How Much Does it Cost to Install Solar on an Average US House?

We are frequently asked about the cost of installing photovoltaic (PV) solar panels on the roof of a home or business building for the purpose of generating one’s own electricity. There are plenty of websites on the internet that provide information on this. The Solar Power Authority even provides a free quote tool and solar calculator, but they can be complicated to use if you lack some technical knowledge. For this reasons, I’ve come up with some easy guidelines that you can follow to find out how it will cost to get an entire solar power system installed.
In the United States, the average household consumes an average of 1 Kilowatt per hour (KWh). There are 730 hours in a typical month. The standard price of 1 KWh of electricity is $0.10. After a simple calculation, you find out that the average monthly bill for electricity should be around $73.
This figure can vary depending on the type of electrical appliances you have some such water heaters and other appliances that run continuously. Video game consoles, big plasma TVs and extended computer use can also affect your bill. Also, your bill will be high in months when you use your AC more often. Finally, the cost of electricity varies considerably across the country. Figures can be as high as $0.24 per KWh in places like Hawaii and as low as $0.07 per KWh in places like West Virginia. You must adjust your calculation accordingly to reflect your own consumption and not the consumption of an average household.

Solar panels have an average generating capacity of about 10 watts per square feet. Typical panels have a conversion efficiency of about 12 percent. This means that you need about 100 square feet of panels to generate every single KW. If sunlight was present 24 hours a day, you could install 100 square feet of solar panels and generate enough electricity to power an average household.
Unfortunately or fortunately, sunlight is only present during daytime and the amount varies depending on the number of clouds in the sky. Also, the length of daytime varies across the year depending on the season. Luckily, there are numerous online resources you can use to calculate roughly the number of hours per day when the sun will be shining depending on where you live.
In the United States, places like Pittsburgh, Chicago, and Seattle receive an average of 3 hours of sunlight per day. Whereas places like California and Colorado receive an average of 5 to 6 hours per day. Places like Arizona get a whopping 7 hours per day of sunlight. Your location will determine the total size of the panels you will need. This can be anywhere from 400 square feet to 800 square feet (i.e: 4 KWh to 8 KWh). Simply put, you will need to install more panels if you live in places that receive less sunlight per day and fewer panels if you reside in places receive more sunlight per day.
If your power company provides net meters (this are special meters that have the ability to spin backward when you generate more electricity than you consume) you can essentially have an annual power bill that averages at zero. However, because winter days have fewer daylight hours, you are more likely to consume electricity during that season and generate electricity during summer. A system that is tied to the grid is very different from an off-grid system like those found in remote areas. The latter require batteries which can significantly increase the cost of these systems.
At the time of writing, the cost of installing solar panels stood between $7 and $9 per watt. This means that a 5 KW system would require an investment of between $25,000 and $35,000. Many power companies give incentives and subsidies to consumers that can cut the total cost by even as much as 50 percent. However, even at half the cost, a typical solar power system that produces electricity worth $75 would require many years to pay for its initial installation cost.
For instance, a system that costs $18,000 to install will require about 20 years to pay for itself. Today, the cost of a single panel stands at $3 per watt. After adding the cost of labor, the price may go up to $5 or $6. This final cost includes both electronics and labor needed to link a complete solar power system to your existing electrical system.

Standard Solar System Components

Solar panels are not the only components found in a solar power system. There are four main components in a typical PV system:



Solar Panels

These capture sunlight and convert it into electrical energy.


Protects solar batteries by controlling the flow of electricity.


Store electrical energy for later use.


Converts the stored energy in the batteries to the voltage needed to run electrical appliances at your home or business. These individual components are what make the cost of a solar power system very high, and some of the components like batteries need to be replaced over time.
All hope is not lost however as the cost of solar power systems is expected to drop significantly in coming years as thin film panels from manufacturers such as AVA Solar, Nanosolar, and First Solar become available to average consumers. Manufacturers like First Solar have only been selling to commercial consumers. AVA Solar and Nanosolar have recently embarked on upgrading their production facilities. These companies are making huge claims of lowering the cost of solar panels to $1 and $2 per watt. They are also promising generating volumes that are multiple times the figures we see today. All we can do is wait and see.
If total installation costs do come down to $1 per watt, it means that a 5 KW system may only require an investment of $10,000 with a payback period of around 10 years, mind you – without any subsidies. This means that PV solar panel systems will be more attractive, especially if electricity rates remain constant.
But, electricity rates are bound to hike as infrastructure and fuel costs increase. The payback period may actually decrease in future so you can expect to see more solar panels on roofs especially in areas that receive a good amount of sunlight throughout the year or in areas that charge high electricity rates.
You can use this calculator to find out exactly how much you can save!

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