Are Solar Panels Worth It?

Solar energy has many benefits, including lower electricity bills and reduced carbon emissions. However, installing a solar panel system is expensive, causing many homeowners to wonder if the investment is worth it. “Homeowners should consider factors like electricity costs, available solar incentives, the desire for energy independence, regional weather conditions, and current roof conditions,” says Vicky Guo with EcoFlow.

Our team has spent more than 770 hours researching the solar industry, interviewing experts, and surveying homeowners about their solar experiences to help you determine if going solar is right for you. This guide covers the basics of how solar panels work, their benefits, and which homes are the best candidates for solar power.

Solar Energy Market Trends

By the end of 2024, there were more than 5.4 million solar systems installed in the U.S. nationwide, according to the SEIA. The solar industry was responsible for more than $70 billion in private investments supporting the economy in 2024, per the SEIA. In that same year, the U.S. had installed enough solar capacity—over 235 gigawatts (GW)—to power more than 40 million homes.

The solar industry employs workers in every state, with nearly 280,000 working for 10,000 companies, per the SEIA. Solar comprised more than half (55%) of the new electric capacity added to the grid in 2023 and roughly two-thirds (66%) in 2024. In 2024, the top three companies by total solar capacity—measured in megawatt direct current (MWdc)—include Meta (5,177 MWdc), Amazon (4,668 MWdc), and Google (2,595 MWdc). 

The amount of solar installed in California can power nearly 15 million homes and accounts for a 30.1% share of the state’s electricity, per the SEIA. Texas, Florida, Arizona, and North Carolina round out the top five states with the most homes powered by solar, with North Carolina reaching nearly 1.2 million homes. After California, the four states with the highest percentage of electricity from solar are the following:

• Nevada: 28%
• Massachusetts: 25%
• Hawaii: 20%
• Vermont: 19%

Solar domestic module manufacturing capacity expanded by 190% from 2023 to 2024, concentrated in southern states like Texas (8.6 GW added) and Georgia (8.4 GW added), per the SEIA. In addition, the last decade saw a 28% average annual growth rate supported by favorable federal tax policies (such as the Investment Tax Credit) and increased public and private demand, according to the SEIA. The cost of solar installation—which has dropped by nearly 40% over the last 10 years—has also contributed to industry growth.

Despite a slow year for the residential solar segment, the SEIA expects U.S. solar capacity to more than triple in the next decade, reaching 739 gigawatts direct current (GWdc) by 2035. However, to achieve 100% carbon-free electricity by that time, the nation must produce 140 GW annually within the next five years, per the SEIA.

How Do Solar Panels Work?

Solar panels, also known as photovoltaic (PV) panels, absorb energy from sunlight and convert it into electricity to power your home. The power generated by solar panels starts as direct current (DC) electricity, passes through a solar inverter, and becomes alternating current (AC) power. Finally, the converted energy flows through your home’s wall outlets and charges any connected batteries.

If you have an off-grid solar system, your home will rely entirely on the electricity generated by your solar panels. A solar battery will store extra energy to use later, when your panels are not actively producing power. However, most systems are connected to the grid. If your grid-tied solar system doesn’t fully cover your electricity needs, you can get the remaining power from the grid. Excess energy can be sent back to the grid or stored for later use.

What Are the Benefits of a Solar Panel System?

Using solar energy provides several advantages to homeowners, including financial savings and environmental benefits. We’ll go over these in detail below.

Inexhaustible Sustainable Energy

Solar power provides a renewable energy source, preventing homeowners from having to rely on fossil fuels. As a result, solar users will reduce their carbon footprint and cut back on harmful emissions that contribute to climate change. It also offers a way to protect homeowners. “Concerns about power outages caused by extreme weather, such as hurricanes, wildfires, and winter storms, have led many homeowners to invest in solar as a backup for when the grid fails,” says Guo.

Lower Utility Bills

According to the U.S. Energy Information Administration (EIA), homeowners spent an average of $138 per month on their electric bill in 2023. Electricity prices vary significantly from state to state, but you’ll generally see higher averages in New England and the South.

Using solar panels allows you to tap into a less expensive resource than the traditional power grid, helping you to generate your own energy and save on electric bills. Homes that use electric-powered appliances, such as electric stoves or water heaters, are able to use more of their solar-generated electricity and save on gas bills.

Solar panels often generate more energy than is needed to power your home. Some states offer net metering, allowing customers to sell their excess energy to the grid and accumulate credits over time. Alternatively, solar customers can add a solar battery to store extra energy for use later. Homeowners can use stored energy during low-sunlight days or power outages. The best reviewed solar batteries are able to power your home longer than most alternatives.

Increased Home Value

Homeowners often look for ways to raise their home value through upgrades and renovations. Installing a solar system can increase your home value, too. In 2019, Zillow found that homes with solar panels sold for about 4% more, on average, than comparable homes without solar power. Some states even offer tax exemptions to ensure that you benefit from the home value boost without having to pay higher property taxes.

Solar Tax Breaks and Incentives

Homeowners may receive additional monetary benefits from their local utility company, state government, and federal government. Many utility companies provide rebates for customers who move to solar energy. Likewise, state and local governments make the switch desirable by offering rebates to solar customers. Tax credits and other incentives vary by state.

The federal government offers the Investment Tax Credit (ITC) for homeowners who install new solar panel systems. This federal solar tax credit provides a federal tax reduction equal to 30% of your solar installation costs for systems installed until 2032. The credit rate will reduce to 26% in 2033 and drop to 22% in 2034. It’s set to expire in 2035 unless renewed.

Which Homes Benefit the Most from Solar Panels

Not all homeowners will benefit equally from solar panels. However, if any of the following statements are true, your home may be an ideal candidate for solar panels.

• Your home gets plenty of sun exposure: Every state gets enough sunlight to power an average-sized home. However, specific factors such as shading and roof positioning could reduce your ability to take full advantage of solar panels. The ideal rooftop is free of obstructions, such as trees or tall buildings. The roof should also be south-facing and have a slope that can hold a solar panel at a 15- to 40-degree angle and have a good sun number score.
• You have high utility bills: If your utility bill costs are constantly high, the highest-performing home solar systems might help. Keep in mind that you may need to install more solar panels than average to offset these costs, leading to a more expensive system. If your monthly electric bill typically stays low, a solar system may not be an ideal investment. A solar panel installer will review your current electricity bill to help you determine if solar is right for you.
• Your state offers solar tax incentives: Many states offer solar incentives to encourage their residents to switch to solar panels. These incentives help reduce the system’s overall cost, making installation much more affordable. Local utility companies may offer additional incentives and credits, too. Roughly 75% of our 1,000 surveyed solar users said they took advantage of solar incentives to increase their return on investment.
• Your electric company offers a net metering program: Excess energy from your solar panel installation can be stored in a solar battery or returned to the power grid. Several states offer net metering, which compensates solar customers for the excess power that their system produces. Approximately 32% of our survey respondents said they participated in a net metering program.

If you’re not able to install solar panels on your roof, we recommend looking into community solar projects. These projects allow you to pay for a portion of a shared system of solar panels, often located within your community. It’s also worth noting that solar panels will still work in less-than-ideal conditions, though you may receive less savings. You can also look into ground-mounted solar as an alternative to rooftop solar.

Still not sure if solar panels are a good idea? The video below covers five important things to consider before installing solar, including the conditions that make a roof perfect for solar panels.

How Much Do Solar Panels Cost?

Solar panel installation costs vary by provider and location. We surveyed 1,000 homeowners in 2025 and found that the average solar panel system costs $16,129 after federal tax credits. However, systems can cost as much as $25,000 according to data from the SEIA.

Several factors affect the price you pay, including your home’s size and the number of panels needed to run it efficiently. Additionally, solar incentives, rebates, and tax credits can significantly reduce your installation costs.

“A common misconception about solar energy is that it’s too expensive. While solar panels do require an initial investment, prices have decreased significantly over the past decade, and financial incentives like the 30% federal tax credit make it more affordable than ever. Homeowners can also utilize solar financing to pay for their system over time instead of paying upfront, making it a more feasible investment,” says Guo. Homeowners have several options for paying for a solar panel system. Most providers offer the following methods of paying for solar:

• Full payment: Customers can pay for their new system immediately and receive full ownership. This is the most cost-effective payment option, as it qualifies you for solar incentives and prevents you from paying additional fees for interest rates. According to our 2024 survey of solar customers, 49% chose to pay in full upfront.
• Solar loan: Homeowners can choose to take out a loan and pay for their system in monthly installments over time. Typical loans range from five to 10 years and may be through a top solar company or a third party. You’ll pay more for your system in total due to interest rates, but you’ll still qualify for incentives and own your system. Of our 1,000 surveyed solar users, 23% financed their system through a loan.
• Solar lease: Homeowners can rent their panels from a solar company for a fixed monthly rate. Solar leases may last from 10 to 25 years, depending on the company’s terms. At the end of the lease term, you can pay for the panels or return them to your installer. We generally don’t recommend a solar lease because you won’t qualify for incentives or own your system, but solar leases can be worth it in certain situations. Roughly 11% of our survey takers leased their solar panels monthly.
• PPA: A Power Purchase Agreement (PPA) works similarly to a monthly utility bill in that a customer pays for each kilowatt-hour (kWh) of solar power used. Unlike fixed solar loans or lease payments, these bills fluctuate each month depending on the amount of electricity your system generates. The solar company retains full ownership of the equipment, and you’re disqualified from incentives. We also don’t recommend this option except in specific circumstances. Despite the downsides, 17% of our survey respondents chose a PPA.

How Can Homeowners Determine Whether Solar Panels Are Worth It for Them?

“The primary motivation for solar is almost always savings on energy bills,” says Vito Greco, director of solar programs at Elevate Energy. “Another motivation is the desire to produce your own, clean energy, helping mitigate climate change and becoming more energy independent.”

However, households within a city center may not necessarily reap the same benefits of solar energy as those living further away from town. “For example, rural households often experience much longer electricity outages on average than urban households, so solar panels on a rural house would allow for at least some electricity use while the outage is being resolved,” says Daniel Karney, associate professor of economics at Ohio University.

Ultimately, solar power’s value for the majority of homeowners “depends on several specific factors, including solar resource availability, government incentives, and installation costs,” says Jackson Dorsey, assistant professor of economics at the University of Texas at Austin. Kassandra McQuillen, assistant professor of practice at Texas Tech University, also cautions homeowners to speak with their local electricity provider before investing in solar panels. “If their provider does not allow net metering or solar buyback, they may not benefit financially from residential solar,” says McQuillen.

As beneficial as integrating solar power into your home’s daily operations may seem on paper, it’s best to approach this energy upgrade like any other home renovation. “Homeowners usually determine if solar panels are worthwhile by considering the following aspects: initial investment, payback period, construction duration, maintenance cost and complexity, and neighborhood,” says Yunyang Ye, assistant professor at The University of Alabama. Consider the bigger picture beyond saving on your electricity bill to contextualize the full advantage of investing in solar panels.

How To Choose a Solar Panel Installer

Choosing the right solar panel installer can make or break the process. “If you work with a turn-key installer who communicates at each step of the process, the home solar installation should be easy and worry-free,” says Matt Johnson, co-owner of Namaste Solar. “A seasoned installer should handle all the logistics from design to permitting to finding all the incentives and rebates available.”

Johnson recommends looking for a company that has a long track record in the industry, provides a workmanship warranty, and offers ongoing service after installation. Look for the following qualities when browsing for a premier solar company in your area:

• Years of experience
• Types of solar panels used for installations
• Available add-ons, such as solar batteries
• Warranty coverage for the solar panel equipment and its performance
• Reviews from current and former customers
• Better Business Bureau (BBB) ratings
• Financing options and terms
• Customer service availability
• Online pricing or available quotes
• Estimated payback period for your system
• A detailed review of your average energy usage and potential solar savings

Our Conclusion

Like any budding technology, solar power has become increasingly popular—and more affordable to the average homeowner—over time. Continuing to educate themselves about solar energy, from exploring the logistics and financial commitment involved to gathering the facts regarding long-term maintenance and care, can help homeowners determine the efficacy of installing solar panels on their homes.

“Homeowners should check out free resources like the NREL PVWatts Calculator to determine size and efficiency in their area. Google now offers tools to determine how efficiently solar would work with your roof through its Project Sunroof and Google Earth platforms,” says McQuillen. Even interviewing friends and neighbors who’ve gone through the process can uncover valuable insights to help inform a homeowner’s decision to integrate solar power.

Expert Insights

Ask An Expert

What’s the usual payback period? Does it change based on where you live or how much energy you actually use?

Vito Greco

Director, Solar Programs at Elevate
Elevate Energy

Jackson Dorsey

Assistant Professor of Economics
University of Texas at Austin

Kassandra McQuillen

Assistant Professor of Practice
Texas Tech University

Yunyang Ye

Assistant Professor
The University of Alabama

“Because the value of incentives varies by location, the number of years it takes to pay back the system will differ greatly. In some states with healthy solar incentives, like Maryland, California, or Illinois, the payback can be just a few years. This is a great value because solar panels can keep producing energy for 25 to 30 years. In other states where little or no incentives exist, the payback can be 10, 15 years or more.”

“Equally crucial is your state’s net metering policy, which determines how much your utility pays you for electricity your solar panels send back to the grid. In states with full net metering, utilities credit homeowners at the retail electricity rate, significantly shortening the payback period on solar investments. Conversely, states without full net metering offer lower compensation rates, extending payback periods. Depending on these policies, homeowners may see payback periods ranging from as short as five years to as long as twenty years.”

“The payback will vary on a case-by-case basis depending on the size of the system, your electricity consumption (are you charging an EV at home? Have a pool?), and whether a homeowner receives net metering and a solar buyback.

Another unanticipated cost to having residential solar is the interconnection fee. This is the fee your utility will charge you on a monthly basis to be connected to the power grid. It can range from $20–$144 per month.”

“The literature suggests that the payback period for rooftop solar installations typically ranges from 6 to 10 years. In summary, the payback period for rooftop solar installations is influenced by both geographic location and individual energy consumption, with sunnier regions and higher energy usage generally leading to shorter payback times.”

Ask An Expert

Are there certain conditions, like roof type, size, or direction, that make solar panels more or less practical?

Vito Greco

Director, Solar Programs at Elevate
Elevate Energy

Kassandra McQuillen

Assistant Professor of Practice
Texas Tech University

Vicky Guo

PR and Communications 
EcoFlow

“A good rule of thumb is to have a roof that has at least 15 years of life left to get the best solar payback.

A flat roof can be great for solar because panels can be adjusted with solar racking to an optimal angle that reaches the peak sunlight in the summer. If you have a pitched roof, a south- or east-facing pitch is ideal, with no obstructions from tall buildings or trees.”

“If your roof isn’t conducive to solar, you can always add a solar pergola, shed, or carport if you have the space.”

“Homes with old or weak roofs might need repairs before installing solar panels. However, if a roof upgrade isn’t possible, there are alternative options like portable or ground-mounted solar systems that don’t require roof installation.”

Ask An Expert

Cost-wise, what type of solar panel system would you recommend to homeowners: leased or owned, and why?

Vito Greco

Director, Solar Programs at Elevate
Elevate Energy

Kassandra McQuillen

Assistant Professor of Practice
Texas Tech University

 “Purchasing the panels is the simplest and often provides the greatest value over the life of the array. But purchasing solar panels means a significant upfront cost. Some solar installers will offer a lease option with no upfront costs. The homeowner leases the panels on their roof, with the value of the energy produced being greater than the cost of the lease.

A PPA can be more predictable in that you only pay for the electricity you use, usually at a negotiated discount, like 10% or 20%. Leases and PPAs are a great way for homeowners to access solar with no upfront costs. But many states do not allow these models because they see small solar systems owned by a third-party as a small ‘electric utility.”

“Homeowners should start small and scale up as needed. The practical solution would be to get a system you can afford and see if you need a larger system. You don’t need to offset ALL your energy use and might be surprised how a smaller, less expensive, and less obtrusive system works.”

FAQs About Solar Panels