Solar Panel Cost Breakdown

What Is the Real Cost of Solar Panels? 

Installing solar panels can be one of the most impactful improvements you can make - allowing you to take control of electricity bills, protect your home from outages and increase the value of your property while producing energy directly on the roof. 

How much does it cost to install and manage solar panels? 

Average Costs of Solar Panels  

According to studies by the U.S. Department of Energy, the all-in cost of a home solar panel system is between $2.74 to $3.30 per watt.^1,2,12 This figure includes the solar panels, the installation, and other expenses. Using these numbers, an average-sized 8-kilowatt residential solar system would cost between $21,900 – $26,400. 

Regional pricing differences, the system size, local installation costs, inclusion of home battery backup, and local incentives are other factors which affect the final cost.  

Hardware and Electronics 

For a solar panel system to function, you will need equipment including: 

• Solar panels – Convert energy from the sun into electricity. 
• Inverter - Converts energy from your solar panels into energy usable in your home 
• Mounting hardware – Connects solar panels to your roof 
• Conduit and wiring – Connects your system to your home & the grid 
• Monitoring equipment - Hardware used to track performance of your system 

According to the U.S. Department of Energy materials typically account for 43% of total installation costs.²   

Installation and Design 

Installation labor makes up around 7% of your total expenses while design, engineering, project management, processing of approvals, and other overhead accounts for 28%.² Total solar panel installation cost will depend on how much you spend and your system size.^2,3,4 

The design, engineering, project management, processing of approvals, and other overhead account for the remaining 28% of costs.²

For example, if your final quote is $20,000, the labor cost will be around $1,400 while design, engineering, and processing cost would land around $5,600 (installation costs vary by provider).  

• Design includes: 
  • Site assessment – Determines the suitability of your roof for a solar installation 
  • Structural engineering – Evaluates your roof type and structure to ensure your panels can be installed without issue 
  • Electrical engineering – Creates the electrical design for your system  
• 3^rd party approvals include:
  • Building permits 
  • Electrical permits
  • Utility company approvals
  • Inspection fees

In 2024, Tesla’s permitting fees to building and electrical departments across the U.S. ranged from ~$110-760 per installation. 

Other Variables That Affect Cost

Energy Needs

The more energy you use, the more solar panels are needed to generate what you need. Large residences, air-conditioned homes, and multi-family dwellings all have increased power needs. 

Location

Where you live also matters. In lower-cost-of-living places, wages may be lower, bringing down the total cost of installation. 

To illustrate the state-by-state differences in pricing, here is a sample of average solar panel costs by state, for 8kW solar systems or larger, based on Tesla Energy’s internal data. 

Your location also dictates the amount of sunshine you receive. While getting less sun at various times in the year does not increase the cost of owning solar panels, it can affect how much you save.

Quality

More advanced and durable solar panels, batteries, and inverters may cost more upfront, but typically last longer and perform better than cheaper options.

Higher-quality panels produce more energy, so you will need fewer to cover your electricity needs. Also, because it takes less time to install fewer panels, installation costs may be cheaper.

Installation Complexity

Installation costs often rise alongside the complexity of the job. If, for example, you have a large, tiered roof, crews may need to take longer or use more specialized equipment to complete the installation, increasing your final bill.

Maintenance and Repairs

Solar panel systems do not need regular maintenance, but dirt and grime can build up over periods of time without rain. Cleaning your solar panels with soapy water and a non-abrasive sponge can improve your energy production by 3–5%.⁴

If you are not comfortable accessing your roof for this cleaning, you can hire someone to perform this service. Labor costs will vary by service provider.

Additional Costs

Beyond these standard expenses, you may choose to purchase additional equipment or encounter other fees.

• Home Batteries – Home battery systems like Powerwall allow you to store the energy you generate for use in outages or when electricity costs rise during peak hours. Each battery will add several thousand dollars to your upfront cost but can save you money over time.
• Dealer fees – Solar panel dealers often add fees to cover their sales, marketing, and administrative costs.⁶
• Extended warranty – While most solar panel setups come with a standard warranty, you may wish to add extra protection. Some manufacturers offer an extended warranty, which can be purchased at your discretion.

Balancing the Cost: Potential Savings

Despite the upfront cost, between immediate incentives and long-term benefits, solar can save you thousands over time.

Solar Investment: Anticipated Payback Period

One of the main considerations for homeowners investing in solar power is the timeline for recouping their investment. Typically, the payback period for a solar system spans from 6 to 12 years.¹² This period is influenced by factors such as the total cost of solar panel installation, system efficiency, local electricity rates, and the incentives and rebates available in your area.

Incentives

Although the overall cost of installing solar panels can surpass $20,000, you may not have to cover the entire cost. Depending on where you live, you may be able to access federal, state, and local government programs:

• Federal incentives – Federal tax incentive amounts and requirements may continue to change. This page will be updated with the latest details as they are made available by the federal government, but we recommend checking the IRS website for the most up to date information.
• State incentives – Your home state may offer additional incentives. For example, homeowners in New York can enjoy a 25% tax credit, up to a maximum of $5,000.⁷
• Local incentives – Your local utility, city, county, or government may have grants or rebates for installing solar panels or a home backup battery. Some local programs may offer up to thousands of dollars based on their program and its requirements.

Check with all levels of government and a tax advisor to make the most of any financial support, solar tax rebate or solar incentive.

Home Value Appreciation

Market studies show that homes equipped with rooftop solar panels sell for around 4% more.⁹ Homes with solar panel systems also sell 20% faster.⁹

You may not have to pay for these benefits before you sell. Many states offer an exemption on any property tax derived from a solar-related increase in value.^10,11

Tesla Solar Systems: The Future of Energy

The cost of a solar panel system will depend on your energy needs, your location, installation costs, available rebates or tax incentives and if you choose to get a home battery or not.

Tesla solar panels give you the freedom to power your home with low-cost, emissions-free electricity. Built with durability and efficiency in mind, our solar roof and solar panels will grant you energy independence, outage protection and utility bill savings for years to come.

Stay connected to learn more about incentives and cost savings or schedule a consultation to explore the full range of Tesla solar solutions today.