I get asked this question often: How long do solar panels take to pay for themselves?
There is no straight answer to this because there are a lot of factors to consider.
In this post, I will discuss those factors so that you can estimate how long it will take solar panels to pay for themselves.
The Federal Solar Investment Tax Credit (ITC) is a 30% federal tax credit for solar energy systems on residential and commercial properties.
Solar System rebates can take 1-3 months to receive after submission, and the Solar Investment Tax Credit (ITC) will reduce by 20 percent each year starting in 2020.
Based on these facts and staying up to date with current Solar Panel industry news, one might assume they would pay for themselves within three years.
If financially planning based on this assumption, you will likely be very disappointed with the results of your solar installation cost-savings benefits. This article will help you know how long solar panels take to pay for themselves.
Table of Contents
Solar Panels Have Direct Cash-Flow Positive Savings
Solar Panels have direct cash-flow positive savings starting in less than one year, but factoring in government rebate amounts, manufacturing profits, Solar Panel tax credits, Solar Installation cost savings, Solar Panel durability, and Solar Panel performance degradation. Solar Panels have a nearly unlimited return on investment (ROI).
Tying up large amounts of cash in Solar Panels for some people can consider a year risky. However, solar energy companies usually cover 3-5 years of warranty.
It’s based on Solar Energy industry-standard practices, including 5-year average Solar Panel degradation rates from -3% to +5%.
It’s relatively easy to find Solar Systems with over ten years of warranty coverage if you know where to look.
How Do Solar Installations Pay Off Quickly?
Solar Installations pay off quickly based on the following factors:
* Solar Panels have a 25+ year design life with an average 10% or more degradation rate every year after the first Solar Panel warranty expires.
* Solar System rebates can take 1-3 months to receive after submission, and the Solar Investment Tax Credit (ITC) will reduce by 20 percent each year starting in 2020.
* Most homeowners’ biggest Solar Panel cost savers are solar installation cost savings, financing terms, riding cash flow positive, Solar System tax credits, and Solar Panel durability.
* Typical Utility companies charge 16 cents kWh. We use this price to keep calculations simple when comparing Solar Panels to utility electricity prices we were already familiar with.
Solar Panels provide the most Solar Energy cost savings in areas with 25-50 cents kWh Solar Panel electricity rates.
Solar Systems and Solar Panels work best for people that pay over 25 cents kWh (or $25 per 1000-watt hour) for their Solar Electricity.
How Do You Determine Cost-Saving Solar Panels?
The following guide will help you find solar electricity prices so you can see if solar energy is right for your budget:
Check out current Solar Panel Rebates
You need solar panel rebates, tax credits, and incentives near you. If rebates or tax credits are available, they typically take 1-3 months to receive after submission of a rebate application and receipt of a valid building inspection sign-off.
Utilities Won’t Tell You How Solar Panel Electricity Costs
Utilities won’t tell you how much solar panel electricity costs until solar panels are installed, and solar panel electricity is generated at your home or business.
Solar energy and solar systems can typically lower solar electricity costs by 25-50 cents kWh.
However, solar system rebates may take 1-3 months to receive after submitting solar installation rebate applications.
After adding solar panels to your roof, solar panels provide the most solar energy cost savings in areas with 25-50 cents kWh solar panel electricity rates.
Request a solar quote on our site customized for your location based on the address where solar panels will get installed.
Solar Electricity Rates Vary Within States
The solar electricity rates may vary depending on your state, counties, townships, cities, regions, and neighborhoods based on local utility company pricing.
It also depends on government solar incentives, state laws, city building restrictions, solar panel tax credits, Panels Installation cost savings, solar Panel durability, and performance degradation.
This guide uses national averages to keep calculations simple when comparing Solar Panels to utility electricity prices we were already familiar with.
Solar Panel Cost Factors
Not all solar panel companies are the same. The most significant factors influencing cost savings with solar panels are electricity rates, the cost of your solar installation, and solar panel durability.
Compare quotes from at least three contractors before deciding who to hire to install your solar power system.
Use our quote comparison tool customized for your location based on the address where solar panels will be installed.
Seek free or low-cost financing terms when hiring a contractor to install your new solar energy system so you can maximize long-term cost savings with tax credits, rebates, solar panel tax credits, and solar panel installation costs. This way, you will know how long your solar panel will take to pay for itself.
So how long do solar panels take to pay for themselves?
It takes about ten years for solar panels to pay for themselves, with no further costs, making solar panels appealing for residential homes.
Solar panels are cost-efficient energy sources. They have been around since at least 1883, when Charles Fritts created electrochemical cells using selenium, which could only manage a power efficiency rating of about 4%.
While this might sound pretty bad, there have been huge advancements in the past century that have seen this rating rise to a much more reasonable 20-22% for commercial solar panels.
Solar cells are still the major component of these modern panels. Their efficiency is calculated by dividing the number of electrons harvested from sunlight by the total light energy received, giving us an energy conversion rate.
Solar Panel Cost Savings
Solar panels can be expensive at first because they require quite an investment in raw materials. Still, after installation, you could save big money on your electric bill, plus help reduce your carbon footprint.
According to Energy Informative, “Most homes in America spend $1,000 or more per year on electricity, so if you were to generate enough electricity with Solar Panels to offset all or most of your usage, then Solar Panels could save you a lot of money in the long term.” Solar panels will take around 20 years to pay for themselves if their lifespan is 25-30 years.
Most solar panels have an incredible expected lifespan of around 30 years, so once installed, you can enjoy free solar panel electricity for many years—much maintenance is required.
The upfront investment can be paid back within ten years with no further costs, making solar panels appealing for residential homes.
If you want more information about how long solar panels take to pay for themselves, kindly visit our website!
Conclusion
We answered the question How long do solar panels take to pay for themselves? It can take between 4 to 10 years for solar panels to pay for themselves. Again, this depends on the size of the solar panel system, the rebates, and the tax cuts you received.