar panels installed on a southern-facing roof will produce, on average, in the following states: 

You can find out how much is produced in the other states, and even down to your specific house, by using this solar power generation calculator

Annual solar panel production per state

State Annual solar panel production (kWh)
Arizona 1,752 
California 1,550
Connecticut 1,150
Florida 1,351
Massachusetts 1,150
New York 1,230
South Carolina 1,350
Texas 1,360
Utah 1,570

As you can see, solar panels installed in the northeast will produce approximately 35% less power than solar panels installed in sunnier places, like Arizona. Solar panels in Arizona generate more electricity because the sun is typically always shining. 

So, a home in Arizona that is using the same amount of electricity as a home in Massachusetts will need a system that’s 35% smaller, simply because Arizona gets more sunshine.

What size solar system is needed to power a home in each state? 

The table below shows what size systems are needed to cover the average electric bill (electricity consumption) in each state:

System size needed to cover average household electricity usage

State System size (kW)
Arizona 7.0
California 4.2
Connecticut 7.4 
Florida 10.0
Massachusetts 6.3
New York 5.8 
South Carolina 9.9
Texas 10.2
Utah 5.7

How would the cost of solar for your house compare to the average? 

If your energy usage is more than the average for your state, then the cost of installing a solar panel system will be higher. But, this also means that you’ll have higher-than-average lifetime solar savings. 

The characteristics of your house, like the direction and shape of your roof,  will also affect the cost of going solar. The best way to get an accurate estimate for your home is to use our solar panel calculator, where you’ll not only get a solar savings estimate, but you’ll also get expert advice from one of our local pre-screened solar companies. 

What are the best solar panel installation companies near me? 

SolarReviews is the largest review site for the U.S. residential solar industry. You can visit our solar panel reviews pages to find both consumer and expert reviews of solar panel manufacturers, as well as our solar panel installation reviews pages to find consumer reviews of solar panel installers near you.

Is installing solar panels worth it where you live?

Key takeaways

  • The average cost to install a 7 kW solar panel system is $15,500 after the federal tax credit.
  • Solar batteries are becoming more popular as frequent power outages become common, Time-of-Use rates are adopted, and as net metering gets rolled back.
  • There are three different types of solar panel systems: grid-tied, hybrid, and off-grid.
  • The price of a solar system will vary depending on your energy usage, where you live, and the type of system you choose to install.
  • The SolarReviews solar calculator is the easiest way to determine the solar installation cost savings for your specific home.
 - Author of Solar Reviews

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.

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