As energy costs skyrocket, homeowners are looking for alternative ways to reduce energy bills. Solar power continues to be one of the most popular, accessible renewable energy sources that can help homeowners offset energy costs.
But how much does solar power actually cost for a residential home? And is the investment worth the savings in the long run? The answers may surprise you.
The average cost for residential solar
According to the findings from energy data provider Find Energy, the average cost for a 5 kWh solar setup is $14,100. The states with the highest cost -- Iowa, Colorado, and New Hampshire -- have an average system cost of $16,000 or more. The states where solar will cost least -- Nevada, Washington, Arkansas, and Arizona -- have an average system of just over $12,000.
Based on the national average electricity bill of $122, it would take anywhere from seven to 15 years to recoup your investment into a solar system from savings on your electricity bill. Arizona and Nevada have the lowest cost for solar installation and the highest potential for power, making them the leading states for taking advantage of a home solar system.
Is the potential worth the cost?
Solar potential is largely determined by where your property is located geographically. Southern states, like Florida, Arizona, New Mexico, California, and Nevada have the greatest solar potential, in which the number of kilowatt-hours per year could actually exceed the average amount of power used by households in the state.
With the exclusion of Nebraska, South Dakota, Pennsylvania, West Virginia, New York, Maryland, Virginia, and Tennessee, all other states have the potential to generate enough solar power to cover the average home's kWh consumption.
Even if you're in a state with prime solar potential, this doesn't mean an investment in solar power would yield favorable results. The direction your home faces, as well as potential shade issues, could result in less-than-optimal solar exposure, making it longer to recoup your investment.
Ideally, your property's roof would be south facing, with few to no large trees that would shade the panels throughout the day. It's a good idea to speak with an unbiased specialist, who can tell you your realistic input from a solar setup for your exact property before installing.
Home solar is getting more affordable
Solar panel production has become far more accessible and affordable over the past decade. Data from Statista shows the quarterly cost for residential solar photovoltaic multi modules, the technology used in residential solar panels, has fallen 69% since 2016. This is great news for homeowners who have ideal solar potential in their state and the funds available to install a solar system in their homes.
There are a number of incentives offered by state and federal governments that offer tax credits for the cost of solar installation. The federal Solar Investment Tax Credit (ITC), for example, will pay back 26% of your installation costs in 2022, with that number reducing to 22% in 2023. Several states also offer net metering, which means the energy company will buy back excess energy from you each month.
Ten years may seem like a long time to recoup an investment in solar, but as electricity costs continue to soar, your investment will likely be recouped much quicker while also producing renewable energy.