How much do Solar Panels Cost? What is their Payback Period?


So how much do solar panels cost? Are they worth it in your individual case!? There are a lot of factors to consider when estimating solar panel costs. In this article, we summarize these factors, outline questions to ask, and provide a solar panels cost estimation worksheet.

Updated 3/12/2024

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This is the second article in our Going Solar post series helping anyone on their solar journey. If you missed it, the first article helps you determine whether solar panels are right for you, so check it out!

Hopefully, you’ve decided rooftop solar panels are right for you and that your roof gets enough sun, and now it’s time to determine how much an installation would cost.

Questions Before Understanding Solar Costs

solar panels cost

You first have to answer two big questions to start on your solar journey.

First, do you want to install these panels yourself? 

That may seem like a scary idea, but it’s not nearly as complicated as it may seem. Our next article in our Going Solar Series is all about how we did our DIY installation and got it connected to the grid. If you go this route, you’ll need some basic electrical and construction familiarity, but it is mostly just following instructions and putting in the time. If you decide to go this route, you can cut your costs in half as professional installation is typically as much as the system itself costs.

Second, find out your utility company’s stance on solar panels.

For example, our utility company allows Net Metering. This means that we can connect our panels directly to the grid and they will measure how much electricity we produce and how much we consume each month. Then they charge us for the difference in our monthly bill. The upside to this is that we don’t have to buy batteries which saves a lot of money and we will still have electricity if we get several days with no sun. The downside is that if the power goes out, our solar system shuts down as well to protect itself and the grid, and it also means we had to agree to a limit on the size of the system we could buy.

The important questions you need to ask your utility company are:

  • Can I tie my system into the grid or do I need to go off grid and have batteries?
  • If I can tie into the grid, do you offer Net Metering?
    • If not, how do you measure our consumption and production and how do you bill us?
  • Are there any additional fees you charge Solar customers that you don’t charge regular customers?
  • How do you charge my energy consumption?
    • Is it a flat fee per kWh or do you charge differently based on the time of use?
  • Do you impose any limits on the maximum system size that I can have?
  • Do you currently offer any rebates if I buy a Solar System?

To help you work through these questions/calculations in this article, we’ve put together a worksheet for you to go through! Just sign up to get your FREE Solar Panels Cost Estimation Worksheet Download!

By opening up that worksheet, selecting the options, and entering in the data it asks you for, it will do all of the calculations for you later on! You’ll need to pull your electricity usage for the last year or two along with your current cost for electricity from your bills and input them into our worksheet. That helps set the baseline so you’ll know how big of a system you need and how much you could save.

Move on to the next tab in the worksheet. The next thing to consider is if there are any governmental rebates. 

At the time of this article in the U.S., the Federal Solar Panel tax credit has been extended and is currently:

  • 26% tax credit for systems in service after 1/1/2020 but before 12/31/2022 (2-year extension)
  • 22% tax credit for systems in service on or after 1/1/2023 but before 12/31/2023

There are also many states that offer their own rebates or tax credits. Those rebates don’t add directly to your overall discount since they will count as income to your Federal Tax Return so you’ll need to pay tax on them. Doesn’t make a whole lot of sense does it? That’s taxes for you…

solar panels cost worksheet

Once you’ve put that data into the worksheet we can move on to the final tab. Here it goes through and estimates the size of the system you need, how much it would cost, and how long that will take to pay for itself. You’ll need to know how many hours of usable sunlight you are estimated to have. To get that information, refer back to the first article in our Going Solar Series to pull your information from Google Project SunRoof.

solar panels cost worksheet

We’ll also need to gauge the cost of your system. We highly recommend that you work with the a good company and team to get an accurate cost for your system. We can help connect you with the company we used, just shoot Amanda an email here or directly reach out to them and get a free quote by signing up here! They provided us with custom quotes and good pricing. They had a responsive sales team and a knowledgeable engineering team. Below are all the items/tasks they did for us as part of their services:

  • Submitted the interconnect paperwork to our utility company for us
  • Provided the plan set that we needed to submit for permitting
  • Helped answer any questions we had with the permitting process.
  • Gave us a custom installation guide and instructions

    There were a few things missing from their instructions that we had to learn along the way, but we’ll include those details in our next article. Hopefully, you don’t have any surprises!

Solar Panels Cost Payback Period

solar panels cost worksheet

Solar Panels typically have a warranty for around 20 years and the panels last for 20-30 years. If your payback period is 10 years or less then installing Solar Panels is a great idea. At 10-15 years, it is still pretty good, but you may want to wait for the panels to get even cheaper, installation prices to come down, or additional tax credits and rebates to become available.

If your payback period is 15-20 years, solar panels might not make sense. From a financial standpoint, you’d be buying panels mostly just because you think they are cool. If you are buying them to help the planet, then there may be more effective options that you could be putting money towards. Check out our Sustainable Living and DIY project archives.

After running the worksheet numbers, we found out it was worth it for us to invest in solar panels. We hope it is for you too!

solar panels cost

More Sustainable Home Improvements

Alright! Assuming you’ve made it through our worksheet and you want to proceed with installing solar panels, you’ll want to get with a solar panel company. We can help connect you, so shoot Amanda an email or reach out to them directly by signing up here. Then you can get your panels ordered and the plans/permit paperwork submitted to your city. Also, go to our next post for Going Solar Series, which will have more information on that entire process.

Check out some of our other DIY projects and Sustainable Home Improvement articles:

Let us know if you’ve decided to Go Solar or if you have questions. We’re happy to help in any way, especially if you have questions on the solar panels cost estimation worksheet!

Disclaimer: This post includes affiliate links, and I will earn a commission if you purchase through these links. Please note that I’ve linked to these products purely because I recommend them and they are from companies I trust. There is no additional cost to you.

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