Homeowners switch to solar for many reasons. Some feel a responsibility to reduce their carbon footprint, while others wish to increase their home value. The majority, however, hope to save some money.
In the last decade, solar deployments have grown at a rate of 28%. Simultaneously, investing in solar energy is now more affordable than ever. But do you actually save money going solar? Let’s take a look!
Understanding the upfront costs of installing solar panels
To get a clear picture of how cost-effective solar panels are, it’s important to get acquainted with the upfront costs.
If you are based in a hot state where air conditioning is a must, you’ll likely need more solar panels. Although you might think this would cost you more, it’s actually the opposite. Warmer states usually have lower $/W pricing. That’s why in places like California and Arizona, you might end up paying less for larger systems than for just a few panels in Alabama.
How much exactly? For an average 6.5 kW solar system, you should expect to spend between $16,000 and $20,000.
When you think about going solar, the panels themselves are probably what comes to mind first. However, it’s essential to recognize that they are only one component of the overall costs. Other significant expenses include labor and permits. In some cases, you might end up paying thousands of dollars just for the fees!
Although solar panels have become more affordable over the last couple of years, they still require a significant upfront investment. The good news is that many states and cities offer incentives for going solar, which can reduce some of the financial burden.
The bad news? On July 4, 2025, President Trump signed the sweeping reconciliation bill. This means that starting from 2026, it will no longer be possible to claim the solar tax credit. Consequently, getting solar panels will be around 30% more expensive.
Is going solar worth it? Check your monthly electricity bills
When switching to solar, you probably expect to get all your power from your panels, but this may not always be possible. In some cases, you may still be required to pay for some electricity usage. Likewise, some utilities charge just for staying connected to their grid.
Overall, it’s more beneficial for homeowners with high electricity bills to switch to solar. The more you spend on electricity, the more you can save!
To get a better understanding of how much solar panels could save you, take a look at your electricity bills. If you currently pay an average of $125 per month, you could save around $1,000–$1,500 per year (given that you can cover your entire bill and take advantage of net metering).
Analyze your payback period
Once you have an idea of your yearly savings, divide the cost of the solar system (minus any tax credits or incentives) by your annual savings.
Let’s say you’ve invested in a $15,000 system (this is quite common in the US). Your solar panels will pay for themselves in 10 years!
So, do you actually save money going solar? Theoretically, yes, but only if you approach solar as an investment in the medium to long-term future. Keep in mind that most residential solar panels come with a 25-year warranty, but some can have an even longer lifespan.
It’s smarter to switch to solar if:
- You are based in an area with high electricity rates.
- Your state or city provides incentives and rebates that can help cover some of the expenses.
- Your property is in a place where utilities offer net metering.
- Your home has a south-facing roof and ample unshaded space.
- Your household has a high energy consumption.
Keep in mind that not all roofs are suited for solar. In some cases, you might be required to get a roof replacement (especially if your roof is over 15 years old). It’s also challenging (and generally not worth it) to install solar panels on roofs that are less than 250 square feet.
However, don’t let that discourage you – there are several alternatives to rooftop panels!
Final thoughts: Do you actually save money going solar?
Every year, more and more American households are switching to solar. However, the high upfront costs leave many homeowners hesitant to make the investment.
Can going solar save you money? Absolutely, but it’s not a guarantee. That’s why it’s important to do your homework on your state’s local policies and think about your household’s energy consumption.
Not sure if solar is the right solution for you? Our team at American Home Contractors will happily answer your questions and guide you through your solar journey! Contact our team today to discuss the best options for your household.
Fact Checked by Lita Legzdina on 07/10/2025