Solar Energy Pros and Cons – Are Solar Panels Worth It?

If you are one of the many homeowners considering the installation of solar panels on your home’s rooftop, then undoubtedly one of the burning questions on your mind is whether the pros of solar energy outweigh the cons when it comes to residential solar powers systems for homes.

A new asphalt shingle roof with PV solar panels

Let’s examine the main benefits and drawbacks of solar energy systems to help you make a well-informed decision:


  1. Dramatic Reduction in the Price per Watt Installed: One of the strongest benefits of solar energy today is that the solar price per watt (PPV) installed has come down from almost $9.00 per watt installed in 2008, to the current average cost ranging from $2.80 to $3.30 per watt installed, before the 26% federal solar investment tax credits (ITC) that apply to the full amount paid for a new solar system.

    — Thus, homeowners going solar today are paying almost 66% less than they used to pay for solar energy just a little over a decade ago! That’s a very significant reduction in the upfront cost of investment in solar, especially if you take into account the rate of inflation since 2008.

  2. Short Payback Period: Modern PV solar panels are boasting ever higher efficiency ratings and last longer than they did a decade ago. Today, you can install high-efficiency solar panels that will pay for themselves in about 8 years, on average, thanks to the attractive unit economics of solar energy (especially with the federal solar investment tax credits), resulting in a relatively short payback period (break-even point).

    — After your solar panels pay for themselves, they will continue generating home electricity from solar energy for decades to come, with only minimal (practically negligible) annual loss of efficiency.

  3. Reduced Reliance on Power Grid: In states like California where power grid black-outs are a thing, solar panels can help maintain the comfort of having uninterrupted electricity at your house, even when the grid is not supplying sufficient power due to block-outs during peak summer hours. When coupled with a solar energy storage battery, some of the excess electricity can be stored by the battery pack for use during night hours, when solar energy is not available.

  4. Ample Federal Tax Credits and State Incentives: The 26% federal solar investment tax credits through the end of 2022 (after the recent solar ITC program extension by congress) are a very lucrative incentive to invest in solar energy, but there are also numerous state and local utility (power grid) incentives that make residential solar investment even more attractive.

  5. Net Metering: Mandatory solar electricity net metering rules adopted by many states, enable homeowners to sell their excess electricity back to the power grid for electricity credits, when it’s not needed. This is especially useful for homeowners who don’t have a battery pack to store the excess electricity generated by the solar panels during the day. Today, there are more than 41 states that have mandatory net metering rules requiring local electric utilities to buy back excess electricity from the consumers.

  6. Clean Renewable Energy Source: Solar electric energy generation leads to cleaner air and more sustainable living for communities, especially for places like Los Angeles that used to be plagued by smog back in the day. Since solar energy is a renewable resource, harnessing the solar energy is a win-win for your pocketbook and the environment.

  7. Increased Property Values: A well-planned solar power system can help increase the value of your home at resale. A home that generates its own electricity may be viewed more favorably by prospective buyers than one without the solar panels, especially in states like California, Oregon, Arizona, Washington, Texas, and more.

    — Homeowners can take advantage of having a solar power system supplying clean electricity, with the solar system paying for itself in about 8 years. Since solar energy is a gift that keeps on giving, homeowners can continue to enjoy free or greatly reduced electricity, after the break-even period, while also enjoying the increased property value from having a PV system that will last for another 15 to 20 years.

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Solar Power for Homes: PV Solar Panels vs. BiPV Solar Shingles in 2021

How Does PV Solar Power Work?

How PV solar power system works

All photovoltaic solar power systems, whether you go with the traditional PV panels, BIPV solar shingles and tiles, or thin-film solar laminates, are installed to face the sun, and then connected to an inverter by a licensed electrician during the installation, so the Direct Current (DC) electricity generated by the photo-voltaic cells can be converted to the Alternating Current (AC) to be used domestically or sold back to the local power grid.

Did you know? You can sell excess solar-generated electricity back to the grid.

Did you know? Many local electric utilities are often required by local laws to buy your excess electricity at pre-set rates.

You might also qualify for tax credit benefits at the end of the year for the installation of a PV solar power system. Be sure to check your state’s and federal rebates and talk to your tax accountant to see if this might be a worthwhile pursuit for you.

Solar power systems use photovoltaic cells to generate clean, renewable electricity from the abundant solar rays. — Currently, there are three main types of PV solar systems available to homeowners.

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Crystalline PV Solar Panels are based on solar cells made from silicone and placed inside a panel designed to contain many individual solar cells.

PV panels are the most common and recognizable type of solar power systems installed on the residential roofs today by companies in the likes of Tesla Solar (Formerly, SolarCity, which was the most well-known and priciest of all the solar power providers. — Notably, the price had nothing to do with the quality of the product or service, but rather it was the result of the aggressive approach to sales — knocking on doors and using high-pressure sales tactics to get you to sing the contract.

Did you know? The company was on the verge of bankruptcy when it was acquired by Tesla and has shrunk in size quite a bit since acquisition).

Other residential solar players in the space include SunGevity (now merged with Horizon Solar Power), SunPower, Vivint Solar (acquired by SunRun in the summer of 2020), and many other regional and local solar installers.

Fun fact: In the northern hemisphere, PV solar panels normally get installed on the south-facing side of the roof for optimum exposure to the sun.

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PV Solar Power Cost per Watt: 5kW-7kW Solar Panels System Costs 2021

This is a good time to install a photovoltaic solar power system on your property. Residential PV solar panels cost per watt installed has been dropping, and newer technology is enabling a far greater efficiency – that’s more solar energy converted into electricity for home usage – for less money.

A new asphalt shingle roof outfitted with PV solar panels

Your options for buying, leasing, Purchasing Power Agreements (PPA, see below) are expanding, and many homeowners are getting solar panels installed on their rooftops for zero down.

In this guide:

  1. Cost per Watt
  2. Total System Cost
  3. Cost Factors
  4. Rooftop Installation Considerations
  5. PV Solar Panels
  6. Buying, Leasing, and PPA Options
  7. BiPV Solar Tiles
  8. Thin-Film Solar Laminates
  9. PACE Solar Finance Program
  10. Solar System Payback Period

Cost per Watt

The national average residential solar cost per watt installed is $2.96 for a typical 5kW ($14,800) to 7kW ($20,720) PV solar panels system when installed by local installers, before the 26% solar investment tax credits rebate from the federal government.

Did you know? The 26% solar tax credits have recently been extended by congress through the end of 2022. Notably, solar ITC apply to the full amount paid for the installation of a new solar panels system.

Depending on the state you live in, your quoted cost per watt can range from $2.80 to $3.22, on average, when installed by a (small) local solar panel installer.

Note that solar investment tax credits (ITC) are being phased out, gradually, with the amount of tax credits decreasing from 26% to 22% in 2023 (the final year for solar ITC).

How Solar Pricing has Decreased Over Time In 2008, the cost of a solar power installation was $8.82 per watt.

Average System Cost for residential PV Solar Panels installed by Local Installers:

Small Home Average Home Large Home
Home Size 1 – 2 bedrooms 3 – 4 bedrooms 5 bedrooms
System Size 5 – 7kW 7 – 8.5kW 9 – 10kW
System Cost $14,800 to $20,720 $20,800 to $25,160 $26,640 to $29,600
After Tax Credits $10,952 to $15,333 $15,350 to $18,618 $19,714 to $21,904

Note: The federal solar investment tax credit is 26% through 2022, and 22% in 2023. After the recent extension by congress, the program is slated to end on December 31st, 2023.

Homeowners take note: large solar installers with national presence like SunRun and Vivint Solar (acquired by SunRun in 2020) will have higher costs per watt installed vs. a small local solar installer due to much higher marketing and customer acquisition costs for large installers with national presence.

SunRun and Vivint Residential Solar PV system cost per watt installed. Source: Corporate filings

Based on the recent data from the US National Renewable Energy Laboratory (NREL),
the average price per watt installed by Vivint and SunRun in 2020 has been ranging between $4.00 and $5.00 per watt. In fact, SunRun’s and Vivint prices per watt installed have increased in 2020 over 2019 due to higher marketing costs in 2020.

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