Solar 101: The ultimate guide to home solar power



Solar panels and the sun
A comprehensive guide on all things rooftop solar.

Solar is one of the most extraordinary renewable energy sources known to man. With plenty of advancements made in solar technology, homeowners all over the U.S. are seeing amazing results – soaking in all the benefits solar has to offer.

That being said, residential solar is an investment that costs around $18,000 and it comes with plenty of do’s and don'ts. Trust us – we know it can get stressful. Luckily, we’re here to do the thinking so you don’t have to!

If you would like to learn more about residential solar, and how you can get started, you’ve come to the right place.

Calculate how quickly a solar installation would pay for itself after rebates

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    What is solar power?

    In its simplest form, solar power is energy from the sun that is converted into usable thermal or electrical energy. Solar is considered a renewable energy source because energy from the sun doesn’t run out as it’s used.

    Solar power can be harnessed in three main ways:

    • Solar photovoltaics (solar panels): Arguably the most familiar source of solar, PV solar technology turns sunlight to electricity via semiconductors to power electronics on any scale, small or large. Most home solar systems use PV solar panels.
    • Solar heating and cooling: Thermal energy is collected from the sun to provide hot water, space heating, cooling, and even pool heating for residential or commercial projects.
    • Concentrated solar power: Concentrated solar power (CSP) plants use mirrors to concentrate the sun’s energy to drive steam turbines or engines that create electricity. Today, roughly 1,815 megawatts of CSP plants are in operation in the U.S.

    Here are a few key terms and definitions to help you understand basics of solar power:

    Term Definition
    Solar Anything related to the sun. The sun is the star of our solar system.
    Solar energy A broad term to describe energy generated by the sun and emitted as electromagnetic radiation, i.e. sunlight.

    Solar power

    Energy from the sun converted by humans into usable energy in the form of either electricity or heat. The terms ‘solar energy’ and ‘solar power’ are often used interchangeably.
    Solar electricity Electricity produced from sunlight. It can be created using solar thermal or solar PV technology.
    Solar thermal Energy collected using heat from sunlight. It can be used for energy storage, heating, or electricity generation.
    Solar photovoltaics (PV) The process by which electricity is created out of sunlight using solar panels. Solar panels are made of solar cells containing special semiconductor materials.

    How do solar panels work?

    This diagram shows the layers that make up a solar panel.

    Solar panels produce electricity through a process called the photovoltaic effect. Most home solar panels are made of silicon, a semiconductor material. When sunlight hits the silicon in solar panels, the electrons get excited, generating an electric current that can power appliances and devices.

    There are three main types of solar panels: 

    • Monocrystalline
    • Polycrystalline
    • Thin-film

    According to a report from Berkeley Lab, monocrystalline is the most popular type of solar panel for residential solar installations, likely because they operate more efficiently and look better when installed on a roof than the alternatives.

    Learn more: Types of solar panels: which is right for you?

    What are solar panel systems?

    When you go solar, you get more than just solar panels installed. Solar panel systems are made of different components that work together to power your home. The table below explains all the parts that go into a functional solar panel system:

    Equipment Its function
    Solar panels Generates electricity
    Racking equipment Hold the solar panels in place on your roof

    Solar inverter

    Converts the solar energy into electricity appliances can use
    Net meter Records how much energy your panels produce and how much energy your home uses
    Solar battery storage equipment (optional) Stores any excess energy that your panels produce for later use

    There are three types of solar panel systems that you can invest in depending on your needs: 

    • Grid-tied system: The most popular type for residential customers, grid-tied systems power your home using the energy produced from your solar panels. When your panels don’t produce as much power as you need, you use electricity from the utility. 
    • Hybrid system: Also referred to as solar-plus-storage systems, hybrid systems pair solar panels with battery storage so you can save excess solar energy for use later and run your home during a power outage. But you still remain connected to the utility.
    • Off-grid system: These systems have no connection to the electrical grid and rely solely on solar panels and energy stored in solar batteries for power.

    How much does a residential solar system cost?

    System size Number of solar panels* Average cost per watt Average total cost (after tax credit)
    4 kW 10 $3.25 $9,100
    6 kW 15 $2.95 $12,390

    8 kW

    20 $2.85 $15,960
    10 kW 25 $2.75 $20,350
    12 kW 30 $2.75 $23,100
    14 kW 35 $2.60 $25,480
    16 kW 40 $2.60 $29,120

    *based on a 400-watt panel

    The average residential solar panel installation costs between $18,000 and $20,000 before incentives. Solar panel prices are usually measured in “cost per watt of solar installed”, which works out to between $2.75 and $3.35 per watt.

    The price of a solar panel system will vary for a number of reasons, including how many solar panels you need, where you live, and the incentives available in your area.

    How much do solar panels cost near you?

    Are there any incentives for buying solar panels?

    Yes, there sure are! But – that all depends on where you live! There are three main solar incentives to be on the lookout for:

    • The solar tax credit
    • Net metering
    • Local incentives and rebates

    The solar tax credit

    The solar tax credit is a federal solar incentive available to taxpaying homeowners in the United States. The tax credit is equal to 30% of the cost to install solar panels. So, if your system costs $18,000, you can get a tax credit of $5,400. 

    Battery storage also qualifies for the federal tax credit –- even when it’s not paired with solar panels!

    To get the federal tax credit, you must have taxable income and own your solar panels. 

    Net metering

    Net metering is a common incentive for solar homeowners that is offered in most states and is the way solar panels save you the most money on electricity bills. 

    Sometimes, solar panels will generate more electricity than a home needs. With net metering, the utility company will credit your electricity bill for each kilowatt-hour of excess solar energy you send to the grid. 

    In the best solar states, utilities provide net metering credits equal to the full retail value of electricity. Sometimes, the credit will be worth slightly less than what the utility charges, but it can still save you hundreds of dollars on your electricity bills.

    The specifics of the net metering program you qualify for will depend on state laws and your utility. 

    Local rebates and incentives

    There may be additional solar incentives or rebates in your city that can lower the cost of going solar even further!

    In New Mexico, for example, homeowners have access to a state solar tax credit as well as the federal one! Some utility companies in Texas offer upfront rebates that directly reduce the upfront cost of installing solar. 

    Learn more: Complete guide to solar incentives

    Do solar panels actually save you money?

    The average homeowner saves almost $1,500 a year on electricity bills by having solar panels installed. 

    When we talk about solar savings, we mean your avoided energy costs or the amount of money you would have spent on your electric bill without solar. Keep in mind that your savings will vary depending on: 

    • Your location
    • Your energy usage
    • Electric prices offered by your utility company

    Over your system’s 25-year lifespan, you can see an average of $37,500 in savings. Let’s say you get a 6 kW system for $12,600. In about eight years, your system will pay for itself. After that, you’re in the green for all the money you save every year thereafter – no pun intended. 

    The amount of time it takes for your system to pay for itself, also known as the payback period, may vary. The average payback period for solar systems in the U.S. is between 5 and 15 years.

    Calculate your potential solar savings

    Top solar brands for your home

    Many homeowners don’t know where to start when it comes to solar brands. Luckily, we’ve got you covered.

    Here’s a few of our favorite solar panel manufacturers, based on SolarReviews’ annual ranking of residential solar panels:

    If you’re looking to also pair your solar panels with an energy storage system, here’s a few of our top picks for solar batteries

    Are solar panels right for everyone?

    Solar panels are an excellent way to save money on electricity bills and take part in reducing your carbon footprint. However, solar panels aren’t right for everyone.

    Before you go solar, ask yourself a few of these questions:

    • Can I afford solar?
    • Is my roof suitable for solar?
    • Do I live in a good state for solar?
    • Am I paying too much for electricity?
    • Does my home get good sun exposure?

    If you answered yes to most or all of these questions – definitely consider going solar! 

    How to get started

    If you want to purchase solar panels now or in the future, the first step on your agenda should be to reach out to a few reputable installation companies in your area.

    Obtain at least three quotes from installers to compare and find an affordable option that meets your needs. Installers will be able to handle any questions you may have regarding solar that we haven’t already answered for you.

    Get quotes from trusted solar companies near you

    Solar FAQ

    Want to learn more about the wonders of solar power? Here are a few commonly asked questions about solar:

    Q: How long do solar panels last?

    A: Solar panels are designed to last several decades. Most solar panels on the market have a 25-year lifespan based on their warranty. However, they could last as long as 30 years! 

    Q: Do solar panels need direct sunlight?

    A: Solar panels will perform the best in direct sunlight – but will still generate some electricity in cloudy conditions.

    It’s best to have solar panels placed on a south-facing roof to expose them to the most sunlight possible. However, solar panels can face other directions and still generate electricity.

    In terms of your solar panel placement, it’s best to have them facing south and have them angled for the optimal amount of sunlight. An experienced solar installer will know the best placement for your panels.

    If you experience heavy snowfall, you will need to clear the snow off of your panels if they are covered. Panels that are covered in snow will not produce any energy.

    Q: Can I finance solar panels?

    A: Yes, you can! Paying for solar panels in cash gives you the best solar savings possible. But, If you cannot pay your system off in cash, you have a few options:

    • Solar loan
    • Solar lease
    • Power-purchase agreement (PPA)

    Learn more: Solar financing: What’s the best way to pay for solar panels?

    Q: What are the best solar panels?

    A: Picking the best solar panel brand is hard! If you’re getting quotes from a trusted solar company, it’s likely they’re offering good-quality solar panels. 

    You’ll want panels that perform well and come from reliable brands that can support you in the future. Here are a few of SolarReveiws’ top solar panel brands for 2023:

    Q: Do solar panels raise the value of my home?

    A: Solar panels do raise your home’s value if you are the owner of the panels. This means your home may sell for a higher price if you have a paid-off system on your roof.

    But, like any big home improvement project, installing solar panels could increase your property taxes. Luckily, many states offer property tax exemptions for homeowners who switch to solar! 

    Q: Do I need a solar battery?

    A: Most homeowners don’t need a solar battery.

    Solar batteries are expensive, adding upwards of $12,000 on top of your solar installation costs. But, if your utility offers a less-than-ideal net metering policy or you live somewhere that experiences frequent power outages, a battery may be the way to go! 

    Some of the best solar batteries sold today include the Tesla Powerwall+, Generac PWRcell, and Enphase IQ.

    Q: Can I install solar myself?

    A: Yes, you can DIY your home solar project – but we do not recommend it. 

    DIY solar installations can be performed to cut costs on installation, but they are very risky. If you don’t have the time or expertise, we recommend just calling a local installer to minimize the headache.

     - Author of Solar Reviews

    Zeeshan Hyder

    SolarReviews Blog Author

    Zeeshan is passionate about promoting renewable energy and tackling climate change. He developed these interests while studying at beautiful Middlebury College, Vermont, which has a strong focus on sustainability. He has previously worked in the humanitarian sector — for Doctors Without Borders — and in communications and journalism.

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