A guide to solar panels for homes: Cost & savings, solar batteries and 2021 trends
You probably know enough people who have installed solar panels on their homes to know that solar panels have been an attractive option over the last few years.
Their ability to be both a profitable investment and environmentally beneficial presents us all with the rarest of opportunities: to profit from doing good. The combination of these powerful motivations has already led 2 million homeowners to install solar panels on their roofs.
In 2021, the 26% federal solar investment tax credit remains in place for all homeowners, net metering laws remain in 30 states, ensuring solar system owners are paid for excess solar energy their PV solar panels export to the grid, and solar prices have fallen more than 70% over the last 10 years.
In some areas, installing a solar panel system on your house can now offer a better return than traditional investments like property or shares. However, this is not the case in every situation. This guide will help you determine whether solar panels are suitable for your home and give you local information about costs, savings, payback period, tax credits, and other local incentives.
In the 2021 version of our Solar Panels for Home Guide, we have also added new commentary about solar batteries, their pros and cons, and how future changes to net metering laws may tip the scales in favor of installing them. But first, let's start with the basics.
How much do solar panels for homes cost on average in 2021?
The average residential solar panel installation cost today is between $12,000 and $14,600 after claiming the 26% federal solar tax credit (more about that below). This works out to about $3.00 per watt installed, which is nearly 70% cheaper than the cost of solar just 10 years ago!
Solar panels have next to no long-term maintenance costs, so solar is mostly a one-time investment. Solar prices have levelled out over the last two years and we are not forecasting any further falls to solar panel prices over the course of 2021 or 2022.
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How much will solar panels cost for your specific house based on your location and energy use?
While average price is interesting, your house is unlikely to be average. What is more relevant to know is how much solar panels will cost to install on your house given its location, electricity usage, and what kind of savings and payback period can you expect.
SolarReviews has developed a very sophisticated solar panel cost and savings estimator that can answer this question for you based on your local weather, your local utility rates and the prices of your local solar companies.
We get it - $12,000 isn’t pocket change. Luckily, there are many zero-down solar financing options available, like solar loans, that allow you to go solar and start saving the minute the panels are turned on, without having to worry about any large upfront costs. We recommend solar loans rather than leases because you keep the solar tax credits.
With solar leases the leasing company gets the tax credits and, if you sell your home, the buyer needs to accept assignment of the solar lease. With a solar loan you own the system and so this is not necessary.
Note for new solar enthusiasts: Solar system capacity is measured in watts and kilowatts. One kilowatt ("kW") is 1,000 watts. The kilowatt rating of a system is a measurement of the maximum generation capacity of the system.
What are solar panels and how do they work?
To sum it up, sunlight hits the solar panels and shakes up the electrons within the cells, which creates a flow of electricity that is then sent to the system’s solar inverter. The inverter converts the electricity into usable electricity that can power everything in your home, from your lights to your fridge.
Some solar panel systems also include a solar battery, which will store extra solar energy the panels produce for use later. Keep in mind, not all solar panels are installed with solar batteries. In fact, most solar panel systems are not paired with batteries, but they are becoming increasingly popular.
The good news is that you can install and benefit from solar with no technical understanding of how solar works. Once the solar company installs the system, it runs itself and requires no involvement from the homeowner. If you are interested in the more technical aspects of solar, you can take a look at our in-depth breakdown of how solar panels work.
What are the different types of solar systems you can get for your home?
Until recently, most solar systems that were installed on homes were simple grid-tied systems because this is the cheapest type of solar system. Their low cost means they offer the quickest payback. However, these systems switch off when the utility grid is down and so they do not offer backup power when the grid is out.
More and more people are now considering adding solar batteries to their solar system so that they have backup power if the electric grid is down. Residential solar systems with battery backup, that are also connected to the utility grid, are called hybrid solar systems.
There is a third type: off-grid solar systems. However, few people elect to go off-grid unless they live in a remote area because off-grid systems are expensive. We discuss solar batteries and hybrid systems further below, but these videos show how each type of system works on your home.
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.
Do solar panels really save money? Do they pay for themselves?
Yes, solar panels really do save you money. In many cases, panels can save well over $50,000 throughout their lifetime. You can expect your solar panels to pay themselves off after four to eight years. After that, your panels will be making you completely free electricity for the rest of their 25-30 year working life!
The reason that solar savings can add up to such large sums of money is because of the compounding effect of electric rate inflation. If you don't get solar then the price you pay for electricity will go up, and up, and up over the years. Solar panels are like an insurance policy against increasing electric rates.
While this may sound too good to be true, worry not - solar is not a scam. The other reason why solar panels provide such great savings is because of a utility program called net metering, which most states have, that lets you sell any excess solar electricity your solar panels produce during the day back to your utility company at the same rate you buy electricity at night.
It’s important to note that not all net metering policies are created equal, and many utilities are fighting to cut back on net metering programs if they haven’t done so already. By installing solar now, you’re guaranteed to receive net metering for at least 10 years, which protects your investment against any future changes in net metering.
Calculate solar panel savings based on your home's location and current electricity bill
Your average monthly bill
Do solar panels work when the power goes out?
Most people think that solar panels will keep their lights going when the power goes out. Unfortunately, unless you add battery storage (a hybrid system), they won’t.
Solar power systems automatically go offline in the event of a grid power outage as a safety measure for utility workers who are repairing power lines.
The only way solar panels will power your home during a blackout is if they are paired with battery storage.
What are solar batteries? How much do they cost?
Solar batteries store your excess solar energy so you can use it when you need it most, like during a power outage.
Most home solar batteries cost between $10,000 and $15,000 to install, so they add a substantial amount to the total cost of a solar installation. However, in a number of states, there are specific rebates to cut the cost of adding batteries to your solar system. It is also worth noting that the 26% federal solar investment tax credit applies to batteries when they are installed to store solar energy generated by a home solar system. This further reduces the cost significantly.
Despite the high price tag, solar batteries are cheaper and more popular than ever before as more homeowners want to protect themselves from widespread power outages. In fact, around 70% of people that use our website to request quotes from local solar companies ask for battery storage. This number is up from less than 50% only two years ago. Blackouts are becoming more common throughout the U.S., and what better way to keep your lights on than a solar battery?
In the future, solar batteries will only become more popular, especially as more utilities put an end to net metering. Without net metering, you wouldn’t be paid for all of the solar electricity you produce that is excess to your home's electric needs, at the time it is generated (the middle of the day). By storing your extra energy in a battery, you’ll still get the full value of your solar energy, even if your utility doesn’t have a great net metering program.
You can read more about net metering and battery savings here.
How long does it take to install home solar panels?
A solar installation usually takes one or two days to complete, sometimes more depending on the complexity of the system. But the installation is just one step in the process of going solar.
When all is said and done, it can take between two and three months to get solar installed from the time you sign an agreement with an installer to the time the system is turned on. The biggest holdups are due to solar permitting and utility approval, which, depending where you live, can add months to the installation process.
The good news is that many solar companies are pushing for quicker permitting processes so homeowners can start saving with the sun as soon as possible.
Are there solar incentives or tax credits available?
The most well-known solar incentive is the federal solar tax credit, also referred to as the Investment Tax Credit or ITC, which provides homeowners with a tax credit equal to 26% of the total cost of a solar panel installation. Battery installation costs are covered, as well.
However, the solar tax credit drops down to 22% at the start of 2023 and expires completely at the start of 2024. So if you want to secure the highest tax credit possible, you need to go solar before the end of 2022. If you wait, your solar savings won’t be nearly as impressive as they could be.
The solar tax credit isn’t the only incentive for going solar. There are tons of solar incentives throughout the U.S., even ones just for battery storage! You can get a better idea of the savings you can get through rebates and incentives in your area with our detailed state solar incentive guides.
How many solar panels do you need to power a home?
We’re going to be honest with you, the question ‘How many solar panels do I need?’ isn’t that helpful, and frankly, it makes things more complicated than they need to be. The exact number of panels on your roof varies depending on the specific brand and model of the solar panels chosen.
The more relevant question is, “What size solar panel system do I need?” Solar systems are measured in watts (W) and kilowatts (kW) where the kW rating is the maximum generation of the system installed. An average size system in 2021 is around 8 kW. In 2021, solar panel models are around 370 watts each, meaning on average people are installing around 22 panels.
If you want to know the number of solar panels you need to power your specific home you can use the solar panel cost calculator below.
Calculate how many solar panels you will need to power your home
Your average monthly bill
If you would prefer a more detailed explanation on solar system sizing, and how it is calculated, you can read our article on the topic.
Is a DIY solar installation a good idea?
While you can install solar panels yourself, it may not be the best idea simply because of the potential danger involved. DIY solar installations let you save money on labor costs and you can even find DIY solar kits online, which range from $8,000 to $10,000.
However, the potential savings may not be worth the risk: you’re working on a roof, plus you’re completing electrical work. Not to mention, you’ll need to work out all of the permitting and planning yourself, which can be hard to navigate. You also run the risk of voiding out warranties and not qualifying for certain incentives.
So, while you can install solar yourself, we don’t advise it. DIY may save you a buck, but going with a professional installer will save you a headache.
How do you find the right solar installer?
The best way to find the right solar installer for your specific needs is by getting multiple solar quotes. Not only does this let you get a feel for each of the installation companies, but it also helps you find the best possible price.
Sure, you could go with a large company like Tesla and save a few dollars, but you get what you pay for. Those large installers won’t give you the kind of personalized customer service you need over the 25-year lifespan of your solar panels.
At SolarReviews, we recommend going with a reliable local solar installer. You should look for a company that employs its own installation crew and has been in business for five or more years. You can look through our database of trusted solar installers in your area, and read through hundreds of customer reviews to find the perfect installer for you.
Are solar panels worth it for your home?
Solar panels are almost always a worthwhile investment, especially in places with solid net metering policies and local solar incentives.
Of course, there are certain scenarios in which rooftop solar panels aren’t a good fit, like if you have nowhere to put the system, you plan to move soon, or your energy costs are already low.
To guarantee that you have access to net metering and the 26% tax credit, the best time to go solar is now. Plus you’ll get to see solar savings sooner, which puts more money in your pocket to use on things you actually care about - instead of your electric bill.
Installing solar panels not only allows you to save big on your electric bills, but it also helps you lower your carbon footprint while giving you more independence, especially when you pair solar with battery storage.
Although battery storage doesn’t make sense financially everywhere just yet, as we see more states eliminating net metering and blackouts becoming more common, more homeowners will start adopting storage along with solar panels.
The best way to know if solar is right for you is to use our solar calculator. Our state-of-the-art calculator provides accurate cost and savings estimates for your specific home, so you can get a better idea of whether or not solar is a worthwhile investment for you.