The number of solar installations has been trending up both nationwide and in Pennsylvania. While those numbers include utility-scale and commercial installations, residential solar is on the rise too.
For many people, Philadelphians included, solar panels can save them money, thanks to a combination of the local cost of electricity, solar incentives, and energy bill savings. To find out if home solar panels are a good fit for you, read on.
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Does Solar Make Sense in Philadelphia
For many people, the main motivation for going solar is saving more money than they spend (though there are plenty of other reasons, too). Whether or not solar makes sense on your specific property depends on a number of factors.
Price of electricity
One of the ways solar panels save you money is by replacing the electricity you’d buy from your utility with free electrons from your roof. In Pennsylvania, the average electric rate in 2023 was 18.10 cents per kilowatt-hour. The utility that serves Philadelphia, PECO Energy Company, had an average rate of about 16.18 cents per kWh. Both prices are slightly higher than the 2023 national average of 16 cents per kWh.
Price of solar
The cost of solar varies by project, and city-specific data is hard to come by. The Solar Energy Industries Association estimates that the national average price of residential solar was $3.24 per watt before incentives in early 2024.
The actual cost of solar at your home could vary due to the size of your installation, the complexity of your roof, any additional equipment included (like a battery), the local cost of labor, and more. The best way to determine your specific cost of solar is to get a quote from a reputable installer.
Credit SEIA
Available sunlight
According to the National Renewable Energy Laboratory, Philadelphia and the surrounding area gets an average of 4-4.25 peak sun hours a day. While solar panels will certainly generate more electricity in sunnier places, average sun isn’t the most important factor in making solar worth it. Many of the strongest solar markets aren’t in the sunniest places.
More important is the amount of sun your roof gets. If it’s heavily shaded, solar panels probably aren’t a good fit.
Outages
Most solar systems are designed to shut down during a power outage. (The utility’s technicians need to know there’s no electricity flowing through the wires they’re out fixing.) But, when you attach a battery many systems can keep your house running during an outage, or at least parts of it.
In 2022, Pennsylvania’s utility customers dealt with 200 minutes of outages, according to the Energy Information Administration. (Some may have experienced more and some none at all.) If you want to do away with the inconvenience of power outages, solar plus storage may be worth it for you.
Solar Incentives in Philadelphia
While prices have declined steadily over the last few years, buying solar panels still incur a significant upfront cost. Solar incentives that reduce the cost of solar or increase your savings help solar panels make sense for more people.
Federal tax credit
The federal solar tax credit, officially known as the Residential Clean Energy Credit, lets you reduce the taxes you owe by 30% of the cost of going solar. (If solar cost you $20,000, you can claim a credit of $6,000.)
There are a few restrictions. In order to be eligible, you need to own your solar system and it needs to go on a house you own, not one you rent out full time. You also need to owe taxes to take advantage. If your credit is larger than what you owe, you can roll any excess to future years.
The federal tax credit is set to reduce from 30% to 26% in 2033 and to 22% in 2034. You should always talk to your tax professional to confirm you’re eligible to claim the credit.
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Net metering
When you install solar panels, you almost certainly won’t directly use all the electricity they generate. That extra energy will flow to your battery (if you have one) so you can use it later or to the grid. Utilities often compensate solar panel owners for the electricity they send back to the grid.
PECO, Philadelphia’s utility, uses a system of 1-to-1 net metering. Each kilowatt-hour your solar panels send to the grid will be worth a credit on your electric bill. For example, if you buy 200 kWhs from the utility and send 200 kWhs back, your credits will cover your consumption for that month. If you generate more credits than you use in a month, they’ll roll over to the next month, until May. At the end of May, any credits you still have banked will be paid out and applied to your bill at the price to compare. PECO's price to compare for September through November 2024 is 9.244 cents per kWh.
Solar renewable energy credits
Solar renewable energy credits (SRECs) are another way solar panel owners can earn from the electricity they generate. For every 1,000 kWhs of electricity a solar system generates, its owner can sell one SREC, also known as alternative energy credits in Pennsylvania, to utilities and other parties looking to meet renewable energy requirements.
Palmetto customers can sign up with SRECTrade, which will mint and sell SRECs on your behalf. The price of SRECs depends on supply and demand.
Solar Payback Period in Philadelphia
A solar payback period is the time it takes for the savings a solar panel system generates to match the total cost. The exact amount of time that takes will be specific to each system and depend on its initial cost and ongoing maintenance, the savings it generates, and whether that changes over time. Here’s the basic formula.
( total cost - incentives ) / annual savings = payback period in years
Let’s say you install a five kilowatt system at $3.24 per watt for a total of $16,200. You get to claim the federal tax credit ($4,860) which brings your installation cost to $11,520. If you save an average of $100 each month, or $1200 each year, your payback period would be 9.6 years.
( $16,200 - $4,680 ) / $1500 per year = 9.6 years
Things can change in nearly 10 years, which might impact your payback period. For example, the average electricity rate in Pennsylvania increased 35% from 2014 (13.32 cents per kWh) to 2024 (18.1 cents/kWh), according to the US Energy Information Administration.
Philadelphia Utilities and Rooftop Solar Panels
Unless you go completely off grid, something not many people do, you’ll still have a relationship with your utility when you go solar. In Philadelphia, PECO’s electric rates and net metering policy will affect your solar savings.
| Utility | Net metering type | Fixed monthly charge | Average electricity rate (cents/kWh) | Price to compare (Sep.-Nov. 2024) | Maximum offset |
|---|---|---|---|---|---|
| PECO | 1-to-1 net metering | $10.54 | 16.18 | 9.244 | 110% |
The above information is subject to change. Your actual rate may differ if you’re on a time-of-use or other variable plan. And fixed charges and electric rates are subject to change.
Gas utilities and home electrification
If you use natural gas to cook, heat your home, or run your water heater, you probably have a Philadelphia Gas Works bill, too. If you’re looking to reduce or even eliminate it, consider home electrification. Home electrification and solar can help you run more of your home with greener, cheaper electricity.
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Leasing Solar Panels in Philadelphia
Many people have turned to third party ownership (TPO) to unlock the benefits of solar without the upfront cost. With TPO, solar panels go on your roof, but you don’t have to buy them. Instead, you pay a monthly fee for the equipment (in a lease) or for the power that they generate (in a power purchase agreement, or PPA).
Most TPO agreements include an escalator: a set amount payments increase each year. When an escalator is smaller than the amount electricity rates increase each year, you can save more money at the end of your lease than the start.
Palmetto’s TPO option, the LightReach Energy Plan, is available in Philadelphia and is designed to save you money in year one when you get it directly from Palmetto. It also comes with a production guarantee, buyout options starting in year five, and comprehensive protection for the lifetime of the system.
Solar Panel Maintenance in Philadelphia
Solar panels have a lifespan of at least 25 years, which sounds like a long time for something to go wrong. Luckily, solar panels are typically low maintenance. You’ll likely want to clean your solar panels from time to time as dust, dirt, leaves, and more can block sunlight from reaching them and suppress production.
Some solar companies offer protection plans, like Palmetto Protect, that include standard or extended warranties, proactive monitoring, production guarantees, and more.
Finding the Best Solar Company in Philadelphia
Choosing the right solar company to work with is probably the most important decision you make after deciding to go solar. But how do you find the right company? Here are a few tips.
- Read reviews, both positive and negative.
- Talk to friends and family who have experience with the company you’re considering.
- Weigh after-installation offerings, like protection plans and warranties.
- Choose a company that provides clear answers to your questions and gives you time to make the decision on your terms.
Palmetto Reviews
“Palmetto handled every detail and kept in close contact with me so I was always up to date on the process. Installation was quick. The installation crew was wonderful. They cleaned everything up and made sure I was satisfied before leaving. The entire experience was extremely pleasant and simple. I would recommend them 110%.” Denise M., Google Review
“I didn't know much about solar before initially meeting with a Palmetto rep. The process from the first meeting to the system being active was very efficient and required minimal involvement from me. All reps that I interfaced with were very knowledgeable and completely transparent. This helped with gaining knowledge on how solar energy works and increased my comfort with moving into the solar world.” Bryant K., Google Review
“After the system was installed we saw a huge decrease in our electric bills, and a huge decrease in our winter bills even with the lack of sunlight during the winter.” Jim F. Google Review
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Frequently Asked Questions
Are solar panels worth it in Philadelphia?
With net metering and the option to sell SRECs, solar can be a money-saving investment in Philadelphia. How much or whether you save will come down to your specific circumstances like your available space for solar panels, energy usage, and more. The best way to find out is by reaching out for a savings estimate.
Does solar increase your home value in Philadelphia?
Solar panels will likely increase your property value.
How much does it cost to go solar in Philadelphia?
The cost of installing solar varies by location, down the house. While the Solar Energy Industries Association estimates residential solar panels cost $3.24 per watt to install to start 2024, the cost of any individual system will vary by its size, the complexity of the roof, local costs of labor and permitting, and more.
Does Philadelphia have net metering?
PECO customers in Philadelphia can get one-to-one net metering. Each kilowatt-hour they generate and send to the grid can earn them bill credits worth the cost of buying one kilowatt-hour from their utility.
Disclaimer: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors.
Andrew BlokWriter and EditorAndrew has worked as a journalist and writer for four years, over half of those dedicated to covering solar. He currently lives in Tucson, AZ, where you might run into him walking his dog and birding while dodging the heat. He has degrees in English education and journalism.
