What is the average cost for solar panels? The average U.S. 2018 cost for an installation was $11,380 to $14,990 after federal solar tax credits (FTC). This equates to a mean cost of $18,440 before credits. The average household installation is 6 kilowatts (kW) and the federal solar tax credit will cover roughly 30% of your installation. 

The answer depends on factors like;

  • Size of the Array
  • Panels, Inverters and Components Selected
  • Financing
  • Relative Local Energy Costs


Installation Cost Depends on Your Location

In the State of Texas, the average 6kW system costs about $17,700 before tax credits. In other terms, it costs $2.95/watt. This cost is roughly 4% lower than the national average. Texas is a great state for installing solar panels when compared to the rest of the U.S. The average cost for a 6kW system in Texas after tax credits is $13,188.

On the other hand, some states have been slower to take advantage of the falling prices and increasing PV efficiencies we have seen in the last few years. No matter the relative cost for installation, the investment is always worth making over the long term. A state ranking is available for review. It factors several key metrics together in order to find the most “solar friendly” states;

  • Overall Grade
  • Renewable Portfolio Standard
  • Solar Carve Out
  • Net Metering
  • Interconnectivity
  • State Solar Tax Credits
  • State Solar Rebates
  • Performance Payments
  • Property Tax Exemptions
  • Sales Tax Exemptions


What is the Return on Investment?

Again, you might ask, “What is the average cost for solar panels?” We think it’s more useful to look at the question in terms of your return on investment (ROI). It represents an investment, there is no doubt, but how many years will it take before the system is paid for and saving you money every month? Without getting into calculating the output vs. consumption and amortizing the difference over a period of several years, you can use one of many simple online calculators to determine this value.

Your location is a factor but even the dreariest states receive a surprising amount of sunlight. Encōr Solar mainly operates in the southwest. Let’s base our calculations on the State of Texas, which has an average value of 4.92 hours/day. No matter where you live, you can measure your peak solar hours by use of an insolation meter. The longer the device is allowed to collect data, the better idea of your peak solar hours you can get. A solar chart is another way to get a good estimate.

This value is useful because the formula to calculate PV output incorporates this number. We have done the calculations for you in this example. If you’re interested in double-checking the numbers specific for your situation, we encourage you to do so or call us to help. The example calculations we did are based on certain assumptions;

  • The array was slightly larger than average, costing $25,230 – 30% FTC = $17,661.
  • Typical utility pricing for the City of Houston was used.
  • The solar tax credits have been applied.
  • It’s a residential installation.
  • The calculations are based on 20 years of operation.

In this scenario, a typical suburban home in Houston was chosen. The total 20-year savings were calculated to be $35,927 at a normal (without panels) monthly electric bill of $175. Subtracting the cost of installation, we arrive at a figure of $18,266 or a savings of $76/month after installation costs. The savings calculated before installation costs were $149/month. At this level, the installation would pay for itself in roughly 9.8 years.


Cost Depends on Financing

It is important to remember that these numbers are a function of the size and relative solar radiation exposure for the area. We chose a typical suburban home to give you a general idea of the potential. PV installations are subject to an economy of scale. In other words, larger arrays return higher rates of relative savings.

2018 – 2019 is seeing many continued industry advances and government incentives lowering the cost. This coming year may be your last best chance to install a solar array for an average national payback period of 5 – 8 years! Additionally, loans for a solar installation can often be obtained for 0% down. Paying off the installation right away is always the option that represents the lowest cost but financing options are also very attractive. The three most common types of 0% down options are;

  • Solar Leases
  • Power Purchase Agreements (PPA)
  • Solar Loans

Solar loans are fairly straightforward. They can be secured in most states for no down payment and offer competitive rates. The owner retains the benefits of tax credits and control over the solar array.


Solar loan ROI

What is a Solar Lease or a PPA?

Unlike the solar loan option, leases and PPAs allow you to enter into a contract with another company. In a solar lease, the installer owns the array and charges a monthly “rent” for the power used. It’s usually 10%-30% lower than a normal bill. A solar power purchase agreement is much like a lease except you contract to buy the power at a kW/hour rate rather than a fixed rent amount. This rate is calculated based on the output of the array to be installed.

What is the Real Cost for Solar Panels?

The real cost is a negative number representing a money earning asset. Encōr Solar understands that solar panels represent a significant investment for most homeowners. Options exist for financing and often come with 0% down. Federal and state tax credits also lower the required initial investment amount.

The investment in PV technology is a smart move. Over time, the initial investment is well worth making, especially during this coming year. Most PV arrays perform well for at least 25 years. Will you be retired by then? How important will it be to have low monthly bills in your golden years?

Our professionals at Encōr Solar are always ready to help answer your questions and delve deeper into your unique situation. If you want one less thing to worry about, call or contact us when you’re ready.


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