Solar 101

Introduction to Solar Energy: How It Works and Why It Matters.

Table of Contents

Cost of Solar

Solar energy has been around for decades, but it's only in recent years that it's become a practical and affordable source of electricity for homes and businesses. In this article, we'll take a closer look at how solar power works and why it's such an attractive alternative to traditional fossil fuels.

Cost of Solar in the United States

As the pursuit of sustainable energy intensifies, solar power has emerged as a leading contender in the United States. Solar energy not only helps combat climate change but also offers long-term cost savings for homeowners and businesses.

While the initial investment may seem daunting, it’s essential to consider the full picture of the cost of solar in the U.S. and the plethora of financial incentives available at the state and federal levels.

The Cost of Solar Installations

The cost of a solar installation in the United States can vary depending on several factors, including the size of the system, the type of solar panels used, and regional market dynamics. Historically, solar power systems had a higher price tag due to expensive components and installation processes. However, recently, technological advancements and increased demand have driven costs down significantly.

In fact, most homeowners tend to find that REDUCED costs are what push them to finally purchase solar.

The average cost of a residential solar PV system ranges from $2.50 to $3.50 per watt before any financial incentives. For a typical 6 kW solar system, this would amount to around $15,000 to $21,000 before incentives. Commercial-scale solar installations generally have a lower cost per watt due to economies of scale.

Federal Solar Tax Credit (Investment Tax Credit)

One of the most substantial financial incentives for installing solar in the United States is the Federal Solar Investment Tax Credit (ITC). The ITC allows homeowners and businesses to deduct a percentage of the total solar system cost from their federal income taxes. In 2023 Congress passed an extension for the ITC, making homeowners eligible for a 30% tax credit. For individuals within a close range on their tax brackets, this can make a big impact.

Keep in mind that the ITC created the 30% deductible to last until 2033, when they say it will drop to 26%.

State-Based Solar Incentives

Beyond the federal level, many states offer additional solar incentives to encourage adoption and reduce the cost of solar installations. These state-specific incentives can include:

State Tax Credits

Some states offer their own tax credits, which can further reduce the net cost of going solar. Learn more about your state in our solar by state series!


Many states have rebate programs that provide cash incentives or grants based on the size of the solar system installed.

Performance-Based Incentives (PBIs)

PBIs are programs where system owners receive payments based on the amount of electricity their solar systems produce over time.

Renewable Energy Certificates (RECs)

In states with Renewable Portfolio Standards (RPS), solar system owners can earn RECs for the clean energy they produce, which can be sold to utilities to meet their renewable energy targets.

Property Tax Exemptions

Some states offer property tax exemptions or reduced assessments for homes with solar installations, helping to lower the overall cost of the system.

What is Net Metering?

Net metering is a billing arrangement that allows them to offset the electricity they consume from the grid with the excess electricity their solar system produces.

When the solar panels produce more electricity than the home uses, the surplus energy is sent back to the grid, earning credits on the homeowner’s electricity bill. Net metering effectively reduces electricity costs and can even lead to net-zero or even net-positive electricity bills.


While the upfront cost of solar installations in the United States can be a concern for some, it’s crucial to understand the financial incentives and savings available. The Federal Solar Investment Tax Credit (ITC) and various state-based incentives can significantly reduce the overall cost of going solar. Additionally, net metering allows solar system owners to see substantial savings on their electricity bills, making solar power an increasingly attractive and cost-effective energy option.

As technology continues to advance and the demand for renewable energy grows, the cost of solar installations is likely to become even more affordable. By taking advantage of tax credits and savings options, homeowners and businesses can not only contribute to a cleaner and greener future but also enjoy long-term financial benefits.