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Are solar panels worth it in 2023?

For most people, solar panels are worth the investment, but in some rare circumstances they may not be right for you. However, even renters may have solar options if their property owners or managers are open to it – and if not, they might be able to sign up for community solar projects near them. In this article, we’ll help you answer the question: “Is it worth it for me to buy solar panels?”

Key takeaways

  1. The amount you’ll save by going solar will vary based on factors including how much you pay for electricity, how much your installation costs, your energy usage, and what rebates and incentives are available.

  2. Virtually everyone has solar energy options, regardless of if you’re a homeowner, renter, or leasing their business property.

  3. Most property owners will see a return on investment in less than 10 years.

  4. You can maximize your solar savings by shopping around and learning more about your options.

  5. Visit the EnergySage Marketplace today to see how much you can save by going solar.

What’s in this article?

When solar panels are worth it, and when they aren’t

Solar panels are usually most worth it if:

  1. You own your property: renters or business owners who do not own their property should speak to the property owner prior to making any plans to install a solar system.

  2. You pay a high price for electricity: the higher your electric rate, the faster your solar panel system will save you money. These days, solar shoppers “break even” on their solar investment in seven to eight years.

  3. You get a good price for solar: in 2023, an average 10 kilowatt (kW) solar panel system costs about $20,020 on the EnergySage Marketplace. Prices on EnergySage are usually lower than market prices, so you know you’re getting a good deal.

If you fit these criteria, solar panels are probably worth it! What’s more, even homes and businesses that don’t meet these points perfectly can benefit from solar with the right installation (or community solar subscription).

Home solar may not be right for you if:

  1. You rent your property: instead, try community solar, which doesn’t require you to install solar panels on your property.

  2. You pay a low price for electricity: the primary way solar saves you money is by offsetting electricity costs with free electricity generated from the sun. If you’re already paying a low rate for electricity, you may not “break even” on your solar investment for a very long time.

  3. You’re paying too much upfront for solar: just like already having a low electricity rate makes solar less worth the investment, so does higher upfront costs. Be wary of solar installers charging high prices – the best way to make sure you’re getting a good deal is to compare solar quotes (for free!) on the EnergySage Marketplace.

The key takeaway is this: if you own your home and have an electric bill, solar panels are probably worth it! Just how much money you can save varies for every property, but with the cost of solar panels continuing to come down, you’ll be saving money in the long run.

How much will you save with solar? Estimating your costs and savings

The first question you’re probably wondering if you’re considering going solar is: how much money will you save? And for good reason! After all, solar is an investment, so you’ll want to understand your payback period before making any decisions. The average home can save between $10,000 and $30,000 over the lifetime of your solar panel system. Most property owners will break even on their solar investment in eight to nine years – but as you start exploring your solar options, there are a few key questions you should ask to approximate your personal return on investment:

How much do you pay for electricity?

Your current energy bill is the largest factor in determining how much you’ll save by installing solar. The first step in identifying your savings potential with solar is knowing how much electricity you use, and the rate you are paying for it. 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 under 12 cents per kWh; in others, like the Northeast, you could pay 20 cents or more. When you go solar, you reduce or eliminate your monthly electricity bill, so your utility bills and the local cost of electricity substantially impact your savings.

If you’re not sure where to start in determining your solar savings, try using our Solar Calculator. Our calculator incorporates local electricity rate data to provide you with a customized estimate of what you can expect to save, and just how quickly your investment will pay off.

How much will your solar installation cost?

There’s a lot that determines the overall cost of your solar panel system, so you’ll want to do a bit of research first. As solar deployment continues to grow, the cost of solar will likely decrease further, but some of the biggest factors that will impact your array’s cost – and ultimately how much you save – include:

  1. System size: how much electricity you consume correlates with how much energy production you need , and therefore the size your solar array needs to be – and generally, a bigger system with more panels will have a higher average cost than a system with fewer panels.

  2. Equipment: while cheaper solar panels may feel like the easiest way to save on your solar system, oftentimes your long-term savings will be greater if you invest in high-quality equipment.

  3. Roof characteristics: if you have a south-facing single roof plane that slopes at a 30-degree angle, it’s ideal for solar! This doesn’t mean solar isn’t worth it if you don’t have a perfect solar roof, but your installation may be a bit more complex (and therefore cost more) and your sun exposure might be less direct (meaning potentially less savings).

  4. Labor: solar companies can vary substantially in price, even if they’re installing the same equipment. Different solar installation companies vary in their labor warranties and skill levels, which is why it’s important to find pre-vetted, high-quality installers, like you can on the EnergySage Marketplace.

  5. Location: solar prices differ from state-to-state – generally, you’ll see a lower price per Watt ($/W) in warm states and a higher $/W in cold states, but you may need a larger system size in a warm state. Other important factors that impact your solar savings and vary by location are rebates and incentives, which we’ll cover next.

What rebates and incentives are available?

Rebates and incentives significantly reduce your total cost of solar and can actually put money into your pocket each month, translating to substantial long-term savings. The best solar incentive is the investment tax credit (ITC), which allows you to deduct 30 percent of your solar installation cost from your federal income taxes – there’s no cap on its value, but your individual tax liability will determine whether you’re able to take full advantage of this incentive.

Depending on where you live, you may also qualify for other various incentives that help you save more: in addition to the federal tax credit, local incentives like state tax credits, cash rebates, solar renewable energy certificates (SRECs), and performance-based incentives (PBIs) can increase your solar savings up to 50 percent! You may also be eligible for exemptions on the sales tax of your solar photovoltaic (PV) system and on the added value to your property taxes.

Net metering is one last policy to keep in mind, and it’s one of the most important ones in the residential solar industry. Essentially, it allows you to store any excess energy produced by your solar system in the electrical grid for use at a later time. With net metering, you won’t receive a monthly payment: instead, you will receive utility bill credits for the electricity produced by your solar panels. It’s important to note that not all states offer net metering, so you’ll want to check out the Database of State Incentives for Renewables and Efficiency (DSIRE®), which tracks net metering and other policies. California, one of the most popular states for solar, recently changed their policy on net metering, which you can learn more about on EnergySage.

How will you pay for your solar power system?

There are different financing options when it comes to going solar and whether you choose to buy or lease your solar panels will have a major impact on your savings. If you have enough to make a cash purchase, you’ll save more than with any other option – but even with a zero-down solar loan, your savings could still be in the tens of thousands. While solar leases and power purchase agreements (PPAs) require no money down and promise a maintenance-free option, they come with a trade-off: your total savings will typically be just 10 to 30 percent of your utility electricity bill.

How does this play out in the real world? Check out the EnergySage Solar Calculator to see how your long-term savings will differ depending on whether you choose a cash purchase, a solar loan, or a solar lease – or community solar, if that’s something you’re considering!

Are you planning on selling your property in the next ten years?

If you plan to move in the near future, purchasing a solar system may not be worth the investment. Instead, consider options like community solar that don’t lock you into panels on your roof for decades. It’s also important to consider that adding a solar system can significantly increase your home’s value – so solar can still be worth it. Leasing your panels may also be an option, but keep in mind that leases are typically long-term and can be difficult to cancel, which can make it more difficult to sell your home.

Estimating your solar payback period

The initial costs of rooftop solar panels are often the biggest consideration when going solar, leading many homeowners to question whether solar power is worth it. While most homeowners can expect their investment to pay off in under ten years, you can get a more specific estimate with a few calculations. If you want to calculate a rough estimate for how long it will take for solar panels to pay for themselves, you can use this formula:

(gross solar system cost – upfront incentives) / (annual savings + additional state and/or utility incentives) = estimated payoff period

Calculation for solar panel payback period

Here’s an example:

Your new solar PV 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 gross solar system cost is $15,000, with the upfront incentives totaling $6,000. This means that your combined cost is $9,000.

Now, say that your energy bill is $100 every month, and your solar system produces enough energy to cover your energy needs. Your annual savings is your monthly power bill multiplied by 12 months, meaning in the first year of having solar, you’ll save $1,200 on your electricity bills. Some states and utilities also provide incentives that pay you extra for the solar energy your panels generate, like SRECs or the SMART program in Massachusetts: it’s not uncommon for those incentives to put an additional $600 a year into your pocket beyond your electricity savings, meaning an annual benefit of $1,800.

By dividing your combined cost of $9,600 and your annual benefit of $1,800, you can get a more realistic estimate of your payback period. In this example, that’s right around five years!

How to maximize your solar savings

Most likely, you’ll save money by going solar – but how can you maximize those savings? We have a few tips to help you get the most out 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 companies in your area. By comparing multiple solar quotes, you will get increased competition for your business and transparency, which will ultimately mean a higher quality installation at the right price.

Data from the EnergySage Marketplace shows that when you receive multiple solar quotes through EnergySage, you’ll save 15 to 25 percent on the cost of solar compared to going solar outside of EnergySage. A 2017 report by the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) backs up our findings: when consumers compare as many solar options as possible, they typically avoid paying inflated prices.

2. Check out smaller installers

These inflated solar prices often come from some of the larger solar installers in the industry – so it’s important to consider all of their solar options, not just the installers large enough to pay for the most advertising. The same 2017 NREL report referenced above found that quotes from large installers were typically 10 percent higher than those from mid- and small-sized installers. If you receive quotes from some of the bigger companies in the industry, just be sure to compare them with quotes from local installers so you don’t overpay for solar.

3. Compare equipment options

Getting multiple solar quotes will also allow you to compare the equipment offered by each of those installers. There are many variables to consider when seeking out the best solar equipment, including solar panels and inverters. While certain equipment will have higher efficiency ratings than others, investing in top-of-the-line solar equipment doesn’t always result in higher savings. The only way to find the best system for your property is to evaluate quotes with varying equipment and financing offers.

To compare the equipment options offered by EnergySage installers, make sure to visit our Buyer’s Guide.

Frequently asked questions

There’s a lot more to know about solar than just “are solar panels worth it.” Here are a few other questions people commonly want answers to about the worthiness of solar panels:

How much do solar panels cost?

As of 2023, solar panels cost about $20,020 for a 10 kW system. That includes the generous 30% federal solar tax credit, but not additional local rebates and incentives you may be able to take advantage of.

How long does it take for solar panels to pay for themselves?

Most property owners who get solar quotes on the EnergySage Marketplace will break even on their solar investment in eight to nine years. After that, you’ll be generating free electricity and racking up the savings for the whole lifespan of your system!

Should you wait to buy solar panels?

Even though the cost of solar panels continues to fall, it’s usually not worth it to wait. The longer you wait to go solar, the more savings (opportunity cost) you’re missing out on. In the long run, it’s worth it to go solar as soon as possible for most shoppers instead of hoping for a much lower price down the road.

Why should you not get solar panels?

There are some situations, such as already low power demands or a home that has too much shade, where a solar system isn’t ideal. In some cases, a home may require extensive renovations to support the weight and needs of a solar energy system.

Are solar panels worth it in your area?

Solar is worth it in most areas! However, factors such as available incentives, the climate, home size, how much shade there is, and the amount of sun that a region gets all affect how quickly you’ll break even on your solar investment. Take a closer look at your options in our article on the benefits of solar.

How to decide if solar panels are worth it

If you think you’re paying too much for electricity, chances are, solar is worth it for you – it’s a great way to protect yourself from rising electricity prices while lowering your carbon footprint by generating clean energy right at home! As a first step, try out our Solar Calculator tool to see just how much you could save with a solar panel installation.

If you’ve decided that solar is worth it, check out the EnergySage Marketplace to maximize your savings! You’ll receive up to seven quotes from our network of pre-vetted solar installers, which will allow you to compare installers and equipment. Still not convinced or unable to install solar on your property? You can also take advantage of solar savings by joining a community solar farm on the EnergySage Community Solar Marketplace.

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