Are solar panels worth it in 2024? Usually, but not always

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is solar worth it

Solar panels are one of the smartest investments a homeowner can make, especially as the cost of electricity is rising across the country.

While average electricity rates increase about 2.5% every year, the benefit of going solar is that you don't have to worry about climbing energy costs anymore. Investing in a solar energy system is a practical financial decision because you can save tens of thousands of dollars on your electric bill over two decades.

Understanding how much money you'll save by going solar is one of the most important factors when deciding whether it makes sense for you.

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Key takeaways

  • The amount you'll save by going solar varies based on how much you pay for electricity, installation costs, your energy usage, and the rebates and incentives are available where you live.

  • Most property owners will see a return on their investment in six to ten years.

  • You can maximize your solar savings by shopping around and obtaining multiple quotes from different installers. The more quotes you get, the more likely it is you’ll find additional savings.

One of the primary reasons it makes sense to go solar is that electricity costs typically increase yearly, but your solar costs won’t. Without solar panels, the average homeowner will pay more than $60,000 in electricity bills over the next 25 years, according to EnergySage data. If you install solar panels now at an average cost of $20,000, you can save more than $40,000 over the next two and a half decades.

The bottom line is that solar panels are almost always worth it if you own your home and have an electric bill. How much money you can save varies for every property.

Solar is a long-term investment that requires some patience before you see a return. Before you commit, it’s important to understand your estimated savings. The average homeowner will save between $21,000 and $92,000 over 25 years, but it varies based on the following factors:

1. Your solar installation cost

As solar deployment continues to grow, the cost of installing solar panels will likely decrease further, but right now, solar is expensive. Some of the most significant factors that will impact your solar cost and savings include:

2. How much you pay for electricity now

It's important to know how much electricity you use and how much you pay for it. When you go solar, you reduce or eliminate your monthly electricity bill, so your current electricity costs impact how much you can save.

You pay your local utility company for every kilowatt-hour (kWh) of energy consumption, and your rate varies significantly depending on where you live. In some parts of the country like the South, your provider could charge less than 14 cents per kWh. In the Northeast, you could pay as much as 27 cents or more.

3. The rebates and incentives available to you

Solar rebates and incentives, including the federal investment tax credit (ITC), net metering, and state and local incentives like SRECs and PBIs, significantly reduce your total solar cost. They can even put money back into your pocket each month.

Check out the Database of State Incentives for Renewables and Efficiency (DSIRE®) to see which incentives are available near you.

4. If you're planning on selling your home soon

It takes an average of eight years to break even on your solar costs. If you think you might move before you reach your payback period, purchasing a solar system may not be worth it. Instead, consider community solar, which doesn't lock you into a long-term investment.

However, adding a solar system can still benefit you financially if you move. According to a few studies, solar panels increase your home's value by about 4%. Just be wary of leasing solar panels if you think you might move. Leases are typically long-term and can be difficult to cancel, making it more challenging to sell your home.

5. How you pay for your solar power system

There are different financing options for going solar. Whether you choose to purchase your solar panel system upfront, take out a solar loan, or use a solar lease or PPA will impact your savings.

The average EnergySage shopper breaks even on solar in eight years. You can get a more specific estimate with this simple calculation:


Let’s use the following example:

Your new solar system costs $15,000 and you received a tax credit of $4,500 in addition to a $1,500 rebate from your state. In this case, your total solar system cost is $15,000 and your upfront incentives ($4,500 + $1,500) total $6,000. This means that your combined cost is $9,000.

Your annual savings is your monthly power bill multiplied by 12 months, so if your monthly solar energy bill is $100 a month, you'll save $1,200 per year on your electric bill.

As we said before, some states and utilities also offer incentives that pay you extra for the solar energy your panels generate. It's not uncommon for those incentives to put an additional $600 into out pocket each year, meaning total annual savings of $1,800.

($15,000 - $6,000) / ($1,200 + $600) = 5 year payback period 

By dividing your combined cost of $9,000 and your annual benefit of $1,800, you get an estimate of a five-year payback period.

We have a few tips to help you make the most of your solar system:

1. Get multiple quotes

As with any big-ticket purchase, shopping for solar requires a lot of research and consideration, including a thorough review of installation companies in your area. By comparing multiple solar quotes, you can get a high-quality installation at a competitive price.

Data from the EnergySage Marketplace shows that when you receive multiple solar quotes through EnergySage, you save 15-25% on your solar installation. Comparing your solar options helps you avoid paying inflated prices.

2. Check out smaller installers

Some homeowners lean towards working with bigger installers because they’re well-known or have brand name recognition. However, smaller installers often provide lower prices than larger installers.

According to a report from the U.S. Department of Energy's National Renewable Energy Laboratory, quotes from large installers were typically 10% higher than those from mid and small-sized installers. It’s worth working with a smaller company as long as you do your research.

3. Compare equipment options

You can also compare different equipment options when you receive multiple quotes. Selecting high-quality equipment is important, but investing in the very best doesn't always result in the highest savings.

The only way to find the most cost-effective system for your specific property is to evaluate multiple quotes with varying equipment and financing offers. You can use the EnergySage Buyer's Guide to compare the equipment options offered by our installers.

Find out what solar panels cost in your area in 2024
Please enter a five-digit zip code.
  • 100% free to use, 100% online
  • Access the lowest prices from installers near you
  • Unbiased Energy Advisors ready to help
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