How Long Does It Take for Solar Panels to Pay For Themselves?
The benefits of installing solar are far-reaching, especially in the Sunshine State! But the main question we often get from people who want to go solar is “How long will it take for my solar panel system to pay for itself?”
Many aspects factor into the payback period of a solar panel installation, including some that are easier to calculate than others.
Thankfully, Solar Bear Orlando can help break down these factors to give you a clearer picture of what your solar panel payback period might be. Keep reading to learn more!
What is the Solar Payback Period?
The solar panel payback period is the calculation of how long it will take for your solar panel system to pay for itself.
In other words, the payback period is how long it takes for your solar system to break even and recoup the cost of your initial investment. Therefore the solar payback period is also called the solar break-even point.
How is Solar Payback Calculated?
To calculate the solar payback period of your solar panels, it is important to determine the combined costs and benefits of installed solar panels. Keep in mind, several factors affect the costs and benefits of going solar.
6-10 years is the average time it takes for solar panels to pay for themselves. Keep in mind that the variables involved can change dramatically. These variables include:
The Cost of Your Solar Panel System
The initial investment in your solar panel is the largest expense. The gross cost of your solar panels is the total cost of your solar panel system before any financial incentives are included. This amount is dependent on the size of your solar panel system, the equipment used, and the labor involved.
Numerous solar incentives are available to homeowners and businesses that are switching to solar. These include federal, state, and even local incentives in the form of rebates, tax credits, solar renewable energy credits (SRECs), and more.
Solar incentives can dramatically reduce the cost of a solar panel installation and shorten the solar panel payback period significantly.
Average Monthly Energy Usage
One of the most important steps in determining how much energy you want to offset with your solar panels, as well as the size of the solar panel system that you might need, is determining your average monthly electricity usage.
The higher your monthly energy usage is, the more savings you could gain from switching to solar, and the shorter your solar payback period will be.
Estimated Electricity Generation
Here at Solar Bear Orlando, we endeavor to design a solar panel system that matches your energy usage needs. This considers:
- How many panels can fit on your roof or property
- Which way your home faces
- Seasonal weather patterns
- Future energy demands
- And more!
From these factors, we design a solar panel system that meets your desired energy offset which in turn will impact your solar payback period.
Calculating Your Solar Payback Period
Now that you know the factors that contribute to the combined costs and benefits of installing solar panels, you are now equipped to calculate your solar panel payback period.
Follow these steps:
- Determining Combined Costs: Subtract the value of the incentives and rebates that you qualify for from the gross cost of your solar system.
- Determine Annual Benefits: Add up all the annual financial benefits you might receive, such as the electricity costs you will now avoid.
- Divide The Combined Costs by the Annual Financial Benefits: The resulting number will represent the number of years it will take to reach your solar panel payback period. After this, you will have surpassed the break-even point and will now be able to reap all the financial benefits that your solar panel system offers.
If your system costs $30,000 and you get $10,000 in incentives, your combined costs are $20,000.
You’ve calculated that your savings are $1,200 a year plus any other incentives ($1,500) = $2700 in annual benefits.
So, $20,000/$2700= a 7.4-year payback period.
Go Solar with Solar Bear
As you can see there are many variables involved in calculating the solar payback period, and even if your solar system takes seven years to reach the solar payback period, it’s worth it!
Ready to go solar in the Greater Orlando or Central Florida area? Call Solar Bear Orlando today for an energy audit and solar panel consultation; (727) 471-7442!