The average cost of installing an average-size home solar system in 2024 is about $30,000 before federal tax credits and incentives

. The federal solar tax credit may reduce the net cost to about $21,000; local incentives can further lower the cost.

You can determine whether solar panels are worth it for your home by considering various factors, such as local incentives and policies your electric bill, and how you finance the system.

» MORE: See our picks for the year’s best solar companies

The cost of installing residential solar systems has dropped by nearly $15,000 over the past two decades, according to the Solar Energy Industries Association

. That change has made solar more accessible for many more homeowners.

However, costs vary among states. Here are the typical costs for installing residential solar panels by state according to EnergySage data.

1. Panel choice

Several panel characteristics affect panel prices:

• Brand. Solar panel brands vary in quality, warranties and pricing structures, making some brands more expensive than others.

• Output rating. Panels that produce more watts of power in ideal conditions tend to cost more per panel

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• Efficiency. The higher the efficiency, the more powerful the solar panel is for its size.

To understand how output rating and efficiency work together, imagine two 400-watt panels, one that has an efficiency rating of 18% and another that has an efficiency rating of 20%. If working in their ideal conditions, both will produce 400 watts of energy, but the one with the higher efficiency rating is physically smaller. Because space can be tight when loading solar panels on your roof, higher efficiency panels tend to be more expensive.

2. System size

The size of your solar energy system refers to how much solar energy it produces, usually measured in kilowatts. The more kilowatts your system produces, the more it may cost upfront because it either requires more panels, uses more efficient (and more expensive) panels or both. A higher kW system could save you more money over time, though, by producing more energy

.

Your system’s design can also affect the size you need. The shape of your roof, as well as how much direct sun it gets and for how long all factor into how an installer designs your system to maximize solar energy production. If your house requires a more complex or larger system to produce the energy you want, this can affect the total cost.

3. Additional hardware

Installing a system that can store unused energy can increase the cost as well. A good solar battery can cost over $10,000 before federal tax incentives

. For example, for a quote that we requested from Tesla, one Tesla Powerwall 3 with installation can run over $16,500.

4. Purchasing method

Paying for solar panels with cash is cheaper than financing the purchase. According to EnergySage, customers who take out a solar loan could pay as much as 47% more than the cash value of a solar system through the life of a loan. How much more you’d pay depends on your loan terms.

5. The installer

Each solar installer has its own way of pricing equipment and installations. Talk with several installers before deciding on which one to use. A more expensive installation doesn’t necessarily mean better quality, though, so be sure to research the companies before agreeing to anything.

Here are four important things to consider if you’re trying to decide whether solar panels are worth it.

1. Whether you have net metering

To encourage people to install solar panels, many states have adopted net metering, which is a billing method that credits you for the excess solar electricity that you export to the power grid. Essentially, these policies pay you for not using all of the solar energy your system produces

. Although net metering is available in many areas, not all states or utilities offer it.

However, some states, including California and Arizona, are transitioning from net metering to net billing, which lowers the price utility companies pay customers for their excess solar energy. If your utility doesn’t offer these incentives or pays a low rate for electricity sold back to the grid, solar panels likely won’t bring your electricity bill to zero, unless you use a solar battery to store power to use later on.

2. Whether you qualify for tax incentives

The biggest solar incentive for homeowners is the federal solar tax credit, also known as the residential clean energy credit

, which provides a credit of up to 30% of the cost of your solar power system

.

Depending on your state, you may also have access to rebates, sales and property tax exemptions, waived fees and expedited permits. You can find details on incentives for your state at the Database of State Incentives for Renewables & Efficiency (DSIRE).

3. The size of your current electric bill

Solar panels can generate enough power to significantly lower your monthly electric bill — and if you’re very lucky, even eliminate it. The higher your bill and the more of your electricity use you can offset with your system, the more likely you are to benefit from solar.

You might save more with solar if electricity prices are high where you live. A solar system may provide a good hedge against rising electricity prices, which rose an average of 6.2% from 2022 to 2023, according to the U.S. Energy Information Administration (EIA).

4. Your roof

To help you get the most out of your system, solar installers will inspect your roof, compare that to your electric bills and discuss your future electrification plans. They will also help you evaluate your home’s orientation toward the sun, the amount of sun it gets, and the roof type and condition.

5. The length of your payback period

How long it will take for your solar savings to equal your initial investment varies and depends on several factors, including how much you paid for your system and what tax incentives are available to you. The average payback period ranges from 3.7 to 17.9 years, depending on the homeowner’s state

.

NerdWallet writers Lauren Schwahn and Tommy Tindall contributed reporting to this article.