Are solar panels worth it?

What to consider before going solar

Solar panels are worth it if you like the idea of helping the environment, lowering your monthly utility bills and gaining more energy independence. But it doesn’t work out for everyone.

You might not want to switch if you don’t get enough sunlight, need a new roof, have a limited budget or plan to move soon. While houses with solar panels sell for 4.1% more on average, remodeling your bathroom or kitchen might be better if your focus is on resale value.

Whether it’s worth it for you comes down to your upfront costs, monthly savings and location. Here are the questions to ask yourself.

How much solar panels cost

Solar panel costs vary based on a range of factors. On the low end, you can install small 3-kilowatt (kW) to 5-kW systems for around $10,000 in some markets. On the high end, we’ve talked to solar customers who spent more than $100,000 going solar.

Solar costs are trending down

The average cost to install solar panels has gone down more than 40% over the last decade. “Ten years ago, I did not find it affordable, nor the technology — especially expected lifetime — acceptable,” a solar customer, Paul in Colorado, told us.

Now, with the federal solar tax credit, Paul says his “system can about pay for itself at the current price for electricity with my utility. If the cost for electricity goes up significantly in the future, there will be an actual savings as well.”

QUESTION: If solar panel prices keep going down, should I wait until they are even cheaper?

The short answer is “maybe,” according to Ed Hirs, an energy fellow and lecturer at the University of Houston. Newer solar panels are getting cheaper, more durable and more efficient.

However, installation and labor costs don’t seem to be going down any time soon. Hirs noted the cost of replacing roofs (which you might need to do before going solar) has also gone up.

At the same time, energy costs are trending up

You see more savings by switching to solar if you live in an area where utility rates for electricity tend to be high. For homeowners who never invest in solar power, the cost of utilities is unlikely ever to go away.

“Each consumer needs to make this decision and kind of weigh the cost and the benefits,” Hirs said. “If you’re going to live an average normal life and not have outages and not be in a situation where the price of power off the grid is rising, rising, rising — maybe it will make sense to put panels on for 25 years.”

Break-even points and return on investment (ROI)

A solar panel system generally pays for itself within eight to 12 years when you pay cash. If your break-even point is closer to 20 years, switching to solar energy might not be worth it.

Going solar isn’t a money-making investment. It’s more about saving over the long term. Its value also depends on your local energy commission and utility provider. Net metering can minimize costs, but most people don’t make a lot of money off of it. Don’t expect to get rich selling your unused energy.

» LEARN: What is a good investment? 

One solar customer, Edward in California, said: “Going solar allowed me to save a little bit. But it's not a tremendous amount of savings like people think. You're producing excess during the day when it’s sunny and you're just taking it right back at night. Maybe you're saving 150 bucks a month.” Still, saving $150 each month is worth it for many people.

The estimated savings for going solar average $22,181 over 25 years after factoring in the cost of your system, incentives, benefits and electric bill reductions.

Benefits of solar panels

Solar panels are worth it for a lot of people for the financial benefits. It’s also the best way to gain energy independence while reducing your carbon footprint at the same time.

» COMPARE: Best solar energy companies

Lower electric bills

There are two main financial benefits of going solar: reduced monthly electric bills and the potential to earn from net metering credits.

• Monthly energy savings: Going solar lets homeowners “lock in the cost of their energy and avoid ever-increasing utility costs,” according to Tim Deters, who works at Green Ridge Solar, a solar company based near Portland, Oregon. With energy prices increasing around 5% each year, he said, savings add up significantly over time.
• Net metering and SRECs: Many utility companies offer net metering programs that let you sell excess energy back to the grid. In some regions, you can earn a Solar Renewable Energy Certificate (SREC) for each megawatt-hour (MWh) of solar electricity you produce, which is another source of revenue.

Solar panels can reduce your reliance on nonrenewable energy sources and help protect you from unpredictable rate spikes. For example, Jeff in California went solar to “reduce our reliance on the grid as much as possible.” Since making the switch, “we are generating a tremendous amount of energy each day, and our energy bill is now net negative — in a huge way!” Jeff said.

More energy independence

Embracing solar paves the path toward true energy independence. It especially works out for people in areas susceptible to power outages.

“I don’t think people are figuring in the cost of outages,” Hirs said. Hirs lives in Houston, where he loses power for at least a week every few years because of a hurricane.

With everything that a household or business runs on, a solar panel system can provide some useful backup, according to Hirs. It keeps your lights on. It keeps your food from spoiling.

“The tragedy of the situation is if the state and independent system operators (ISOs, RTOs) had been less focused on low prices and more focused on reliability, I don’t think home solar would have grown as much as it has,” Hirs said.

Hirs thinks everyone who can afford solar panels should be evaluating them against the cost of a home generator. Both are precautionary expenses.

» MORE: How a solar-powered home works with generator backup

Better for the environment

The ecological benefits of going solar are worth it to many people even if they aren’t saving a lot of money.

“Our primary motivation is sustainability, with a secondary goal of saving some money and avoiding occasional blackouts/brownouts to which our neighborhood has been affected,” said Glenn in California.

Solar energy is a clean way to make power. After they are installed, photovoltaic panels don’t emit greenhouse gases (GHGs) into the atmosphere like burning fossil fuels does. They also cut down on harmful pollutants such as sulfur dioxide (SO2) — a good thing for people, animals and the environment.

Over their typical 25- to 30-year life span, the emissions associated with their lifecycle are dwarfed by the emissions they offset by displacing fossil fuel-based electricity.

Tim in Florida put it this way: “Your home has ALREADY made its carbon footprint. What better place to put solar than on your home which already exists?”

» DOES YOUR STATE RANK? Greenest states in the U.S.

What to watch out for

Some people don’t get the deal they thought they were getting. Installation delays, bad local utility contracts or faulty equipment are often to blame for their dissatisfaction.

For example, Preston in Texas was “truly disappointed” by the performance of their solar panels and home battery system. “Unfortunately, I am now committed to using one of the least efficient and potentially hazardous systems in the market for the next three decades,” they said.

Preston might have been happier if they invested in higher-quality equipment. However, where you live can impact whether going solar is worth it, even if you buy the best solar panels.

• Solar panels are expensive: Even with rebates and other financial incentives, the price typically starts between $10,000 and $30,000. It’s even more expensive if you want a solar battery for energy storage. Plus, you might have to make loan payments even if the system isn’t operational, like Derreck in North Carolina.
• Efficiency and output vary: The best solar panels have an efficiency rating of 20% to 22%. However, your actual energy output depends on weather, location and panel orientation, which could affect your month-to-month savings.
• You have to look out for pushy sales reps: Like in any booming industry, some people just want to make a quick buck and might say anything to close a sale. For example, Mike in Florida told us a sales rep “said there's no upfront cost, which was true. I didn't have to pay any money out of pocket until it was installed. Then I had to pay $70,000, and I had to get a loan for it. So, that was very misleading.”

If you use financing to purchase your solar array, it’s important to read your contract carefully. Some solar companies put a lien on your house. If you’re not dealing with a reputable company, you could lose your home.

» MORE: Solar energy pros and cons