Are Solar Panels Worth It? Key Insights
As electricity rates climb, more homeowners are looking to the sun to power their lives. While the promise of "free energy" is enticing, some are left wondering:
Are home solar panels a smart investment?
The answer depends on your location, roof condition, and energy goals. This guide breaks down current installation costs, explains how to calculate your "payback period," and explores the environmental and property value benefits of going solar that you can use to inform further conversations with a trusted solar advisor about buying or leasing solar panels.
How much do solar panels cost?
Your out-of-pocket costs for solar panel installation can vary greatly. On average, residential solar panels cost $2.36-$3.24 per watt based on state averages from Palmetto data as of December 2025.
But the actual cost to you can vary depending on where you live, how big your system is, and what incentives you qualify for. When you are talking to a solar advisor about your options, make sure the estimate includes both materials and labor.
Factors that will influence your solar panel cost include:
- Hardware and equipment brand, make, and model
- Installation and labor
- Financing fees
- Permitting
- Size of your home and system
- Installation complexity
- Roof condition and available space
- Additional features, such as a solar battery
State, local, or utility company incentives and programs might reduce your costs.
- State tax credits
- Tax exemptions or exclusions
- Net metering programs
- Solar renewable energy certificates
- Low-interest loan programs
Another factor to consider when evaluating your overall costs is the time and money required for solar panel maintenance. The good news is quality solar panels are quite durable and can last 25 or more years.
Leasing solar panels
When you lease solar panels, you swap the upfront cost for predictable monthly payments that cover purchase, installation, and most maintenance. This means you could save as soon as your first electric bill, though like with purchased solar panels, savings can vary from month to month and year to year.
How much can solar panels save?
To get the best understanding of solar panel savings, you should look at them annually, or over multiple years. Solar production and savings vary with the season. Typically, they’re largest in the summer and smallest in the winter.
Using estimates from Palmetto installations, you can see that savings vary by location.
| State | Avg. monthly savings | Avg. 25-year savings | Avg. Payback period |
|---|---|---|---|
| Arizona | $123 | $65,463 | 11.1 |
| California | $240 | $105,292 | 6.2 |
| Colorado | $128 | $56,197 | 10.7 |
| Connecticut | $288 | $126,141 | 7.3 |
| Florida | $184 | $80,925 | 10.6 |
| Georgia | $103 | $45,416 | 15.8 |
| Illinois | $136 | $59,764 | 14 |
| Maine | $223 | $97,675 | 9.0 |
| Maryland | $193 | $84,633 | 10 |
| Massachusetts | $273 | $119,805 | 6.6 |
| Michigan | $123 | $54,190 | 11.6 |
| New Hampshire | $151 | $66,158 | 12 |
| New Jersey | $206 | $90,560 | 9.8 |
| New Mexico | $127 | $55,737 | 9.7 |
| New York | $222 | $97,553 | 7.0 |
| North Carolina | $137 | $60,191 | 11.8 |
| Ohio | $130 | $57,246 | 12.5 |
| Pennsylvania | $156 | $68,655 | 10.2 |
| Rhode Island | $222 | $97,227 | 8.0 |
| South Carolina | $99 | $43,669 | 12.1 |
| Texas | $179 | $78,676 | 10.9 |
| Vermont | $173 | $75,864 | 10.6 |
| Virginia | $160 | $70,113 | 11.8 |
| Wisconsin | $162 | $71,214 | 11.2 |
(Average savings estimates are based on real Palmetto installations, but do not necessarily reflect the value you could see.)
A solar panel payback period is the amount of time it takes for savings from solar panels to match the cost of installing them. The table above includes averages for real installations in the above states. When you lease, you won’t have a payback period, since you’ll have no upfront cost. You can calculate your payback period by dividing the upfront cost of your solar panels by your annual savings.
For example:
$11,200 (Cost of solar panel installation)
Assuming your solar panels decrease your energy bill by $100 per month, it means you are saving $1,200 per year.
$11,200 investment / $1,200 savings per year = A payback period of 9 years, 4 months
Payback periods can change depending on how electricity rates change. If rates increase faster than expected, payback periods can be shorter than predicted.
The new Palmetto app helps you find ways to save energy and money. You can track your home energy consumption, track utility rates and costs where supported, and find energy-saving products on the app.
Are solar panels worth it?
Solar panels are worth it for many homeowners, especially if you live in an area with high electricity rates, you have plenty of sunlight, and you intend to stay in your home for many years.
However, there are a few situations where investing in solar panel installation might not make sense. For example, if your home is heavily shaded or you already have low energy bills, then the costs might not justify the potential savings.