How much money do solar panels save in 2025?

What if you could lock in your electricity costs today and never worry about rate hikes again? That's essentially what solar panels do. While your neighbors watch their monthly bills creep up year after year, you're generating free electricity from your roof.

Do solar panels save money? Absolutely. And the numbers are compelling. Even with lower electric bills or a system that doesn't cover 100% of your electricity needs, the savings add up. Most solar shoppers save between $37,000 and $148,000 on electricity over 25 years.

How much you save depends on several factors: your location, current energy usage, the size of your solar panel system, and—most importantly—the price you pay for electricity. The higher your rates, the faster your savings accumulate.

You can calculate your total solar savings by subtracting the amount you pay for solar (including any available incentives) from what you would have otherwise paid for electricity.

How much do solar panels cost?

Solar is an up-front investment. After you pay for the equipment and installation, your system will produce free electricity for years to come. But you may still have minimal electricity costs if your panels don't offset 100% of your usage. 

The cost of your system primarily depends on its size, which is determined by your electricity use. To estimate how much you'll pay for solar, multiply the size of your system (in watts) by the average cost per watt in your area—$2.53/W across the U.S., according to EnergySage data. Right now, a 12-kilowatt (kW) solar panel system (the average quoted size on EnergySage) costs about $29,649 before any available incentives. This is much lower than it was just 10 years ago. 

While the federal solar tax credit expires at the end of 2025 and is no longer available to most homeowners due to limited installer capacity, many states offer local incentives that help reduce costs. And, if you live in an area with net metering, your local utility company will compensate you with bill credits for any excess energy your solar panel system sends to the grid, helping you save even more over time.

How much do you spend on electricity?

The first step to understanding how much you can save is to calculate how much you spend on electricity annually. According to the U.S. Energy Information Administration, the average U.S. household uses 10,791 kilowatt-hours (kWh) of electricity annually. Multiply that by the national average electricity rate, $0.17 per kWh as of April 2025, and you'll find that the average American family spends around $1,834 per year, or $153 each month.

Also, keep in mind that electricity prices are constantly rising due to inflation. Over the past decade, national electricity costs have increased by about 32%, or 2.8% every year. 

Annual utility rate inflation is one of the biggest reasons it makes sense to go solar. When you generate your own energy with a solar panel system, you lock in your energy costs at a consistent rate, which means you no longer have to worry about annual rate increases from your utility.

Electricity costs over time

*Assumes an annual electricity price increase of 2.8% based on the 10-year average inflation rate. 

Whether or not your system completely offsets your electricity needs depends on its size. You can use the EnergySage calculator to determine how many solar panels you need to cover 100% of your energy needs.

The average U.S. homeowner will save around $57,000 over 25 years after installing solar panels, but your savings will vary depending on where you live and the cost of electricity in your area. The table below shows our state-by-state solar savings estimates over 25 years.

We chose 25 years as the solar lifetime because most solar panel companies cover their products under warranty for 25 years. However, most solar energy systems will last more than 30 years, so you can expect even more substantial long-term savings. Our estimates are based on the following assumptions:

• Electricity demand is based on the state's average quoted system size and median production ratio, and assumes the percentage of needs met by solar panels is 100%.

• Electricity rate is based on the state's average, according to the EIA.

• Electricity inflation rate is 2.8% (national 10-year average).

• Cash purchase and ownership of the solar panels—savings will be lower with a solar loan or a lease/power purchase agreement (PPA).

• The solar lifetime is 25 years—most panels perform well for 30 years or longer, but are covered under warranty for 25 years.

Solar panel savings by state

Note: Based on EnergySage Marketplace data from the first half of 2025.

Financial returns are a compelling reason to invest in renewable energy, but money isn't the only thing solar panels save. When you install solar, you also reduce CO₂ emissions by limiting your fossil fuel consumption. 

The Environmental Protection Agency has a formula to help you calculate the amount of carbon emissions that various green energy practices can help reduce. The table below converts solar power energy production into greenhouse gas offsets using the metric converters 7.44 × 10-4 metric tons CO₂ / kWh of energy produced and the national average for solar panel production ratio, 1.42 kWh / W of power.

CO₂ reductions by solar system size

For reference, a typical vehicle emits 4.6 metric tons of carbon dioxide every year. This means that a 5 kW (5,000 W) solar panel system more than offsets the emissions produced by one fossil fuel automobile in one year.

Solar is one of the few home improvements that pays you back—and then keeps paying you. While a kitchen renovation might make your home look nicer, solar panels actively reduce your monthly expenses while increasing your property value.

Solar delivers meaningful returns for most homeowners. If you spend a lot on electricity—whether from high usage or high rates—you could save upwards of $100,000 over 25 years. And if you have access to strong local incentives like net metering or state rebates, your economics get even better.

As long as your roof is a good fit and you have moderately high electricity costs, solar panels are probably worth it. An analysis by the Department of Energy shows that matching solar's returns with traditional investments would require unusually high rates of return. It's a pretty risk-free investment with tangible benefits you can measure every month on your utility bill.