Is Solar Energy Cheap Or Expensive?

Is solar energy cheap or expensive?

Solar energy is one of the most abundant renewable energy sources available today. It works by converting sunlight into electricity using photovoltaic solar panels. The costs associated with solar power include the upfront costs of purchasing and installing the solar panels, the ongoing costs for maintenance and operations, as well as any incentives or savings from utility bills over time. Determining whether solar power is cheap or expensive requires looking at both short term and long term costs and savings.

Upfront Costs

The upfront cost of installing a solar panel system for a home or business can be substantial. According to NerdWallet, you can expect to pay between $2.50 and $3.50 per watt for solar panel installation when factoring in materials and labor costs. For the average home solar system size of 6-8 kilowatts, that translates to a total cost of $15,000 to $28,000 before incentives. Forbes reports the average cost per watt is between $0.90 and $1.50 for materials, with an additional 25% for labor installation costs.

The exact upfront cost of a solar panel system will depend on various factors like the size of your home or business, your energy usage, the type of solar panels selected, and your location. Larger systems for bigger homes or commercial buildings will be more expensive. More energy efficient homes may need fewer solar panels and thus have lower costs. Premium solar panels will also increase costs compared to more standard options. In addition, installation costs can vary greatly by region and local labor rates.

While the upfront investment for solar panels is sizable, the costs have dropped substantially over the last decade. Further declines in solar panel prices and installation costs are expected to continue as technology improves and adoption increases. There are also incentives and tax credits available to help offset the initial purchase and installation costs over time.

Operating Costs

One of the biggest advantages of solar panels is the minimal operating costs once they are installed. Unlike fossil fuels, the sun’s energy is free. There is no need to continually purchase fuel to generate electricity from solar panels.

After the initial investment into the solar panel system, the operating costs are extremely low. Solar panels require no fuel to operate, just sunlight. This allows solar panel systems to generate electricity for decades with minimal operating expenses. According to one source, operating and maintenance costs for solar panels over 25 years averages around $10,000 for a 10 kW system, or about $400 per year (Source 1).

Overall, the operating costs for a solar system after installation are very minimal compared to conventional energy sources that require continual fuel purchases and expenses.

Maintenance Costs

The major recurring cost of maintaining a solar panel system is cleaning the panels. According to, the average cost of cleaning solar panels is between $150 and $350 annually for a 4kW system. This involves cleaning and removing dust, dirt, and debris from the panels so they operate efficiently. Prices depend on the panel size, mounting, and accessibility.

Another routine maintenance cost is replacing the inverter every 5-10 years, at a price of $800-$3500 with average costs around $1500. The inverter transforms the panel’s DC power into AC power for use in the home. Wear and tear over time means these need to be changed out. See for more details on typical maintenance costs of a solar system.

Government Incentives

There are various government incentives available to help reduce the cost of going solar. These include federal tax credits, state and local rebates, and net metering programs.

The federal solar tax credit allows homeowners to deduct 26% of the cost of installing a solar energy system from their federal taxes through 2034. This credit applies to both residential and commercial solar installations (Federal Solar Tax Credit Guide For 2024).

Many states and utilities offer additional rebates and incentives beyond the federal credit. For example, states like California, New York, and Massachusetts offer robust solar incentives, including upfront rebates, performance-based incentives, and property tax exemptions (Solar Incentives by State: Rebates, Tax Credits, and More). The Database of State Incentives for Renewables & Efficiency provides a comprehensive overview of state-level solar incentives (What rebates and incentives are available for solar energy?).

Net metering programs allow solar customers to get credit for excess electricity they export back to the grid. This helps offset the cost of electricity drawn from the grid when the sun isn’t shining.

Electricity Bill Savings

One of the main benefits of installing solar panels is the ability to offset electricity purchased from the grid, resulting in lower monthly electricity bills. According to Marketwatch, a typical 6 kW home solar system generating 9,000 kWh per year can save homeowners around $1,432 annually on their energy bills. The more electricity your solar panels generate, the more you’ll reduce your electricity purchases and costs.

As noted by Ecoflow, the average 5 kW residential solar system can save $100 to $150 per month on electric bills. However, actual savings depend on various factors like your electricity rate, system size, sunlight hours, weather, and orientation – so savings will vary by location. Overall, investing in solar provides the opportunity to greatly reduce grid energy usage and electricity costs over time.

Return on Investment

One key factor in determining the value of solar panels is the number of years it takes to recoup your initial investment and start realizing savings, known as the “break even point.” According to the U.S. Department of Energy, most solar systems take 4-7 years to break even after rebates and incentives in the U.S. 1. This return on investment time period depends on several variables:

  • System size – Larger systems have higher upfront costs but generate more electricity.
  • Electricity rates – Areas with high energy costs achieve faster payback.
  • Government incentives – Tax credits and rebates improve ROI.
  • Solar financing – Loans or leases spread out costs over time.
  • Sun exposure – More sunlight equals more power generation.

Overall, achieving a full return within 7 years or less is considered a good solar panel investment. After the break even point, solar owners can enjoy 10-30 more years of free electricity from the sun.

Long Term Value

Solar panels typically have a system lifetime of 20-25 years before they start to degrade and produce less energy. According to the U.S. Department of Energy, the estimated operational lifespan of a solar photovoltaic module is about 30-35 years, although some panels may continue producing power beyond this timeframe.

Most solar panel manufacturers provide a 20-25 year performance warranty, guaranteeing the panels will maintain a certain level of productivity. For example, SunPower offers a 25-year warranty that guarantees panels will operate at 95% efficiency for the first 5 years, and then lose no more than 0.4% efficiency per year for the remaining 20 years.

While solar panels become slightly less efficient over decades of operation, they can continue generating a good amount of electricity beyond their warranty period. Studies have shown that many solar panels still produce over 80% of their original performance after 35 years in the field.

So while the typical lifespan is around 25 years, with proper maintenance, quality solar panels can realistically be expected to last 30 years or longer before requiring replacement. This provides excellent long-term value for homeowners and businesses that invest in solar energy.

Source: End-of-Life Management for Solar Photovoltaics

Environmental Impact

Solar energy has significant environmental benefits compared to fossil fuel energy sources. Unlike coal, natural gas, and oil, solar panels produce clean, renewable electricity without emitting greenhouse gases that contribute to climate change. Widespread adoption of solar energy can help reduce carbon emissions and the impacts of climate change (Solar Energy, Wildlife, and the Environment). According to the U.S. Energy Information Administration, solar energy systems do not produce air pollution or carbon dioxide when generating electricity. Transitioning to solar power and other renewable energy sources is an important strategy for slowing climate change and protecting the environment (Solar explained Solar energy and the environment).

In summary, solar power provides clean energy and significantly reduces carbon emissions compared to fossil fuels. This helps mitigate climate change and the environmental harm caused by burning coal, oil, and gas for energy.


In summary, the upfront costs of installing solar panels can seem high, ranging from $10,000-$25,000 for an average-sized residential system. However, solar panels have no fuel costs and minimal maintenance expenses. Factoring in federal and local tax credits and incentives, which can cover 26%-50% of system costs, along with long-term savings on electricity bills, most solar systems offer a return on investment between 6-11 years.

Over a lifespan of 25-30 years, a solar system typically saves tens of thousands of dollars on electricity costs while also reducing a household’s carbon footprint. Though solar power represents only a small fraction of energy generation currently, costs have fallen dramatically in the last decade. With continuing technological improvements and economies of scale lowering prices further, solar energy offers a financially viable and environmentally sustainable energy source over the long term.

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