What is the average payback period for residential solar panels in 2023?
The solar payback period refers to the amount of time it takes for the electric bill savings from your solar panels to equal the amount you paid for the system. The average payback period for a residential solar system in 2023 is about seven years.
A payback period of seven years equates to a return on investment of approximately 14%. However, this varies greatly by state and even by regions within states.
Once you have generated an accurate payback period, you can compare this to the returns you see on other types of investments:
- Long-term government bonds currently have returns between 0.1% and 2%
- Zillow estimates that home prices increase between 3% and 5% annually
- The stock market has risen around 9.5% historically
As you can see, residential solar panels stack up favorably against all of these other investment options - and this is even before we consider the increase in a home’s value caused by the solar panel installation.
How much do residential solar panels cost for an average 2,000 square foot home?
Solar panel cost is often measured as the “cost per watt” of solar. This makes it easy to compare the relative value of solar systems of different sizes in terms of the watts of power they can produce.
Our data shows that the average cost of a residential solar system in 2023 is between $2.85 and $3.00 per watt, before the federal tax credit. At that price, a typical 7 kilowatt (kW) home solar system would cost $19,950 and $21,000. The cost would fall to $13,965 to $14,700 after claiming the 30% solar tax credit.
The cost of residential solar panels has dropped dramatically over time. In fact, it has fallen over 70% in the past decade.
How much will solar panels cost for your specific home?
To calculate solar panel cost for your home, it is first necessary to calculate how many solar panels are needed to power your home. The number of solar panels you need depends on how much electricity your home uses.
Our calculator can easily determine how many solar panels you need just by using the cost of your most recent electric bill.
Solar system type can impact solar home cost
There are four main types of solar installations that can turn your house into a solar home:
- Grid-tied solar system: Panels are either on your roof or ground-mounted and connected to the utility. Grid-tied systems are best for cost and long-term return on investment.
- Hybrid solar system: Connected to the grid and paired with battery storage. Battery storage increases installation costs but may be worth it if your utility doesn’t have net metering or you experience frequent blackouts.
- Off-grid solar system: Relying completely on your own energy generation with no connection to the utility. These systems can be expensive because they need to be large enough to meet all of a home’s energy needs 24/7.
- Passive solar homes: Homes that are built to work with the surrounding climate patterns to create completely renewable, fossil fuel-free energy.
Generally, a grid-tied energy system is the most practical option in terms of cost and long-term return on investment. But each option has its own benefit, and the right one for you depends on your lifestyle and what you want out of solar.
How long do solar panels last?
Most standard solar panel warranties ensure that your solar panels will last at least 25 years. As solar panels age, their power output decreases. It’s normal for a warranty to guarantee that they will produce over 80% power output at the end of 25 years.
However, this is just a minimum lifetime. It’s possible for solar panels to last well over 30 years.
What maintenance is required for solar panels?
There is very little maintenance required for solar panels. It is recommended that you clean your solar panels once or twice a year to avoid dirt and buildup. However, this might not be necessary if your area gets regular rainfall or if your roof is steep, which allows debris to easily fall off.
It is worth checking to see that all junction boxes are sealed and watertight once every five years.
Because there is almost no maintenance required, you don’t need to worry about additional maintenance costs.
Is my roof suitable for installing solar panels?
There are a number of factors that determine how suitable your roof is for solar panels, including:
- The size of your roof
- The direction your roof faces
- The pitch of your roof
- How much of your roof is shaded
When trying to determine if solar panels are worth it for you, consider the size, direction, pitch, and the amount of shading your roof has. Large, unshaded, southern-facing roofs are the most ideal for solar production.
Does my roof have to face due south for solar panels to produce enough electricity?
While solar panels facing due south do produce the most overall electricity, it’s perfectly fine to have panels facing southwest and southeast.
As solar prices continue to fall, panels are being put on west-facing roof spaces even though they produce about 15% less electricity.
This is especially common for those with time-of-use electricity billing, who wish to move their solar generation to later in the afternoon (when their power company charges peak rates) in order to save money on their electricity bills.
How many solar panels are needed to power a house?
The number of solar panels you will need to power your house will depend on two factors:
- The amount of electricity you use
- Your location, as where you live determines how much electricity your solar panels can produce
Do I need to buy a solar battery if I install solar energy panels on my house?
In short, no.
In most areas, it is not necessary to buy a solar battery when you install solar panels on your roof. This is because most utilities offer some form of net metering, which effectively allows homeowners to sell the excess energy their solar panels produce to the power company, instead of physically storing it in a battery.
Even though battery storage is getting cheaper, it still has a relatively long payback period. For example, the Tesla Powerwall only costs around $11,500, including installation, but it will still take almost 10 years for it to pay for itself.
Another important factor when deciding are solar panels worth it is how high your electricity rates are and whether or not your utility offers retail net metering. Places with high electric rates and full retail net metering are often some of the best places to install solar.
With that said, it may be worth considering installing solar with a battery system if you live in an area that does not offer net metering.
Do solar panels increase the value of your home?
A 2015 study showed that a typical solar panel system added a $15,000 premium to the selling price of a home. They did this by studying comparative sales of similar houses with and without solar panels.
Separately, Zillow released a study in 2019 which concluded that solar panels, on average, added 4.1% to the value of a home, effectively making installing solar panels a worthwhile investment, even if you plan on selling your home in the future.
So, are solar panels worth it for your home?
As you can see, there are many factors that go into determining if solar panels are worth it for your home. The return on a solar investment depends on where you live, your roof’s features, your electric rates, and who installs your panels.
The easiest way to answer the question “are solar panels worth it?” is to use our solar calculator to get an accurate cost and savings estimate tailored to your home and energy usage.
Then you can be on your way to powering your home with clean energy - all while cutting your electric bill.