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Long considered too expensive and inefficient for mainstream adoption, solar power has become increasingly competitive with traditional fossil fuel electricity generation. The average operating cost of a rooftop solar system is now 6-8 cents per kWh, depending on its size, type of equipment, and local incentives.
Installation costs are dropping too. As of 2025, solar panel installation per watt fell to just around $2.50 before incentives. This is on par with or cheaper than traditional plants in many regions, with a typical 11 kW residential system sticker price of $29,000, or $20,500 after applying federal and state tax credits.
As solar becomes more economical in more markets—even without subsidies—deployment is accelerating across residential, commercial, and utility sectors, creating plenty of investment opportunities throughout the value chain.
Companies involved in manufacturing, installation, financing, and service are drawing increased capital from both specialized green energy investors and mainstream funds seeking exposure to one of the fastest-growing segments of the energy sector.
Key Takeaways
- Solar energy installation costs have decreased significantly over the past decade.
- Federal and state solar tax credits can significantly reduce upfront costs.
- New technologies are making solar more productive and economical.
- Investors can profit from solar through home systems to investing in ETFs and individual stocks.
- Emerging technologies like bifacial panels, perovskite cells, and integrated storage solutions are creating new opportunities.
Solar Energy: An Overview
Solar energy harnesses the sun’s light to generate electricity through photovoltaic (PV) cells or thermal solar systems. PV panels, typically made of silicon, are the standard choice for both residential and commercial applications.
The global PV market has undergone a remarkable transformation, with annual installations growing from less than 100 GW in 2012 to over 655 GW projected for 2025. The rapid expansion of the market has produced economies of scale which have resulted in manufacturing plants becoming more automated and efficient. Materials science innovations such as higher-quality silicon combined with advanced anti-reflective coatings and robust encapsulation techniques have extended solar panel lifespans beyond their typical 25-30 years.
Efficiency improvements have dramatically enhanced the value proposition of solar energy. Just a decade ago, commercial panels typically operated at 14-16% (with consumer panels even less efficient), meaning much of the sun’s energy was wasted. Today’s more advanced panels convert much more sunlight into usable electricity, reducing space requirements and improving returns on investment. While the most efficient solar panels on the market today have efficiency ratings as high as 25%, the majority of panels now range from a 20% to 24% efficiency rate.
The dramatic cost reductions in solar technology—with prices falling by approximately 20% every time global solar capacity doubles—have made solar increasingly viable for both individual consumers and large-scale utilities. This trend has continued despite some recent challenges, with overall costs expected to continue their downward trajectory.
| Top 5 Most Efficient Solar Panel Makers in 2025 | |
|---|---|
| Manufacturer | Efficiency Rating (2025) |
| Aiko Solar | 24.3% |
| Maxeon | 24.1% |
| Jinko Solar | 23.8% |
| Recom Tech | 23.6% |
| SPIC | 23.6% |
Tip
Another reason that the price of solar has dropped is due to an increase in supply, particularly from Chinese producers. China has over-produced solar panels relative to current demand, which put downward pressure on prices. At the same time, the cost of installing solar panels has fallen due to more efficient methods and specially designed tools.
Profiting Through Personal Solar Panel Installation
Energy Savings and ROI
Installing solar panels on your property is often the most direct approach to earn from solar energy. The financial benefits include:
- Reduced electricity bills: Solar systems allow homeowners to reduce or completely remove their monthly electricity payments.
- Protection against rate increases: Homeowners who produce their own energy can protect themselves from the typical annual utility rate increases.
- Net metering: Net metering policies enable you to push surplus energy from your system back to the grid which generates credit and further decreases your costs.
- Increased property value: Solar installation leads to higher resale value for homes which research shows realize a premium of around 4%.
- Tax incentives and rebates: The federal government will keep a 30% renewable energy credit until 2032 which cuts installation costs by almost one-third. Many states offer additional incentives (see below).
Solar installations for homes typically reach their return on investment (ROI) after about five years, based on local electricity rates combined with available incentives as well as installation expenses.
Once this initial payback period ends, the system produces electricity at essentially no extra cost for its remaining 25-30 year operational lifetime.
Current Federal and State Incentives
- The Residential Clean Energy Credit: passed as part of the Inflation Reduction Act of 2022, it equals 30% of the costs of new, qualified clean energy residential installations made from 2022 through 2032. The credit declines to 26% for solar panels installed in 2033 and then 22% in 2034.
- State-level incentives: Many states offer additional tax credits, rebates, or performance-based incentives. For example, N.Y. homeowners can claim a 25% tax credit on system costs, up to $5,000, through New York State’s Solar Energy System Equipment Credit. Visit your state’s energy department website or check databases like the Database of State Incentives for Renewables & Efficiency (DSIRE) to see what programs are available. In general, states also offer:
- Property tax exemptions for the added value of solar systems
- Sales tax exemptions on solar equipment
- Performance-based incentives paying for each kilowatt-hour produced
- Net metering or feed-in tariff programs
These incentives can usually be combined, which significantly reduces the upfront costs and enhances ROI.
Tip
The federal solar panel ITC is the original Investment Tax Credit that has been around for over two decades, allowing homeowners to claim a tax credit worth 30% of their solar installation costs. The ITC has now been incorporated into the broader Residential Clean Energy Credit framework.
Investing in Solar Stocks and ETFs
Solar ETFs
Investors seeking broad solar market exposure without picking individual companies should choose solar ETFs for their diversified portfolio benefits (all data is as of May 16, 2025).
- Invesco Solar ETF (TAN): The largest pure-play solar-focused ETF with assets under management (AUM) totaling $678 million and includes 38 holdings.
- Global X Solar ETF (RAYS): A pure-play market-cap-weighted index of global solar energy companies selected based on their revenue generated from solar-related business, and ESG criteria. It only has $4.6 million in AUM but 44 holdings.
- First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN): A diverse clean energy fund that holds a substantial solar portfolio with total assets of $424 million.
- iShares Global Clean Energy ETF (ICLN): With roughly $1.44 billion in assets ICLN is the largest diversified clean energy ETF, including allocations to solar power.
Solar Stocks
Individual solar companies worth considering for investment include:
- First Solar (FSLR): A top U.S.-based producer of thin-film solar modules and panels.
- Enphase Energy (ENPH): A developer of microinverter technology for solar systems that scale with improved panel efficiency and system sophistication.
- SunRun (RUN): Leads residential solar installation across the United States while expanding its battery storage operations.
- Canadian Solar (CSIQ): Produces solar PV modules internationally.
- Nextracker (NXT): Intelligent solar tracking solutions that boost energy production for large-scale utility projects.
- SolarEdge Technologies (SEDG): Leads the market in power optimizers and inverters along with monitoring systems that boost energy production from solar installations.
- Array Technologies (ARRY): Solar tracking solutions for utility-scale applications across difficult terrains and weather conditions.
- Shoals Technologies Group (SHLS): Specializes in electrical balance of system (EBOS) solutions which connect solar panels to inverters and the grid.
- Sunnova Energy International (NOVA): Residential solar and energy storage services through long-term service agreements while expanding its role in the virtual power plant market.
- Hannon Armstrong Sustainable Infrastructure (HASI): Provides financial resources to renewable energy businesses.
- Maxeon Solar Technologies (MAXN): A Singapore-based solar panel maker.
- Daqo New Energy (DQ): Chinese-based manufacturer of monocrystalline silicon and polysilicon, primarily for use in solar photovoltaic systems.
- Jinko Solar (JKS): A Chinese producer of solar panels.
- Tesla (TSLA): While mainly known for its electric vehicles, Tesla’s energy division now offers residential and commercial solar panels, the innovative Solar Roof (solar cells integrated into roof tiles), and the Powerwall battery storage system.
Emerging Solar Technologies and Trends
The solar market is undergoing significant transformations because of numerous technological innovations in 2025 and beyond:
Perovskite Solar Cells
Perovskite solar cells reached laboratory efficiencies up to 27% while commercial applications promise to achieve 30% efficiency (compared to around 20-24% with current technologies). Despite commercial deployment being hindered by stability and durability challenges, significant advancements continue to be made and experts anticipate commercially viable perovskite-silicon tandem cells entering the market between 2025-2026.
Bifacial Solar Panels
Bifacial panels function by harnessing sunlight from both their faces to achieve efficiency improvements of up to 30% in ideal conditions.
Building-Integrated Photovoltaics
Building-Integrated Photovoltaics (BIPV) technology embeds solar cells into various building materials such as roofing tiles and glass windows as well as building facades.
Solar-Plus-Storage Solutions
The price of integrated solar and battery storage systems is still expensive, but is falling—while their popularity continues to rise. The cost of battery storage systems is expected to decrease dramatically with improved technology and economies of scale.
Grid Modernization
Investments into grid infrastructure to support increased renewable energy usage will generate new opportunities throughout the entire solar industry.
Solar Prices and the Trump Tariffs
President Trump’s sweeping Tariffs announced in 2025 stacked double‑digit tariffs on top of existing duties for most crystalline‑silicon panels, inverters, batteries, steel and aluminum parts. Analysts expect an immediate module price bump of roughly $0.04–0.06 per watt (10–15 %) with some Chinese brands raising prices by $0.07–$0.08 per watt (35%), pushing total installed costs up 3 – 8 % for residential rooftops and 6 – 10 % for utility‑scale projects—but with large regional and product‑mix caveats.
Domestic thin‑film players such as First Solar stand to benefit, while import‑heavy developers face margin squeezes and timeline risk
What Is the Largest Solar Company?
What Is Elon Musk’s Solar Company Called?
Elon Musk’s Tesla Corp. (TSLA) purchased SolarCity in 2016, in a $2.6 billion deal.
Who Makes the Most Affordable Solar Panels?
Solar panel affordability is often measured in terms of price per watt. These vary from time to time and place to place, so it is difficult to identify the most affordable producer or product. However, solar panels in the range of $0.75 per watt or less tend to be the most affordable as of 2021.
The Bottom Line
Solar power is becoming more affordable and more efficient at turning the sun’s energy into usable electricity. For those seeking an investment option in the solar sector, solar company stocks or ETFs are a good option. People can also profit from solar energy by having solar panels installed on their own homes or businesses in order to take advantage of net metering to reduce utility bills.
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