Solar Sticker Shock

Wait, how much?

One of the knee-jerk reactions to a solar system proposal is sticker shock. It makes sense, any of us would gasp at a price tag in the tens of thousands of dollars! In fact, the average cost of a 5kW solar system before any incentives is $16,800. Most homes require a 5-8 kW solar system, so the initial price tag will likely be in the $20k – $30k range. This is certainly not a price to scoff at, but there are many factors to take into account with the cost of solar. Let’s unpack why maybe we shouldn’t give too much credence to solar sticker shock.


What Makes Solar Unique?

Savings, Now and Later

The questions is: would you rather pay $45,000+ over 25 years to the utility company or pay $20,000 for a solar system?

Let’s say the current electrical bill is around $150 per month, which is $1,800 annually. Over the course of 25 years, that is a total payment of $45,000 to the utility company. Of course, this assumes no electrical rate increases from the utility company for 25 years. In reality, electrical rates increase nationally an average of 4% every year! So over 25 years, payment to the utility will very likely be much more than $45,000.

Compare this conservative estimate to the cost of solar over the lifetime of the system.

Depending on financing structure (RGS Energy offers purchase and financed options) a solar system can be paid for in cash up-front or financed. If purchased with cash up-front, you’ll be investing in free electricity after the monthly savings recoups your initial investment. If you finance with a loan, either through RGS Energy or your own bank or credit union, you’ll typically see immediate monthly savings with the same free electricity after the term of the loan! 

Tax Credits and Incentives. 

A major aid in reducing the cost of solar are federal and local incentives. The Federal Incentive Tax Credit (ITC) provides a 30% tax credit, so the solar system’s cost will be reduced by 30%. In addition, local and state incentives further reduce the cost via solar initiative incentives. After applying the Federal ITC, the average cost of a 5kW system drops from $16,800 to $11,760. This is even before any local incentives have been applied.

Benefits of the Federal Solar Tax Credit

For more information on local incentives visit the Database of State Incentives for Renewabes & Efficiency (DSIRE)


A solar system purchase is an investment. In fact, solar systems have the best home improvement value compared to other home projects and can recoup 142% of the cost! For the Addessi family, not only did solar increase the value of their home by $15k, but they will realize a return in less than 8 years:

At the current rate of power generation, we are predicting a return on our out of pocket investment of less than eight years, RGS estimated conservatively 12-14 years. In addition to paying for itself through National Grid savings, the system has added an estimated $15k (refinance appraisal in 2015) to the appraised value of our home which is more than our total net out of pocket expense for the system. We plan to be in the home for the next five years, so with the system paid for through grid savings, the additional equity will be all ours.

Addessi Family

The price of a solar system doesn’t seem so shocking anymore when we take into account electrical savings, incentives, and the return on investment.

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