Guide to Home Solar Panels: What You Need To Know

Home Solar Key Points

• Home solar panels have an average payback time of seven to 10 years for most homeowners.

• Solar power with storage can provide security during power outages.

• Solar panels require a sizable investment so it’s important to compare multiple quotes from installers.

Are you on the fence about putting solar panels on your roof? Residential solar has come a long way since the 1980s, and government incentives like the Residential Clean Energy Credit shorten the payback period to make installation easier on your wallet. However, incentives like tax credits and net metering may not be around forever. Now is a great time to see if buying solar panels makes sense for your home. Let’s dive in.

Should You Get Home Solar Panels?

A rooftop solar system can help most homeowners save money, but it’s not the best option for everyone. Here are a few things to consider if you want to go solar.

Home Solar Panel Basics

Going solar involves installing photovoltaic (PV) panels on your roof to harness the sun’s energy and turn it into electricity. In most cases, rooftop solar installations are tied to the grid. Homeowners use energy from their panels during the day and energy from the grid at night.

Most rooftop solar systems are designed to cover 100% of a home’s average energy usage. What you use can be slightly more or less than what your system produces, and you can get credit for overproduction if your power company offers net metering. If you can’t get net metering in your location, you’ll want a battery backup to store energy for nighttime use. Solar panels with a battery backup also provide security during power outages.

Why Go Solar?

We’ve noticed a few main reasons homeowners choose to install solar panels:

• Save on rising energy bills: The big reason to choose solar is to save money in the long run compared to rising energy bills. If you finance your panels, you essentially trade your variable electricity payment for a fixed loan payment.

• Power outage security: Many people install solar panels with a battery backup system to have secure power during blackouts. If you conserve electricity during an outage you can charge your battery during the day and have enough power for necessities at night.

• Do good for the environment: Many homeowners see the environmental benefits of solar as the most important factor.

• Regulations: California was the first state to require solar panels and energy storage on most new residential and commercial buildings. If you’re thinking of building a new home in the state, you’ll have to consider solar.

How Much Power Can Solar Panels Produce?

You can use the PVWatts calculator to closely estimate the power that a solar system of different sizes can produce at your address. The calculator allows you to select many parameters like:

• Total system size

• Roof tilt

• Roof direction

• Type of panel (standard, advanced, or thin-film)

• Mount type

You can then see the output by month and year to compare with usage data from your energy bill. While this is just an estimate, it can help show whether an average 7 kW system is enough or if you need something bigger.

How Many Solar Panels Power a House?

Our data shows that 13 panels can run a 4 kW system for a small home while 25 panels can run an 8 kW system for a medium-sized home. How many panels you need depends on your energy usage, home location, and more.

Pros and Cons of Home Solar Panels

Now let’s look at a few high-level benefits and downsides of solar panels.

What a Rooftop Solar Installation Includes

Solar panels aren’t the only part of a home solar system. Here’s what an installation includes:

• Solar panels: Convert light into DC electricity

• Inverter: Converts DC electricity into AC electricity so your home can use the power

• Mounting/racking equipment: Positions and secures panels to your roof

• Metering equipment: Tracks the amount of electricity your system generates and what you use

• Electrical wiring: Connects each piece of the solar system together

• Solar battery (optional): Stores energy your system generates for later use

• Charge controller (for battery): Regulates the current and voltage going to the battery to avoid overcharging

How Long Do Solar Panels Last?

New solar panels should last at least 25 to 30 years with normal maintenance, which includes bi-annual cleanings and occasional inspections if issues arise. Considering how long solar panels last, you’ll have plenty of time to get a good return on your investment if you plan on living in your home for many years.

What Companies Offer Home Solar Panels?

So now you know the basics of solar panels and you think your home could be a good fit, but where do you shop?

Like many homeowners, you might have had a door-to-door salesperson come to your house and pitch solar power. Regional installers use this technique, and not all doorknockers are scammers. However, it’s important to do some comparison shopping before signing on the dotted line.

For example, our data shows a 5 kW system costs $17,823 on average but can range from $13,958 to $21,082. If someone quotes you $40,000 for a 5 kW system, say no thanks.

You can shop from major national and regional installers like Trinity Solar, Solar Optimum, SunPower, Tesla, Sunrun, and Semper Solaris. Depending on your state, you might have a handful of installers to pick from or dozens. 

Installers carry panels from manufacturers like Qcells, Canadian Solar, First Solar, and JinkoSolar. When you work with an installer, they’ll help you pick the right type of panel to get the best efficiency for your budget.

Are Solar Panels for Your Home Worth It?

Whether a rooftop solar installation is worth it boils down to the payback period. This is the time it takes for the savings on your energy bill to cover the cost of the installation. Our data shows that the average payback period for a 5 kW system is about seven to 10 years, though this ranges from five years in Arizona to 16 years in states without ideal conditions.

Local incentives can make a big difference in your payback period. In the best-case scenario, you’d live in a state that has plenty of sun and offers full net metering and more local rebates. But even without ticking these boxes, solar systems tend to pay for themselves well within their lifetime.

Average Cost of Solar Panels

With an average installation cost of $17,823 for a 5 kW system, solar panels aren’t cheap. However, over a 20-year period, our data shows the average homeowner saves $16,331 after recuperating the installation cost.

The best way to pay for your solar panel installation is with cash. This way, you avoid paying interest and have the quickest payoff period. That said, paying with cash isn't feasible for everybody.

The next best option is to finance the panels with a loan. Calculate how much financing will cost you in the end and use that to figure out your payback period. You can get loans from a bank, credit union, finance company, or even a solar installer.

Some companies also offer leasing options, where you make a fixed lease payment but don’t own the panels. We don't recommend this arrangement because the long-term savings are lower and you can’t claim the federal tax credit. 

How Net Metering Factors Into the Equation

Net metering gives you credit for the excess energy your grid-connected solar panels create. States that have full net metering provide a one-to-one credit for the energy you send. So, if you pay 16 cents per kWh, you get 16 cents for each kWh you provide to the grid. This is called the retail rate. 

Net metering can reduce your electricity bill to $0 (besides minimum charges). Even though your home uses energy from the grid at night, your system has produced enough during the day to cover more than you need in that 24-hour period. Most states with net metering allow credits to roll over indefinitely or for the billing year, so you can use credits you earn in the summer for the fall.

Instead of offering the retail rate, some states offer variable, avoided-cost, or wholesale rates. These are all lower than the retail rate. For instance, while you pay 16 cents per kWh, you might receive 5 cents for excess energy. These are called net billing rates since you don’t get the retail value.

A few states don’t have any net metering or billing regulations. Hawaii is an example. However, solar can still be worth it in Hawaii considering the amount of sun.

Without net metering, you’d pay for the power you use at night. This is a great situation to have a battery for solar storage.

Residential Solar Incentives

Multiple incentives reduce the cost of solar depending on your state and local area. These range from a 30% federal tax credit on the installation cost (excluding loan interest and fees) to state tax credits, state rebates, utility rebates, incentives for energy storage, and low interest rates for renewable energy loans.

Here are a few examples:

• Residential Clean Energy Credit: The IRS provides a tax credit of 30% of the cost of a new renewable home energy system installed between 2022 and 2032. The credit decreases to 26% in 2033 and 22% in 2034. The credit can be used on future tax years if you don’t owe enough taxes to use it all in the first year.

• State tax credits: States offer credits that can be a flat dollar amount or percentage of the installation cost. For example, homeowners in Arizona can get up to $1,000 to install a solar system.

• Rebates: States, utilities, and agencies may offer other rebates to lower net installation costs. For example, AEP Texas North customers can get a rebate based on their system’s output and available funds.

• Tax savings: If solar panels increase your assessed property value they can also increase your property tax. However, a majority of states provide exclusions so your taxes don’t rise after installing solar panels. Many states also exclude solar panels from sales tax.

Do Solar Panels Increase Your Home’s Value?

Solar panels may increase the value of your home if the panels aren’t too old by the time you sell your home and buyers in your market appreciate solar. For example, a Zillow study showed that homes with solar panels sell for an average of 4.1% more than those without. However, if you wait 20 years after installing solar to sell your home, buyers could see the old system more as a liability than an asset.

Buying Solar Panels Step-by-step

The entire process of shopping for and installing solar panels can take anywhere from two to six months. Here’s what to expect.

1. Find reputable local solar installers

First, locate reputable solar installers in your area. Look for companies with:

• At least 3 to 5 years of experience

• Mostly positive reviews

• Certification by the North American Board of Certified Energy Practitioners (NABCEP)

• A workmanship warranty of at least 5 to 10 years

• Transparency about working with subcontractors

• High-quality solar panels and mounting equipment

2. Compare quotes from solar installation companies

As with any big purchase, comparing solar quotes is a necessity. Reputable companies are used to people shopping around and may even offer price match guarantees. Beware of high-pressure salespeople who say the quote is only good for a short time.

Some companies might provide estimates over the phone, but the best option is to have an installer visit your property. They’ll look at your roof and ask about your energy usage to formulate a full quote.

A full quote should include:

• The size of the system and the amount of power it will generate

• Specific make and model of solar panels

• Panel configuration

• Inverter model

• Information on incentives that apply to you

• Total cost of the system

• Warranty information

• Loan information if applicable

3. Get solar system designs and permits

You’ll sign a purchase agreement to move forward with the installer you choose. Then, they’ll create a detailed design including wiring, utility requirements, and building codes. This part can take a couple of weeks.

Next, the installer will apply for permits to construct the system. These can include solar-specific, electrical, and building permits. This can take a few more weeks to a couple of months depending on your local government.

4. Begin solar system installation

Once the permits are in place, the installer can order the panels and hardware to begin installation. Be prepared for a bit more waiting depending on what needs to be ordered.

The actual installation takes just a few days. Considering the months before this phase, installation can feel like the quickest part.

5. Inspect and connect

After installation, the county and utility will both inspect the system. The utility company will install and activate your new meter and give you permission to operate the system.

Now, sit back and enjoy clean energy from the sun for years to come.

Wrapping Up: Home Solar Guide

Home solar panels are often worth it and have the potential to save you thousands in electricity bills over time. The deciding factors include how much electricity you need, solar panel costs in your area, average sunlight, and state incentives available to you. If the math looks good to you, it’s a great time to start using clean solar energy for your home.

FAQ About House Solar Panels

Below are a few frequently asked questions about home solar panels:

Can I run A/C on a solar panel?

Yes, you can run A/C on an efficient home solar panel system. If you want to use solar energy at night, you’ll need a battery backup to power your home with stored energy.

How many solar panels are needed to run a home?

A small home with a 4 kW system needs 13 panels while a mid-sized home with an 8 kW system needs 25 panels. On the high end, a 14 kW system would use 44 panels to power a large home with high electricity needs.

Are residential solar panels worth it?

If your home gets at least four hours of peak sun per day on average, a solar panel system is likely to be worth it. Solar panels pay for themselves in about seven to 10 years on average.

How many solar panels do I need for a 2,000 sq ft home?

If you use 10,000 to 12,000 kWh per year of electricity for a 2,000 sq ft home, you’ll need between 19 and 25 solar panels on average. This assumes your home is a good candidate for efficient solar generation.