Updated 2016: Solar photovoltaic (PV) systems turn sunlight into electricity for your home or business -- so you don't have to buy all your energy from the utility. In fact, people commonly save 50% to 70% or more on their utility bills after installing solar panels.

But, how much does it cost to install a solar energy system that's right for you? To be honest, you won't know for sure until you get a free solar home evaluation from a qualified solar installer.

If you're noodling around the Web, however, and are just looking for some general solar cost information, we can help with that, too. As a rule of thumb, competitive residential solar electric systems are now pricing around $3.50 per watt, or $3,500 per kilowatt (1,000 watts). On a medium size residential system of say 8 kilowatts, that's $28,000 total retail price before incentives. The Federal Investment Tax Credit (ITC) is 30% of total system price, so you can knock the price down by at least that much, which is $8,400, leaving $19,600 cost before applying any state and local rebates that may be in effect.

Play with the EnergySage Solar Cost Calculator!                                                                                         

Generally speaking, a number of things can influence the installed cost of your solar panel system:

Where you live.

Some states, utilities and municipalities offer incentives -- like solar rebates and tax credits -- to homeowners (and businesses) who install solar power. Depending on where you live, these incentives can significantly reduce solar installation costs. Your location and how much sunshine you get is also important in figuring out how much electricity your solar energy system will produce.

How much electricity you use.

All else equal, the more electricity you use, the bigger the solar panel system you'll need. The bigger the system, the higher the cost.

Your roof.

Not all roofs are created equal. It's a bit more expensive to install solar panels on a wood shake shingle roof and clay tile roofs, for example, than it is on an asphalt shingle roof. For large commercial projects, structural upgrades may be necessary. If your roof isn't good for solar, you may want to consider a ground-mounted solar array. As always, a qualified solar installer can go over your particular solar project needs. 

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