Median residential solar system prices in the United States reached a record low of $2.48 per watt in the first half of 2025, tying the previous low set in the second half of 2024, according to a new marketplace report by EnergySage. For a median-sized 11.7-kilowatt system, the quoted price translates to $29,016 before incentives.
“The solar industry has widely cited $2.00 per watt as an attainable target price that would maintain solar’s financial attractiveness for most American homeowners after the tax credit ends,” the EnergySage report said. System costs vary regionally, with an average installation in Massachusetts costing $12,300 more than one in Arizona, and lower utility rates generally correlating with lower solar prices.
The report highlighted rising financial pressures on the sector. Median loan rates for residential solar climbed to 7.5%, and 38% of surveyed contractors reported decreased loan demand. In addition, 92% of respondents said the expiration of the 30% residential solar tax credit at the end of 2025 would harm their business.
The study also noted that hard costs—equipment and labor—represent 55% of total system costs, while soft costs such as permitting, marketing, and overhead account for 28%, with net profit margins averaging 17%.
Contractors cited other challenges, including tariffs, high interest rates, and potential impacts from U.S. immigration policy. About 70% said solar equipment tariffs would harm their business, while 36% reported reduced profitability due to higher interest rates, and 45% flagged workforce concerns. EnergySage said the industry is exploring cost-cutting measures to remain competitive and maintain savings for homeowners.
