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Lawrence, KS

641 E. 22nd Street

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Several factors go into the decision to install solar on your home or business, but one of the most important has to be the solar panel payback period. This calculation refers to the time it will take for your solar installation to pay for itself.  In this article, we’ll help you figure out your solar installation’s payback period and what costs should factor into your calculation.


Take these three steps to determine the most accurate solar panel payback period:

  1. Calculate COMBINED COSTS.  Determine the gross cost of your solar installation and then subtract the value of your up-front incentives and rebates.
  2. Sum Up Your ANNUAL BENEFITS. Figure out how much you save from your solar installation every year.
  3. 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

Kansas City SolarCombine Costs – First, let’s assume the gross cost of your solar system is $10,000. Now, we need to understand the upfront incentives available to you, including the solar tax credit and local rebates or incentives. Given that the ITC is currently set at 30 percent, with a $10,000 solar system, you’ll be eligible for $3,000. 

Gross cost ($10,000) – upfront incentives ($3,000) = combined costs ($7,000)

Annual Benefits – Let’s assume your solar installation offsets your monthly electric bill by $50 through taking less energy from the grid and net metering.  Annually, that adds up to $600 in avoided electricity costs. 

Combined Costs ($7,000) / Annual Benefits ($600) = Solar Panel Payback Period (11.6 years)

Under these conditions, it would take 11.6 years to pay back your initial $7,000 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, the brand we primarily install, expects its solar panels to have a useful life of more than 40 years

Skip the Solar Math

If calculating all of these numbers is just too much, don’t worry. We do all of the calculations for you when putting together your solar proposal. That includes figuring out 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. 

This blog post was updated on 5-18-23 to reflect changes with the federal tax credit.