If you consume a lot of electricity, solar might only translate to a small reduction in your electricity costs, which means it could take longer for you to see a return on your investment. Sometimes rooftop solar can completely cover your electricity needs - reducing your utility bill to $0 - and sometimes it only covers a portion of it. It goes without saying: The steeper the price, the longer the payback period. A solar battery could easily increase the cost of your system by $10,000 or more. Solar systems can range in price from a few thousand dollars to tens of thousands, depending on where you live, your electricity needs and what type of system you choose to install. The more you pay for your system, the longer it's going to take to recoup your costs. "It seems like an easy answer, but it's more complicated," Haenggi said.Ĭalculating your potential payback period will depend on a lot of variables. No two solar systems are the same, and that means no two solar payback periods are the same, either. Factors that influence your solar payback period That means your solar payback period is 10 years. You also know the panels will help you save about $1,500 a year on electricity bills. You know you qualify for $10,000 in incentives, so now the net cost is $15,000. In practice, here's what that could look like: Let's say the total system cost for your home is $25,000. Here's another look at the formula: (Total solar system costs - rebates) / Electricity bill savings per year = Payback period in years The number you end up with is the number of years it will take for your panels to "pay for themselves.".Divide the net cost of the system by the annual bill savings.(Again, your solar installer or utility provider might be able to help here.) Estimate your annual electricity bill savings with solar panels.Now you have the net cost of your solar system, after discounts.Then, subtract the value of any rebates, incentives or tax credits.(Be sure to consider interest and fees if you're taking out a loan.) Start with the total cost to install solar on your home.Keep in mind, you'll want to consult the experts (read: solar installers) to make sure you have accurate numbers here. If you want to get a rough idea of your potential solar payback period, here's a way to do it. How to calculate your solar payback period "People are reluctant to say, 'Well here's the payback,' because the energy market has been so volatile," Haenggi said. Before you invite a crew of solar installers over, you'll want to understand when - or if - the panels will start to pay for themselves. Once that period is up, the real savings start.īut solar panels are expensive, and you need to consider how long it'll take for the savings you earn from solar power to outweigh what you paid to put the panels on your roof. The breakeven point - or payback period - is the time it takes to recoup the cost from the initial investment. Solar panels can cost tens of thousands of dollars upfront or spread out in monthly payments. "Solar is what's coming, in terms of how we start powering our homes, how we connect as a community to support energy needs within our community," Jamie Haenggi, president of ADT Solar, told CNET. Or you might just want to stop paying for electricity. Perhaps you want to protect your home from blackouts. You might, like many Americans, want to help the environment by avoiding fossil fuels. There are a lot of reasons to think about getting solar panels.
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