Should You Wait for Solar Panel Prices to Drop More?

The price of solar panels is probably going to keep dropping over the next decade.

Solar has already become half as expensive as it was 10 years ago. New federal incentives that are giving certainty to the solar industry will likely push the price down even further. The combination of cheaper panels and new incentives helped drive record rooftop solar installations in 2022. 

So, if solar panels are getting more affordable, why buy them now? Why not wait, say, another decade for an even lower price? 

"The data will tell you the time to invest is now. And timing the market is a fool's errand," said Ed Hirs, an energy fellow and lecturer at the University of Houston. "If it makes economic sense for you today, it's not going to make less economic sense for you tomorrow."

How do you make your own decision on the right timing for solar panels? Here's what to know to make an educated choice.

Will the price of solar really keep dropping?

No one can predict the future. That said, solar experts have reached a general consensus on where the industry is going next.

"Are there better techniques ahead? Yeah, maybe," Hirs said. "Are things going to become cheaper? Potentially."

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Pamela Frank, vice president of energy consulting firm Gabel Associates, recently told CNET that the federal solar tax credit -- which will be in place for at least the next 10 years -- gives solar manufacturers the confidence to scale up operations and reach new economies of scale.

But there are some headwinds, too. The supply chain issues that have roiled the globe for years have inflated prices on most consumer goods, including solar panels. In the residential solar market, that caused a slight increase in prices. 

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Solar in the US is also more expensive than in other countries, owing to higher permitting and overhead costs. These "soft costs" might not fall as quickly as the cost of the panels themselves.

How much do solar panels cost in my state?

The map below shows the average total cash price, cost per watt and system size for a solar panel system in your state, according to data from FindEnergy.com. The prices shown don't factor in tax credits or state incentives. States that don't have any FindEnergy solar data and are grayed out on the map.

How much can I save if I wait?

There's no way to know for sure.

"In any type of technological advance where a lot of money is being invested, it's kind of like trying to catch a knife," Hirs said.

If solar prices continue the same general downward trend from the past decade, waiting a few years could save you a couple thousand dollars. But again, this depends on a lot of factors, including where you live and what type of solar system you're installing. (Not to mention which installer you use.)

As solar and energy storage become more popular in the US, however, you could unlock some savings as the technology itself becomes more common. And if you partner up with your neighbors, you could even snag a group discount by giving an installer a big batch of work in the same neighborhood.

Right now, solar only accounts for 5% of US energy production, which means there's a lot of untapped potential -- and empty rooftops -- across the country. If solar adoption takes off, that will bode well for the industry, and for the prices that consumers see on their installation bill.

What do I lose if I wait?

While the cost of waiting to install solar might not be as easily quantifiable, Hirs says there are some tangible drawbacks to delaying an installation.

It mostly comes down to how much you value a reliable electricity source -- especially in an era where electrical grids are becoming less reliable.

"The value of solar and any storage capacity that one has is the value of 'lost load,' as we call it in the business. In other words, what's the opportunity cost of having your power go out for a day, or two days, or three days?" Hirs said.

If you have essential medical equipment in your home, for example, you might not be able to afford to lose power for any amount of time -- making solar and energy storage a critical investment, regardless of potential future price drops.

But there are even more prosaic reasons to invest in solar sooner rather than later, according to Hirs.

"For those who can afford it, solar is a great safeguard to keep your air conditioning going, to maintain your home … in the face of grid failure," he said. Having what is essentially a backup source of energy can insulate you -- literally -- from the costs and frustrations of power outages. It's why "we see in the wealthier neighborhoods, folks stacking solar panels on their homes," Hirs said.

By waiting to install solar, you could also lose out on some of the incentives that make it more affordable. While the federal solar tax credit is guaranteed for the next decade, state-level incentives are much less secure. In fact, policies like net metering and tax benefits are often subject to the political whims of elected commissioners. 

When it comes to state-level policies, consumers are still riding the "solar roller coaster," according to Kevin Jones, director of the Institute for Energy and the Environment at Vermont Law and Graduate School.

Five or 10 years from now, your local electric utility might not have such a generous payback rate for the excess electricity your solar panels generate. In California, for example, state regulators recently cut the credit value for excess energy by 75%.

With that level of uncertainty, you might stand to lose a lot if you hold out for the potential of lower solar costs down the line.