Are Solar Panels Worth It? A Complete Guide To Help You Decide

Sabrina Lopez
Sabrina Lopez
June 6, 2024
10 min read

Going solar is a big investment and many homeowners are curious whether it’s worth the upfront costs. In most cases, solar panels provide long-term savings and increased property value that far outweigh the initial costs involved. However, there are some factors that can make investing in solar power less worthwhile for you - for example, if your roof is shaded and north-facing, or if you’re ineligible for financial solar incentives. 

In this guide, we’ll explore the question: ‘are solar panels worth it?’ looking at: 

  • How much solar panels cost
  • How much money you can save with solar
  • When solar panels are worth the upfront costs
  • Pros and cons of installing solar panels
  • Questions to ask yourself to determine if solar panels are worth it. 

How much do solar panels cost?

According to the Solar Energy Industries Association (SEIA), an average-sized residential solar system costs around $25,000 before any government tax incentives. On the other hand, a MarketWatch survey of 1,500 homeowners found the average cost of installation to sit between $15,000 and $20,000. 

The truth is, the cost of a solar panel system will differ depending on various factors, such as:

The only way to truly know how much a solar energy system will cost you - and therefore whether it’s worth it - is to consult with a trusted solar installer in your area for a proper quote. 

How much money can you save with solar?

Knowing how much money you can save with solar power is key to determining if it’s worth it. You can get a rough estimate of your potential savings with some basic equations.

Solar panels generally last between 25 to 30 years, and most homeowners will break even on their investment in around 10 years. This means that after paying off your solar panels, you’ll get to enjoy around 15 to 20 years of free energy. 

Here’s a step-by-step example on calculating how much money solar can save you, using national averages: 

  • Let’s say you pay $25,000 to install a solar panel system, as per SEIA data. 
  • You’ll receive a 30% federal solar tax credit which brings your initial investment down to $17,500. 
  • Now let’s say you spend $1,644 per year on electricity, as per U.S. Energy Information Administration data. That means it will take you around ten years to recoup your initial investment, giving you at least 15 years more with your solar panels. 
  • If you multiply your average electricity bill of $1,644 by 15 years, you’ll get a total saving of $24,660. 

That’s a huge amount of money - and we haven’t even factored in state tax credits or net metering programs. 

When are solar panels worth it?

There are certain factors and conditions that make installing solar panels more worthwhile than others. These include: 

  • Where you live
  • The shape and size of your roof
  • Eligibility for local and federal solar incentives
  • How much energy you consume
  • Net metering options in your area. 

Each of these factors can make solar panels more efficient so they generate more energy and increase cost savings. Let’s look at each of these in more detail. 

Your location

The weather and climate of your location can affect whether installing a solar panel is worth it. If you live in a region with abundant sunshine, you’ll get more energy out of your solar panels than if you live in a cloudy area. That doesn’t mean solar panels aren’t a good investment if your region doesn’t get much sun, it just means they won’t be generating the maximum amount of power. This can reduce your total long-term savings on energy bills. 

The below map from the National Renewable Energy Laboratory (NREL) shows the annual average daily solar energy production in different states, measured in kilowatt-hours (kWh). The states coloured in darker shades receive more sunlight and will generate more solar energy. If you notice, Arizona is in the bullseye of the best energy production, making it the perfect location for investing in solar energy.  

Global Horizontal Solar Irradiance

Shape and size of your roof

The shape, size, and slope of your roof can also affect solar panel installation costs and efficiency. Firstly, roofs that are too steep can complicate the installation process, requiring special mounting equipment and increasing labor costs. Secondly, roofs that are too small may require fewer but more efficient solar panels that can generate more power using less space. These types of solar panels can be costlier. 

To get the most out of your solar panel investment, your roof would be: 

  • Facing south, south-west, or west (in the northern hemisphere) 
  • Sloped between 15 and 40 degrees for maximum sun absorption
  • Spacious with minimal obstructions from things like shade, skylights, or chimneys. 

That’s not to say that you can’t install solar panels if your roof doesn’t fit these criteria, you may just need a more customized design.  

Local and federal solar incentives

Most homeowners are eligible for federal and local solar tax incentives that can make installing solar panels much more affordable. With the Federal Solar Tax Credit, you can claim a tax reduction equal to 30% of your total system cost. Depending on how much tax you pay each year, this can be rolled over for up to five years until the total amount has been claimed.

You may also be eligible for solar rebates, credits, and incentives from your state government or local utility company. For example, in Arizona you can claim a solar tax credit of 25% of your installation costs up to $1,000. This is in addition to the Federal Solar Tax Credit. 

You can find solar incentives and rebates in your area by checking the Database of State Incentives for Renewables & Efficiency (DSIRE). 

How much energy you consume

The amount of energy your household consumes can affect the returns you see on your solar investment. According to the U.S. Energy Information Administration, the average household uses around 900 kWh of electricity each month. In Arizona, the average is slightly more at 1,500 to 2,500 kWh per month, due to higher temperatures requiring higher cooling needs.  

If you live in a state with high electricity rates, such as California, you might benefit even more from solar panel cost savings. Generally, higher electricity rates means more cost savings and a faster payback period. That said, if your household doesn’t consume a lot of electricity then the savings may not be enough to offset the cost of installation. 

The best way to find out if solar panels are worth it for the amount of energy you use is to calculate your solar ROI. We recommend consulting with a professional solar company that can analyze your location, review your average energy use, and estimate your potential savings from going solar. 

Net metering options in your area

States with net metering programs allow solar system owners to sell excess power back to the grid in return for compensation. This could come in the form of credits on future electricity bills or financial payouts at the end of the year. Taking advantage of net metering programs can maximize your energy savings and help you pay back your solar panel system faster. 

Net metering options vary from state to state. Some states offer full retail net metering, meaning you receive the full retail rate for the excess electricity you produce for maximum savings. Others offer energy credits at a rate lower than retail price, which can reduce the amount of savings you generate. To see how net metering works in your area, view the table on this page. 

So when are solar panels worthwhile?

In most cases, solar panels pay for themselves by saving you money on energy bills. The points discussed above all help accelerate that payback period so you break even and start enjoying free energy quicker. 

To summarize: 

  • If you live in an area that receives lots of sunlight, have a large south-facing roof, and can take advantage of solar incentives, you’ll see higher returns on your solar panels and pay back your system faster.
  • If you live in an area that gets less sunlight, have a steep or small roof, and are eligible for fewer incentives, solar panels can still be worthwhile but your payback period may take longer, reducing overall long-term savings. 

Pros and cons of switching to solar

To help you properly assess whether solar panels are worth it, let’s take a quick look at the pros and cons of switching to solar. 

Pros of switching to solar

The benefits of installing solar panels include:

  • Reduced carbon footprint: According to the Environmental Protection Agency (EPA), electric power contributes up to 25% of all greenhouse gas emissions nationwide. Solar energy is clean, renewable energy that reduces your reliance on fossil fuels and decreases your carbon footprint. 
  • Save on energy costs: While there are upfront costs involved in installing solar power, you'll get to enjoy long-term savings on energy bills once you've recouped your initial investment. 
  • Energy independence: Adding solar batteries to your solar panel system makes you less reliant on the grid and allows you to continue powering your home during power outages or blackouts. 
  • Net metering: Depending on where you live, you can increase cost savings with net metering programs that allow you to be reimbursed when you sell excess energy you don’t use back to the grid. 

Cons of switching to solar

As with anything, there can be some drawbacks to solar power that can make it less worthwhile for you. These include:

  • High upfront costs: Not everyone can afford the initial investment of solar energy, even when factoring in federal and state incentives. Many solar companies offer financing options however that may involve paying interest or additional fees. 
  • Weather & climate factors: Solar power is most efficient in areas that receive lots of sunlight throughout the year. If your region is prone to cloudy or rainy days, solar systems are still worthwhile but you may generate less energy. 
  • Difficult to move: It’s best to invest in solar power if you intend to stay in your home for the long-term. While you can remove and reinstall solar panels, the costs of doing so can affect your return on investment. 
  • Aesthetics: For some people, the appearance of solar panels on a roof can diminish from the aesthetics of a home. While you can find solar shingles that blend into your roof, these are typically more expensive.

Things to consider before switching to solar

If you’re still asking yourself ‘are solar panels worth it?’, the following questions can help you decide if solar energy is a worthwhile investment for you: 

  • Do you live in an area that receives abundant sunlight throughout the year?
  • Does your roof face south, southwest, or west?
  • Is your roof spacious enough for a solar panel system?
  • Is your roof unshaded?
  • Are you eligible for any tax incentives and rebates from your local government or utility company? 

If you answered ‘yes’ to most of these questions, then solar energy will almost definitely be worth it for you. If you’re unsure, we recommend consulting with a solar expert who can offer you customized advice depending on your particular location, energy usage, and goals. 

Summary: Are solar panels worth it?

The upfront costs involved with installing a solar panel system may feel daunting, but it’s a long-term investment that will reap rewards into the future. Taking the time to consider all the different factors involved, including your location, energy usage, and eligibility for financial incentives, can help you better understand whether solar panels are worth it for you. 

Ultimately, solar panels are more affordable than they’ve ever been, and they can help you future-proof your home by protecting you from increasing energy costs. They’ll also add value to your property and help you reduce your carbon footprint. If you're not sure whether it’s worth investing in solar panels, our friendly team is happy to provide a free, no-pressure consultation. We’ll evaluate your home, current energy usage, and eligibility for rebates and incentives to give you an estimation on potential cost savings. Fill in this form to receive a free quote or give us a call on 480-576-5693 to speak to one of our staff members.