Several factors influence whether to install solar on your home or business, but one of the most important is the solar panel payback period or in other words the time it takes for your system to pay for itself. This article explains how to calculate payback and which costs to include.
COMBINED COSTS / ANNUAL BENEFITS = YOUR SOLAR PANEL PAYBACK PERIOD
Take these three steps to determine the most accurate solar panel payback period:
- Calculate COMBINED COSTS. Determine the gross cost of your solar installation and then subtract the value of your up-front incentives and rebates.
- Sum Up Your ANNUAL BENEFITS. Figure out how much you save from your solar installation every year.
- Divide Your COMBINED COSTS by Your ANNUAL BENEFITS. The resulting number is how long it will take for you to make your money back on your solar investment.
Solar Panel Payback Period Example
Combine Costs – First, let’s assume the gross cost of your solar system is $10,000.
Annual Benefits – Let’s assume your solar installation offsets your monthly electric bill by $100 through taking less energy from the grid and net metering. Annually, that adds up to $1,200 in avoided electricity costs.
Combined Costs ($10,000) / Annual Benefits ($1,200) = Solar Panel Payback Period (8.3 years)
Under these conditions, it would take 8.3 years to pay back your initial $10,000 investment. Assuming energy costs will go up over time, your payback will probably be sooner. After that time every dollar you save through your solar installation will work as a dividend for the rest of the life of your solar panels. Maxeon, one of the brands we primarily install, expects its solar panels to have a useful life of more than 40 years.
Skip the Solar Math
We’ve put together this simple calculator that will give you rough estimates on how much a solar installation can save you over time.
Estimate Your Solar Savings
See how solar and net metering can reduce your Evergy electric costs over time.
Our solar consultants can build a much more accurate solar savings estimate for your property. They can calculate how much power your system will need to produce, how net metering will factor into your investment and your overall solar panel payback period. We can also give you a better idea of the local incentives that your solar project may qualify for along with any additional costs that your installation may encounter from local utility companies.
If you would like us to create a solar proposal for your property, you can reach out to us here. Our solar consultants will look at your energy needs and location to help you determine the best ways to maximize your investment into solar energy.
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Our mission at Good Energy Solutions is to provide our customers with honest, real solutions to reduce their fossil fuel consumption and lower their long term energy costs. Our combination of hands-on experience, education, and outstanding customer service make our company the clear choice to help you achieve your energy goals.
Founded in 2007 by Kevin and Shana Good, Good Energy Solutions has earned a reputation for our expert reliable service, long workmanship warranties, and quality commercial and residential solar installations.
We are engineers and craftsmen designing for efficiency while keeping aesthetics and longevity in mind. Because of our installation quality and customer service, Good Energy Solutions' solar panel systems feature some of the longest product and service warranties in Kansas and Missouri. Also, we have more NABCEP® Certified Solar Professionals on staff than any other company in Kansas or Missouri. To achieve this certification, PV installers must demonstrate that they possess extensive solar PV installation experience, have received advanced training, and passed the rigorous NABCEP certification exam.
If you would like to know more about solar power for your home or business, contact us here.