What Is The Average Payback Period For Residential Solar In 2024?
So, you’ve decided to go solar, awesome choice! You’re in for an exciting journey. You may be wondering what the average payback period is for your system because you want to save money right?
Well, generally, for a residential solar project, the payback period can range from 10-12 years. This is just a general calculation, and doesn’t factor in that installing solar raises the property value of your home by the same amount that it cost to install it, which is great!
While the payback period varies by project, our team at Solar Bear Orlando walks you through what you need to know.
What is the Solar Payback Period?
The solar panel payback period refers to the time that it takes to save as much on your energy bills as you paid for the solar panel system itself. At the end of your payback period, you are considered to be at your break-even point.
This signifies that your system is paid off and you can start enjoying the return on investment (ROI) with reduced energy costs.
Factors that Impact the Solar Payback Period
The following factors can affect your payback period:
#1. System Cost
One of the main factors that is used to calculate your payback period is the total amount that you paid for the solar system. Naturally, the more you pay, the longer it will take to pay off your system and enjoy your ROI.
#2. Solar Incentives
Several financial incentives are available to homeowners who are installing solar. From renewable energy tax credits to rebates, this all shaves money off your purchase. So if you initially paid $16,000 for your solar system, you could recoup 30% of the cost if you take advantage of the federal solar investment tax credit.
This credit would take $4,800 off of the total cost, which would bring your overall investment down to $11,200 which will positively impact your solar payback period.
Calculating the Solar Payback Period
To calculate the solar panel payback period, you should follow these steps:
#1. Determine Your Solar Expense
First, calculate how much you paid for your solar system, and make sure to include taxes, fees, and any solar incentives. So if you paid $20,000 for your system, and you got $6000 back from the 30% federal tax incentive, this means your total investment is $14,000.
#2. Annual Energy Savings
Next, you need to calculate how much your household spends on electricity each year. To do so, just add up your monthly costs for 12 months. So if your monthly energy bill is $155, your yearly energy costs are $1,860. This is how much your solar energy system will likely save you from paying your local utility company each year. This is your annual bill savings.
#3. Now, Calculate!
So, to determine your solar payback period, divide your total expenses by your annual savings.
$14,000 divided by $1860 = 7.5
So, in this calculation, your solar payback period would be 7.5 years, well below the national average.
Read More > Everything You Need to Know About Solar Permitting
Ready to Go Solar?
If you are ready to install a solar system at your Central Florida home, don’t hesitate to reach out to our team at Solar Bear Orlando for a quote! We can walk you through designing the perfect-sized system depending on your needs, and help you calculate your solar payback period.
We know that going solar can be a journey, and we are proud that we are considered the #1 solar installer in Central Florida. We’re here to help you throughout the entire process. Ready to get started? Contact us for a quote today at (727) 471-7442!