Residential solar has long been billed as a way to get home energy costs down. For households with the resources to install solar panels on their roof, behind-the-meter systems can offset electricity bills, and — when paired with a battery — serve as backup power if and when the grid goes down.
But even though the U.S. has had a residential solar industry for decades, the costs of getting systems installed today dwarfs those of other countries like Australia and Germany. In the U.S., the cost of getting a rooftop solar system hovers around $3 per watt, with state and regional variation; in Australia, it’s under $1 per watt. In the U.S., one in 10 families have rooftop solar, versus one in three in Australia.
This high cost of installation is a problem both for would-be customers who aren’t able to access the potential savings, and for home energy companies, who are generally separate from installers — but nonetheless have installation and permitting costs factored into the total cost of their product. And the lower penetration also means that utilities can’t rely on distributed energy resources as a backup in case of disaster, like they have in Australia.
Two recent reports, from Tesla and from the nonprofit Permit Power, argue that it doesn’t need to be this way. Colby Hastings, senior director of residential energy at Tesla, emphasized that the high prices in the U.S. are “really a system problem.”
The Tesla report found that it’s possible to get solar-plus-storage installations down to $3.02 per watt without any consumer subsidies or tax credits, through a series of changes: regulatory reforms ($0.54 per watt), operational fixes for installers ($0.57 per watt), as well as hardware innovations to get products down to the lowest total installed cost possible ($0.67 per watt). These changes would put solar alone at below $2 per watt.
“You need multiple things to really drive this change,” Hastings told Latitude Media in an interview about the report. “There is not one silver bullet that is going to do it for you.”
Permit Power, meanwhile, evaluated the potential market impact of bringing costs even lower — to $1 per watt. The report, out last week, found that if the U.S. can get the cost of solar in line with its peers, it could save $1.2 trillion across all households installing solar, or $1,600 in annual bill savings, by 2040. This would mean 18.2 million more families installing solar, and nearly 200 gigawatts in additional installed capacity.
According to Nick Josefowitz, CEO and co-founder of Permit Power, the primary thing standing in the way of cheaper solar is paperwork: “The scientists and engineers, they did all the hard work” of getting the actual technology costs way down.
“We’ve found a way to let red tape get in the way of American families being able to take advantage of what have become incredibly cheap solar panels and incredibly cheap batteries,” he said, adding that other countries are “not putting often inadvertent barriers in the way of homeowners that are looking to save money.”
This comes as electricity costs become a dominant political issue in the U.S. Utilities have requested record rate increases so far in 2025: $29 billion as of July, according to an analysis from the nonprofit Power Lines. There are many causes for the spike, from the need to harden old infrastructure to extreme weather preparation — but in Josefowitz’ view, it’s an opportunity to take stock of how to get more people home energy systems.
“I hope we move to a place where people are really incentivized to install storage, to install batteries, because that’s a way for them to control their electricity prices,” he added. “And it allows utilities to avoid distribution grid upgrades and avoid purchasing peak power and doing a bunch of other things [that] will save all rate payers a bunch of money.”
Both Josefowitz and Hastings emphasized that what’s at stake here is not just home energy bills. More home solar — and especially home storage — installation means more resources that utilities themselves can rely on.
“These assets are also grid assets,” Hastings said. “We have now a million Powerwalls…installed, and 25% of them are enrolled in some kind of virtual power plant. So they are providing services not only to the homeowner, but to the grid.”
What can be done?
From the OEM’s perspective, there are certain things that Tesla found are immediately achievable. A new mounting hardware system, for instance, that the company unveiled at the RE+ conference in September, “saves approximately 30% in labor versus traditional rail-mounted systems,” Hastings said, and also reduces aluminum use.
And a change in the company’s backup switch several years ago — which eliminated the need to rewire certain systems — has already resulted in savings of nearly 10 cents per watt for installers. (That said, actually deploying these more widely will require regulatory approval that Tesla has yet to secure; it’s still only approved for use in 40% of the utilities in the country.)
But the most important way to bring the cost of the technology down, Hastings said, is switching from AC-coupled micro inverters and storage to hybrid DC architecture. That switch, she added, can save over 40 cents a watt, and “is doable today.”
What is less in Tesla’s control, however, is the regulatory side of things. “We operate in 1,600 different utilities and 7,000 AHJs, and each one has their own rules, process requirements,” Hastings said. “And that is what drives a lot of overhead.”
Both Tesla and Permit Power highlighted the importance of streamlining permitting and interconnection processes. This could include standardizing fees, so that they reflect the actual costs of getting a system hooked up, rather than system size or value.
And it could also include adopting instant online permitting, as the SolarAPP+ platform facilitates; Tesla found that instant permitting results in labor savings of $0.04 per watt, while Permit Power found that broader permitting and interconnection reforms could save $0.54 per watt.
In certain places, this is already underway. California, for instance, has a mandate to push for automated permitting. “But it’s not all 50 states,” Hastings said. “It’s definitely gaining adoption, but I think we’re still early in the shift.”
Both also advocate for allowing virtual or remote inspections, either by photo or video. Hastings said she is “heartened” by certain state-level developments — such as Texas’ SB 1202, which took effect September 1 and allows for third-party approval and inspection of residential solar and storage systems.
Josefowitz echoed that sentiment, adding that what Permit Power is suggesting is not far-fetched and is in fact rooted in what is already happening in certain places across the U.S. — “and not just in blue states like California, Maryland, New Jersey.”
“Texas [and] Florida have significantly streamlined that and modernized permitting rooftop solar and home batteries,” he said. “Colorado has taken tremendous steps to try and modernize their interconnection process….Places like West Virginia, have started to get homeowners associations out of the business of mucking around with what goes on families’ roofs. That [momentum] is something that in this particular political moment gives me hope that we can do this.”
