Are Solar Panels Worth It? Breaking Down Costs and Benefits

For homeowners in many parts of the United States, purchasing and installing a residential solar energy system offers a substantial return on investment.

The ROI isn’t just financial — though, in most cases, that’s part of the package…

Much of the benefit of solar panels and home battery storage comes from the peace of mind of knowing you’re prepared for blackouts and extended power outages, less exposed to rising energy prices, and less dependent on aging power grid infrastructure.

Let’s take a deep dive into the costs and benefits of solar panels.

How Much Do Solar Panels Cost for Homeowners?

The costs of purchasing and installing solar panels at home vary widely based primarily on the following factors.

• Your electricity generation goals (in watts/kilowatts)
• Your household electricity consumption (in kilowatt-hours)
• Average peak sunlight hours at your location (solar irradiance)
• Available installation surface area at your location that regularly receives direct sunlight
• Number of solar panels
• Type of solar panels
• Solar panel efficiency
• Grid-tied, off-grid, or hybrid solar system?
• Eligibility for tax credits and other incentives

Obviously, the difference between installing two solar panels or 40 has the most significant impact on the upfront costs, but you won’t know how many and what type of PV modules you need to meet your goals without some homework.

It’s essential to recognize that solar panels don’t provide household (AC) electricity alone.

The components of a residential photovoltaic (solar) power system other than the PV modules are known as the balance of system (BOS).

Balance of system components include:

• PV modules (solar panels or shingles)
• Solar inverter
• Solar battery*
• Charge controller*
• Battery management system (BMS)*
• Automatic or manual transfer switch (for integration with home circuitry)
• Mounting hardware
• Cables and wiring

*Optional in grid-tied systems.

It’s possible to purchase components separately and mix and match manufacturers, but this approach frequently leads to cross-compatibility issues that can damage your equipment or cause it to not function optimally (or at all).

Many homeowners prefer an all-in-one whole-house solar generator — such as EcoFlow DELTA Pro Ultra — which includes all the system components required to produce and store household electricity.

It’s also possible to install solar panels yourself, but many homeowners choose to work with a professional installer for arrays of five PV modules or more.

How you connect solar panels — in series, parallel, or hybrid — determines how much voltage (V) and amperage (A) are transmitted to your solar inverter or solar battery charge controller.

Sending too much or too little voltage or amperage can permanently damage your solar generator or other balance of system components and create hazardous overvoltage conditions.

A reputable installer will create a detailed solar panel wiring diagram and explain why and how the configuration optimizes electricity generation and protects your system.

Costing and sizing a home solar panel system requires some work to maximize your return on investment.

If you choose to work with a professional installer, make sure to get multiple quotes from different companies and confirm that they’re using PV modules and BOS components from reputable manufacturers.

With the steep increase in demand for residential solar power systems, the market has been flooded with cheap “grey market” solar panels and parts. 

Home solar power requires a significant investment — as always, let the buyer beware.

With so many factors in play that can impact costs, it’s difficult to estimate the upfront price.

However, this table shows estimated solar panel and system costs based on photovoltaic potential — the amount of electricity in kilowatts an array can generate in direct sunlight and ideal conditions.

Estimated Solar Panel + System Cost Based on Electricity Output Potential in Kilowatts (kW)

System Size in Kilowatts (kW)	Estimated Cost (Before Incentives)
1kW	$3,000 – $5,000
3kW	$9,000 – $15,000
5kW	$15,000 – $25,000
10kW	$30,000 – $50,000
15kW	$45,000 – $75,000
20kW	$60,000 – $100,000

It’s essential to note that the estimates are listed as “Before Incentives” because state and federal tax breaks can substantially reduce your upfront costs and shorten your solar payback period.

For example, the Residential Clean Energy Credit provides US taxpayers with a credit against federal income tax liability of 30% of the total purchase and installation costs of a home solar panel and backup battery system (3kWh or higher) installed at their primary or secondary residence.

That means a 10kW photovoltaic system costing $40,000 can save you $12,000 against your federal income tax liability that can be rolled over to subsequent tax years if the credit exceeds what you owe.

Keep in mind, the 30% solar tax credit is non-refundable.

If you don’t owe federal income taxes, you can’t claim the credit as a rebate — meaning you won’t get a tax refund check in the mail unless you overpaid on withholding tax or in certain other circumstances.

However, even if you don’t owe taxes in the year your system is installed, you can apply it to subsequent tax years.

As always, consult your accountant or other tax professional before purchasing and installing a residential solar power system based on the expectation that you’ll receive the tax credit.

Be sure to check for state solar incentives as well. 

You can typically apply for state, federal, local, and private incentives without affecting eligibility for each.

How Much Can You Save With Solar Panels?

Many variables determine how much you can save on electricity bills with a home solar panel system.

The amount you spend on the system is an essential part of the equation for determining your long-term solar return on investment.

But it’s far from the only factor.

The most critical things to consider when estimating savings on electricity bills are:

• Total system purchase and installation cost (including financing, etc.)
• Annual electricity consumption (in kWh)
  • The easiest way to calculate this is to take your last 12 electricity bills and total your monthly electricity consumption. The average consumption for American households is 10,566kWh per year.
• Your electricity rate in cents per kWh (¢/kWh)
• Expected electricity generation from your system in kWh, based on:
  • Maximum output (kW) 
  • Average solar irradiation at your location. Check the photovoltaic potential at your zip code with the National Renewable Energy Lab’s PVWatts calculator.
  • Solar battery storage (kWh or kVa)
• Solar Incentives
• Net metering programs
  • If available at your location
  • For grid-tied and some hybrid solar inverter systems only — not for off-grid.
  • Requires bidirectional connection to the utility grid

Armed with the above information, you can make a simplified calculation of your solar payback period and annual savings.

1. Calculate Annual Electricity Bill Savings

The formula to estimate annual savings from solar is:

Annual Solar Energy Production (kWh) × Electricity Rate (¢/kWh) = Annual Electricity Bill Savings

For example:

Annual Solar Energy Production: 10,000kWh

Electricity Rate: $0.25/kWh
Annual Savings: 10,000kWh × $0.25 = $2,500

2. Calculate Net System Cost

The formula to calculate net system cost is simple unless you wish to factor in potential income from net metering.

Total Purchase and Installation Costs + Financing Costs – Incentives = Net System Cost

For example:

Total Purchase and Installation Costs: $40,000
Incentives: $12,000

Net System Cost: $28,000

3. Calculate the Solar Payback Period
The simple formula to estimate your solar payback period is:

Net System Cost / Annual Electricity Savings = Payback Period (in years)

For example:

Net System Cost: $28,000
Annual Electricity Savings: $1,500
Payback Period: $28,000 / $2,500 = 11.2 years 

Check out our Solar Payback Guide for more advanced solar payback calculations, including formulas that account for net metering exports.

Estimating your annual savings and solar payback is essential because you don’t truly start saving money on electricity bills until you’ve recouped your initial investment.

The solar payback period for the average American homeowner varies considerably, but a reasonable estimate falls within the range of 7 to 12 years.

Let’s break that down further.

• Shorter Payback (7-10 Years): Typical in states with high electricity rates, strong solar incentives, and favorable sunlight exposure.

• Longer Payback (10-12+ Years): More common in states with lower electricity rates, less generous incentives, or fewer hours of average sunlight.

High-quality solar panels typically last 25 to 30 years — more than enough time for most homeowners to receive a substantial return.

Learn how to calculate home solar power ROI here. 

Because there are so many variables to consider, averages for electricity bill savings, solar payback period, and ROI are of limited value.

However, here are some ballpark estimates.

Average Annual Electricity Bill Savings for a 5kW Home Solar System (Estimated)

• 5kW System Size = 5,000 Watts
• Daily Production: 5,000 Watts * 4 peak sun hours * 0.75 (Performance Ratio) = 15,000 Watt-hours = 15 kWh
• Annual Production (Total): 15 kWh/day * 365 days/year = 5,475 kWh
  • Self-Consumed Energy = 5,475 kWh * 40% = 2,190 kWh
  • Exported Energy = 5,475 kWh * 60% = 3,285 kWh
• Self-Consumption Savings = 2,190 kWh * $0.17/kWh = $372.30
• Net Metering Savings = 3,285 kWh * $0.07/kWh = $229.95
• Total Annual Savings = $372.30 + $229.95 = $602.25

This estimate is based on many assumptions that may not be accurate for your home, including:

• Electricity Rate: $0.17 per kWh
• Average Solar Irradiance (Sunlight): 4 peak sun hours per day
• System Performance Ratio: 0.75%
• Net Metering Credit Rate: $0.07 per kWh (Assumes the system is grid-tied or hybrid and exports electricity to the grid)
• Percentage of Self-Consumption: 40% (60% exported to the grid for credit against electricity bills)

Net metering sounds like an attractive prospect, but, in fact, most programs pay a significantly lower rate per kWh for electricity to export than the full retail price per kWh you’re charged for utility power you consume.

Additionally:

Grid-tied solar power systems without battery storage automatically shut down during a blackout and remain offline for the duration of the outage.

Opting for an off-grid or hybrid (solar + storage) that supports 100% self-consumption would increase your savings by about 55% ($330) in the scenario outlined above.

Not to mention the peace of mind you get from knowing you’ve got whole home backup generator power during an extended power outage.

Installing solar battery storage can increase self-consumption and reduce electricity bills by 75% — or eliminate them completely.

With a hybrid solar generator like EcoFlow DELTA Pro 3, you can still alternate between grid and battery power and recharge with solar or multiple other charging methods, giving you the ultimate in convenience while maximizing your solar ROI.

Based on the scenarios and assumptions outlined above, here are ballpark estimates of annual electricity bill savings with and without battery storage.

Average Electricity Bill Savings by System Size (Grid-Tied with Net Metering)

System Size (kW)	Estimated Annual Solar Production (kWh)	Estimated Annual Savings ($)
1kW	1095 kWh	$110 – $150
3kW	3285 kWh	$320 – $400
5kW	5475 kWh	$550 – $650
10kW	10950 kWh	$1,100 – $1,300
15kW	16425 kWh	$1,650 – $1,950
20kW	21900 kWh	$2,200 – $2,600

Average Electricity Bill Savings by System Size (Off-Grid/Hybrid with 100% Self Consumption)

System Size (kW)	Estimated Annual Solar Production (kWh)	Estimated Annual Savings ($)
1kW	1095 kWh	$170 – $200
3kW	3285 kWh	$550 – $600
5kW	5475 kWh	$900 – $1,000
10kW	10950 kWh	$1,800 – $2,000
15kW	16425 kWh	$2,700 – $3,000
20kW	21900 kWh	$3,600 – $4,000

What Are the Pros and Cons of Solar Panels for Private Homes

(a brief paragraph leading into the pros and cons)

Pros

• Reduced Electricity Bills
• Increased Home Value
• Environmentally Friendly:
• Energy Independence
• Blackout Protection with Battery Storage
• Federal Tax Credit and Other Incentives: 

Cons

• High Upfront Cost

(Source: ASES)

• Aesthetic Concerns: Polycrystalline solar panels are often the cheap option, but they’re significantly less efficient than monocrystalline solar panels, and some find their bright blue color unsightly. Monocrystalline panels are black and fit in aesthetically with almost any rooftop design. Solar shingles and roof tiles can also be an option if you don’t like the look of panels and are installing a new roof. 

• Dependency on Sunlight: On cloudy days, solar panel production is reduced, and PV modules don’t work at night. Because solar power is intermittent, you’ll need either solar battery storage or a bidirectional connection to the utility grid.

When Are Solar Panels Worth It?

If most of the following bullet points apply, consider installing solar panels at your home.

Keep in mind that these factors refer mainly to the financial benefits of home solar, which is just scratching the surface.

• High Electricity Bills: Particularly over $125 per month
  
• Net Metering Availability: Monetizing your excess electricity generation can help you save on bills, but increasing self-consumption using solar storage can save you even more. AND provide energy security during blackouts.

• Eligibility for Tax Credits and Incentives to lower the cost of your system and shorten the solar payback period.

• Favorable Roof Conditions: A south-facing roof with minimal shade is optimal for solar panel installation to maximize electricity production. East- or west-facing roofs can work, but they will decrease sunlight exposure during the times of day with peak solar irradiation. North-facing rooftops are not advisable for solar panel installations.

• High Solar Irradiance: The more average hours of peak sunlight at your location, the better.

• Long-Term Investment: The financial benefits of solar panels really start to accrue when your initial investment is paid off — typically in 7-12 years. If you plan on selling your home before achieving solar payback, you may not see any financial benefit. Solar panel systems have been shown to increase property values, but perhaps not enough to offset your costs.

• Low-Interest Financing Options: Many manufacturers offer low-to-no interest financing if you purchase your system directly, which can significantly reduce your upfront investment.
  
  Reduced Carbon Footprint

• Increased Property Value

When Might Solar Panels Not Be Worth It?

Home solar power is an excellent investment for some — but not all — homeowners.

Check out the bullets below. If many of them describe your situation, you might want to think twice before investing in solar power.

Here’s a bulleted list of factors that suggest solar panels might not be worth it for American homeowners:

• Low Electricity Rates and Bills: Electricity rates vary significantly from state to state. For example, Washington and Idaho benefit from a high level of electricity generation from renewable hydroelectric power and often have rates of around $0.10 – $0.15 per kWh. If your electricity bills are already due to low consumption or rates, there’s less financial incentive to switch to solar.
  
• No Net Metering: Many states and utilities don’t offer net metering programs. This isn’t necessarily a deal breaker, though, as you can save more money through self-consumption with solar battery storage.
  
• Tax Credit and Incentive Ineligibility: If you don’t qualify for federal solar tax credits and/or state and local incentives are unattractive (or unavailable), your upfront purchase and installation costs will be significantly higher, lengthening your solar payback period.

• Shaded or North-Facing Roof: If the only rooftop area you have for installation faces north, it’s unlikely that you’ll generate enough electricity to recoup your investment. Similarly, if the ideal installation area on your roof is regularly obstructed by nearby buildings or shade from trees during peak sun hours, your electricity generation potential will be significantly reduced.
  
• Aging or Damaged Roof: Solar panels last 25-30 years longer than many new roofs. If your roof is in need of replacement, wait until after it’s done to install solar panels. Better yet, let your contractor know you want to install solar panels so he can advise you on the optimal roof type for mounting PV modules.

• Low Solar Irradiance: Most areas of the US get enough sunlight to make solar worthwhile, but not all. Consult the PVWatts calculator for average solar irradiation in your zip code.

• Short-Term Homeownership: If you plan to move in the next few years, you might not recoup the cost of the solar panels through energy savings or increased home value.

• HOA or Permitting Restrictions or Complicated Permitting

Frequently Asked Questions

Final Thoughts

For most US homeowners who plan to stay in their current residence long-term, solar panels are more than worth it — they’re typically an excellent investment.

Hopefully, you now have a solid understanding of whether home solar power is right for you and your family.

The financial ROI is often substantial, but it’s difficult to even put a price on the peace of mind that comes with home energy security and decreased dependence on utility grid infrastructure.

EcoFlow DELTA Pro Ultra is a whole-home solar generator that maximizes self-consumption, solar ROI, and protection for you and your family during power outages.

It’s one of EcoFlow’s wide range of off-grid and hybrid solar power solutions.

Check out our selection today.