What does it cost to install solar panels on an average 2,000-square-foot home today?

In 2023, the average cost of a residential solar panel installation is between $18,000 and $20,000 before you apply for tax credits or other incentives that may be available where you live. This equates to between $2.75 and $3.35 per watt of installed solar energy, depending on your location and the brand of solar equipment you use.

Once the federal solar tax credit is taken into account, the total cost drops to an average of $12,600 to $14,000 - that's almost 80 percent less than the cost of solar energy 10 years ago! Our solar panel cost and savings calculator will show you the local incentives you may be eligible for to help reduce upfront costs.

Factors affecting the cost to install solar panels

1. Solar system size

The size of your solar panel system will play a significant role in the cost of installation. The size of a solar system is measured in kilowatts (kW), which tells you the maximum amount of electricity your solar panels can provide under perfect conditions. On the other hand, kilowatt hours (kWh) represent how much electricity your panels produce and how much electricity your home uses.

The size of the solar system you need will depend on how many kWh of electricity your home uses and how much you want to reduce your electric bill. The higher your energy use, the larger the system you'll need, which means your solar installation will be more expensive.

2. Your location

The location of your home affects solar pricing in a few ways:

How sunny your area is: The less sunlight your home gets, the more panels you need to cover your energy needs, and the higher the price you’ll have to pay

State and local incentives: The 30% federal solar tax credit, sometimes called the Investment Tax Credit (ITC), greatly reduces solar installation prices, but there are also a variety of state and local solar rebates and tax incentives that can help lower costs. You can read more about what incentives you qualify for in our State Solar Incentive Guide

Market conditions: Local competition between installers, job volumes, cost of business overhead, labor costs, and different state and local policies can dictate solar panel costs.

3. type of equipment and manufacturer.

Like most things, this brand uses solar energy to determine the price. Certain solar manufacturers have more expensive solar panels than others, but that doesn't always mean they perform much better.

The brand of solar panels is not the only factor that affects the price. Other equipment used in a residential solar system, such as the type of inverter you use, can also affect the cost of installation. For example, microinverters cost more than string inverters, but they can result in higher power production.