What Is the Average Cost of Going Solar for a Residential Home?

How Much on Average Does Residential Solar Cost?

Solar panels are more affordable than ever, and when you take into account all the flexible financing options that are available, residential solar is more accessible to a large portion of the population who might have never thought solar was within their grasp. But as low as prices have dropped in recent years, having solar panels installed on a home can still be a costly endeavor for many households.

If you are thinking about adding solar energy to your home but are hesitant because of price, one of the best things you can do before you make your final decision is to have an idea of what your system will cost and what type of financing can best help you afford your system. This will help give you an idea of what to expect, so you can come up with a plan to help you enjoy all the benefits that come with energy independence.

Solar Cost Variables

When you are purchasing a residential solar system, the cost of your system will ultimately be determined by a variety of different variables, including the size of the solar system, where you live, the brand of solar panels and other related equipment being installed, the time of year your system is being installed, and more. In short, solar systems fall under three cost ranges – low-end cost, mid-range cost, and high-end cost. According to EnergySage.com’s 2023 solar cost calculator, the following is what you can expect to pay on average for each of these types of systems (after the federal solar tax credit is applied):

  • Low-End Cost: $17,430
  • Mid-Range Cost: $20,650
  • High-End Cost: $23,870

Since each state differs in solar installation costs, you should expect to pay anywhere between $2 and $4 per watt. But some states may have prices even lower. For 2023, the lowest price for solar can be found in Alaska at $2.44 per watt, while the most expensive state for solar is Michigan at $3.78 per watt.

Calculating Your Solar System’s Cost

Using a 6-kW solar system as an example, here is how to calculate the cost of this size system in each of the states listed above.

Alaska: Since the average cost for solar in Alaska is $2.44 per watt, a 6-kW system will cost $14,460 to be installed. This is the price before the federal solar tax credit is applied, which for 2023 is 30%. For this solar system, the solar tax credit will provide the homeowner with an income tax credit of $4,338, which will bring the overall cost of the installation down to $10,122.

Michigan: With an average cost of $3.78 per watt for solar in Michigan, that same size system will cost $22,680 before the tax credit. The tax credit for this system will be $6,804, which will bring the total cost down to $15,876.

How the Federal Solar Tax Credit Works

Before you make your solar decision based on the above cost factors, it is important to understand how the federal solar tax credit works, because many homeowners mistakenly assume that the credit is applied to the cost of the system. This is not the case.

The solar tax credit reduces the solar homeowner’s tax liability by 30% of the cost of their solar installation for that year’s taxes. So, if you live in Alaska, based on the above scenario you will be able to reduce the taxable income amount on your taxes by $4,338. This amount is not refunded to you or subtracted from the cost of your installation. Your system will still cost $14,460 to have installed, the tax credit will reduce your tax liability, which will ultimately help offset some of the costs of going solar.

There’s No Better Time to Go Solar

Just ten years ago, the average cost to have solar installed on a residential home was more than $50,000. In 2023, the national average for solar installations is about $20,650 before federal tax credits are applied. That’s well more than a 50% drop in solar prices in just a decade. And today’s solar panels are vastly more efficient and better made than those from a decade ago as well.

Simply put, if you are thinking about going solar, there’s no better time to do it. The costs have never been lower and the equipment is the very best it’s ever been. With the energy savings your system will provide, you can even expect your solar panels to pay for themselves within nine to ten years on average. Speak with your local solar contractor today and set up a consultation, they will be able to provide you with a more accurate estimate of your solar costs and go over all the different financing options available to you.

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