On average, if the buyer was looking for a residential solar system installation of 6 to 8 kW, it would cost him somewhere between $15,000 and $25,000. Of these costs, the costs of equipment and the costs of labor by the solar installers are just a few that need to be considered. What is more is the fact that these installation expenses can also vary based on which region of the US you live in and the size of the solar system you want installed. On the bright side, the government encourages you to use solar power and will provide you with tax credits and rebates that bring down the net cost.
What Is the Average Cost of Residential Solar Panels?
Here you see a cost of solar table showing how systems with different sizes or outputs cost before and after the Federal Tax Credit has been applied.
| System Size (kW) | Price Range (Before Incentives) | Cost Per-Watt | Net Cost (After 30% Federal Tax Credit) |
| 6 kW | $15,000–$18,000 | $2.50–$3.00 | $10,500–$12,600 |
| 7 kW | $17,500–$21,000 | $2.50–$3.00 | $12,250–$14,700 |
| 8 kW | $20,000–$25,000 | $2.50–$3.00 | $14,000–$17,500 |
Detailed Breakdown of Residential Solar Panels Costs
Solar panel installation cost and Solar equipment costs
The budget for your residential installation of solar panels should be between $0.80 and $1.40 per watt, based on what type of panel you’re taking. Whether you are buying Monocrystalline panels or Polycrystalline panels decides the final price. The first will cost more while giving you better efficiency, while the latter will take more space but at a lower cost. You can buy inverters between $1000 and $3000 for residential systems. Go for string inverters if you’re thinking of budgeting, or you can go for a microinverter if you’re looking for efficiency. Finally, your budget for mounting racks should be around $ 0.07- 0.20 per watt. The cost will differ based on the roof type you have.
Solar System Installation Costs and Soft Costs
Your solar installation costs include installation labor costs for solar panel installation, wiring, and grid connection, plus soft costs like permitting costs, inspections, marketing, and overhead. The Installation Labor costs fall between $825–$1,750 for a 6–8 kW system based on regional labor variations. Secondly, Labor costs range between $0.16 and $0.50 per watt, depending on the roof complexity. Finally, Soft costs range between $6,000–$13,750 for a 6–8 kW system. This includes permitting, inspections, and customer acquisition.
Solar Batteries and Backup Power Systems
You may buy an additional battery or backup system to provide power during outages, higher electricity usage, or nighttime energy consumption. Your expense will be around $18,500 for a 13.5 kWh system, depending on the brand and capacity. Finally, your battery Installation budget should be around $2,000 to $3,500. The higher the complexity of the roof, the higher the costs will be.
Other Related Factors
Includes basic monitoring or advanced monitoring systems and electrical panel upgrades for older homes for better compatibility and system performance. The cost of monitoring systems ranges between $200–$500. Electrical panel upgrades cost between $1,000–$2,000
Hidden Costs or Extra Costs to Consider
- Older or damaged roofs may need repairs before installations
- If the existing panel is subpar, the home might need to upgrade the electrical panel to handle the excess power output of the solar system or to meet code requirements.
- Adding the solar panels can increase insurance premiums to cover the system’s value and potential.
- Solar panels need regular maintenance and cleaning for higher efficiency rates.
- If the installation is too complex for the existing structure, then it can require extra wiring and conduit.
- The Homeowners’ associations in your area can impose additional fees based on the area you live in
Key Factors That Affect Costs
Solar System size and energy needs
The size and output of the solar systems directly impact the cost. Larger systems need more panels and equipment, causing more expenses.
Solar panel type and efficiency
Microcrystalline panels cost more but offer higher efficiency, whereas polycrystalline panels cost less but require more space.
Installation complexity and labor costs
Installation cost can vary based on the roof type, roof condition, roof characteristics, labor rates, steepness of the roof, etc.
Location and regional factors
Cost can vary from state to state based on labor rates, permitting fees, and local incentives.
Inverter Type and Quality
String inverters are cheaper, whereas microinverters are more efficient but pricier.
Upfront Cost vs. Long-Term Savings
Upfront investments for a 6- 8 kW residential solar panel system are between $15000-$25000 before the incentives or federal tax credits. Though substantial, the long-term solar savings more than make up for its initial investments. Energy savings through the solar panel system can potentially save $1,500-$2,000 in energy costs annually on the monthly payments of electricity bills. Hence, over 25-30 years, this annual electricity savings would accumulate between $37,500 and $60,000, offsetting the upfront costs.
Solar Incentives and Tax Credits for Homeowners
Federal Tax Credit
The federal investment tax credit allows a tax credit of 30% of the system cost on residential solar installations, available through 2032. EnergySage – Federal Solar Tax Credit
State and Local Incentives
State or local governments offer incentives, such as tax credits, additional rebates, etc, to encourage solar adoption. These vary by region.:
- New York State Tax Credit: offers state credit of 25% of solar system costs up to $5,0000. Tesla – Solar Panel Cost Breakdown
Solar Payback Period and ROI
Depending on the electricity rates and incentives, the payback period for a 6- 8 kW Solar panel system would be 6-12 years. The return on investment ranges between 10%-20% over 25 years based on savings and tax credit.
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