Solar panels promise to be a good source of renewable energy as well as a great way to save money on bills. But, if you were wondering how soon can I expect to start saving money with my solar system, the answer might not be what you expected.
So, before you decide to install a solar system in your home, check out this brief guide to see how soon it will start paying off.
What Is the Solar Panel Payback Period?
Solar panels can help you save money on your electric bills. Over time, you should be able to save enough money to offset the initial costs. Solar panels payback period is the amount of time it will take you to pay off the money you have invested in the system through savings on your electric bill.
Calculating this time is unique for every user because the upfront costs and energy costs vary depending on the location. So, here are some tips on how to answer the question: How soon can I expect to start saving money with my solar system?
Tip 1: Find Out How Much Money You Will Need to Invest
Check around your area to see how much it costs to install solar panels. Also, take into account additional fees and possible repairs you will have to make on your roof.
Tip 2: Calculate the Tax Incentives In
Homeowners usually get a one-time tax credit of 22% off the price when buying a solar system. Furthermore, you can check with your local energy supplier to see if they offer some other incentives as well.
Tip 3: Learn How Much You Pay for Your Electric Bill
Some homes will be able to use 100% of their energy from solar panels. On the other hand, some will still have to pay a part of their electric bill. Basically, it depends on how much energy you consume.
For now, let’s assume you will be able to get 100% of your energy needs from the panels. The next step is to go back six months and check how much you spend on electric bills on average. So, if you spend $125 a month on electricity, that adds to $1500 a year. If you’ve spent $16 000 on your solar system (including tax incentives), it will take you more than ten years to break even.
This might seem like a long time, but solar panels usually last more than 25 years. Imagine how much money you will be saving after you pay off the initial investment. Also, if you start generating more energy than you spend, you can always sell the surplus and earn money that way.
What Are the Average Payback Periods in the US?
Although numbers vary from state to state, most homeowners expect to break even in 9 to 10 years. Some states, like Massachusetts, have a solar panel payback time of around six years. On the other hand, it can stretch to more than 13 years in North Carolina and a few others.
This difference exists because some states are simply less sunny and can generate less energy through their solar systems, among other reasons.
What Qualifies as a Good Payback Period?
We have mentioned earlier that solar panels today last more than 25 years. So, any period that is less than half of that time, meaning 12,5 years, can be considered a good payback period.
In the end, do solar panels pay for themselves? Yes! How soon can I expect to start saving money with my solar system? The answer to that depends on the area you live in, your initial investment, and your energy consumption, among other things. But, you will probably start saving money in about eight to ten years.