Quick answer: Rooftop solar is most likely to be a good investment if you pay high electricity rates, have a sunny roof that suits panels, plan to stay in the home for many years, and your utility pays fairly for the power you send back to the grid. For US homeowners, the economics changed in 2026: the 30% federal Residential Clean Energy Credit ended after 31 December 2025, so a system bought now must pay for itself through bill savings and any state or utility incentives. Get several quotes and compare the payback period before you sign.
When this article was first written, CBS News reported that roughly 4% of homes in the U.S. were powered by solar energy. That matches the US Energy Information Administration’s (EIA) 2020 Residential Energy Consumption Survey, which found that 3.7% of single-family homes generated electricity from small-scale solar, rising to 8.9% in the West. Adoption has grown since.
Solar panels need a large up-front investment, and the return comes mainly as lower electricity bills over many years rather than as outright profit. This guide, written for US homeowners, sets out the signs that solar may suit your home and the factors that can make it a poor deal. It is general information, not financial advice.
What changed in 2026: the federal tax credit has ended
Until the end of 2025, US homeowners who bought a solar system could claim the Residential Clean Energy Credit, worth 30% of the cost. According to the Internal Revenue Service (IRS), the credit is not available for property placed in service after 31 December 2025, following changes made by the July 2025 budget law (Public Law 119-21, often called the One Big Beautiful Bill Act).
Two points follow from that:
- If you buy a system outright or with a loan now, there is no federal tax credit to reduce the price. Any savings must come from your electricity bills and from state, local or utility incentives.
- Leases and power purchase agreements (PPAs) work differently. The installer owns the system and may still be able to claim a separate business tax credit for a limited time, subject to construction and in-service deadlines. Ask any installer to show in writing how that affects your price.
To find state and utility incentives, use the Database of State Incentives for Renewables and Efficiency (DSIRE), run by the NC Clean Energy Technology Center at North Carolina State University and searchable by ZIP code.
Signs that solar may be a good investment for your home
1. Solar prices have fallen, but compare quotes
Solar used to be too expensive for most households. Prices have come down a long way, and they are still falling. According to Lawrence Berkeley National Laboratory’s latest data on distributed solar, as reported by Mercom, the median installed price of homeowner-owned residential systems in 2025 was about $3.60 per watt, down from about $4.10 per watt in 2024 after adjusting for inflation. Systems bought with cash had a median of about $3.00 per watt, while loan-financed systems were about $4.50 per watt.
An earlier version of this article quoted an average of $2.65 per watt without a source. Prices vary widely by state, installer, equipment and financing, so get at least three quotes and compare them per watt. Our guide on how to choose the best solar installer explains what to check.
2. Your electricity bills are high
Solar panels turn sunlight into electricity that powers your home and reduces what you buy from the utility. The higher your electricity rate and usage, the more each kilowatt-hour of solar is worth to you. Savings depend on your rates, your roof and your utility’s rules, so treat “you will save thousands” claims with caution until you have run the numbers for your own address.
The free PVWatts calculator, built by the Department of Energy laboratory formerly called the National Renewable Energy Laboratory (renamed the National Laboratory of the Rockies in December 2025), estimates how much electricity a system would produce at your address and what that energy is worth. The Department of Energy’s homeowner’s guide to going solar recommends getting an installer’s custom estimate as well.
3. Your utility pays fairly for exported power
The original article said any excess energy can be sold back to the grid. Whether that is true, and at what price, depends on your state and utility:
- Under traditional net metering, exported power earns a bill credit at or close to the retail rate.
- Some states have moved to net billing, which pays less. California, for example, moved new rooftop solar customers who applied to connect from 15 April 2023 onwards to a net billing tariff, under which exported power is credited at a rate reflecting its value to the grid, which is usually lower than the retail rate.
Where export credits are low, savings depend more on using your solar power yourself, or storing it in a battery for the evening.
Going solar is also an environmentally friendly way to generate electricity. Learn more over here about the benefits of solar panels for your home.
4. You want backup power, and you add a battery
An earlier version of this article said solar panels keep your lights on when the grid goes down. That is only true with the right equipment. A standard grid-tied system without a battery shuts off during a power cut. This anti-islanding protection is required so that panels do not feed power into lines that repair crews expect to be dead.
To have power during an outage, you need a battery with an inverter that can run your home, or selected circuits, separately from the grid. Batteries add significant cost, but they are increasingly common: Lawrence Berkeley National Laboratory’s data, as reported by Mercom, show that 37% of new residential solar systems in 2025 were paired with batteries, up from 25% in 2024.
5. Solar may add to your home’s value
A 2019 Zillow analysis found that homes with solar panels sold for 4.1% more on average than comparable homes without them, with large differences between markets. An earlier version of this article said homeowners could expect a 3–4% increase; treat any figure as a possibility, not a promise.
The value usually depends on owning the system. A leased system or PPA has to be transferred to the buyer or bought out, which can complicate a sale. Buyers also look at the age of the panels and inverter and at any warranties.
When solar may not be a good investment
- Your roof gets little sun. The original article said solar produces the same energy in any climate. That is wrong. Panels work in cold and cloudy places, but output depends on sunlight, roof direction and angle, shading from trees or buildings, and the season.
- Your roof needs replacing soon. Removing and reinstalling panels adds cost, so it is often better to replace the roof first.
- You plan to move within a few years and are unsure the sale price will reflect the system’s value.
- Electricity is cheap where you live, or export credits are low and you use little power during the day.
- The finance costs eat the savings. Compare a loan’s total cost, including fees, with the bill savings you expect.
Solar systems are reliable and can last for decades, but they are not maintenance-free. Inverters usually need replacing during a system’s life, panels may need cleaning, and monitoring helps you catch faults early. The original article also listed heat pumps and double-pane windows as solar technologies; they are energy-efficiency measures, not ways of converting sunlight into electricity. See tips for getting the most out of your solar installation.
How to decide: a simple checklist
- Check your last 12 months of electricity bills for your usage and rate.
- Estimate production for your roof with PVWatts.
- Find out your utility’s export rules (net metering or net billing).
- Look up incentives in DSIRE and with your utility.
- Get at least three quotes and compare price per watt, equipment, warranties and the installer’s track record.
- Work out the payback period: the net system cost divided by the yearly bill savings you expect. Compare it with how long you plan to stay and how long the warranties last.
Several large installers have changed hands in recent years. For example, SunPower filed for bankruptcy in August 2024, and its brand and some businesses were bought by Complete Solaria, which now trades as SunPower. Check who will honour your warranty and service the system in the long run.
Frequently asked questions
Can I still get the 30% federal solar tax credit?
Not for a system you buy for your own home and place in service after 31 December 2025, according to the IRS. Check state and utility incentives instead, and ask installers how any business tax credit affects lease or PPA prices.
Do solar panels work during a power cut?
Not on their own. A grid-tied system shuts down during an outage for safety. You need a battery and suitable inverter to keep power on.
How much does a home solar system cost?
It depends on size, location and financing. Lawrence Berkeley National Laboratory’s data put the 2025 median for homeowner-owned residential systems at about $3.60 per watt. Get several local quotes.
Is it better to buy or lease solar panels?
Buying usually gives the larger long-term savings and the clearest effect on home value, but it needs cash or a loan. Leases and PPAs need little or no money up front, but you do not own the system and must transfer it if you sell.
Do solar panels work in cloudy or cold places?
Yes, but they produce less in cloudy conditions and in winter. Cold alone does not stop them working. Use a production estimate for your address rather than general claims.
Checked in October 2026 against the IRS page on the Residential Clean Energy Credit, the EIA’s 2020 Residential Energy Consumption Survey, Lawrence Berkeley National Laboratory’s 2026 data update on distributed solar (as reported by Mercom), California Public Utilities Commission net billing pages and the Department of Energy’s homeowner’s guide to going solar. This is general information, not financial advice.
