Solar power as a source of electricity has been on a meteoric rise, and has crossed some encouraging milestone recently. Every way you look at it, solar is booming. This is driven primarily by the decrease in the cost of adding solar power, so let’s start there.

The Berkley Lab has been tracking the cost of solar power in the US for years, so they are a reliable source of information. They get direct data from the actual price paid by consumers, and break down the cost of panels, the cost of installation, and all the “soft” costs that  are part of the industry. In 2009 the total cost of installing solar between $7 – 8.70 per watt. An average US residential home installs a 6-8 kW system, with the average increasing over the years. In 2025 the average size was 7.7 kW. Let’s use a 7 kW system, at $8 per watt, that’s $56,000 total installation cost. Today the average price of installed residential solar in the US is $3.6 per watt (but it is $3.0 if you pay upfront, $4.50 if you finance). So that same 7 kW system now costs $25,200. (If you pay for it outright, the cost drops to $21,000.) So over the last two decades the total const of installed residential solar has dropped by about 60%. This is without considering any tax breaks or incentives.

The reason for the decrease is partly that solar panels themselves are cheaper, and they are more efficient, so a 7kW system requires fewer panels. Installation costs have decreased by about 50% over this time, largely due to economies of scale. However, the US still has higher soft costs for solar than many other industrialized nations, and this is mostly a matter of the regulatory system. So there is some regulatory efficiency to be gained. Solar companies themselves also have some possible efficiency gains. Fortunately, the net price for solar continues to go down, with another 50-60% decrease in total price possible even without further technology gains. Commercial and grid scale solar is even cheaper – with large non-residential installations down to $2.4 per watt.

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