You might not be in the home to see the payback in the form of electricity savings, but you could see a payoff in a higher sale price for your home. If you're planning on moving or selling your home in the near term, for example, that changes the calculus. That's because, as utility rates increase, you save more money by relying on your solar panels instead of drawing power from the grid.īut again, it depends on your goals and your comfort level. Basically, the higher the electricity rates where you live, the more lucrative solar can be for you. This is a huge, but sometimes overlooked, factor in the solar payback period. But if you live on a shady lot, and your panels' production is more intermittent, you won't see a payback quite as quickly. If your roof has room for lots of panels that soak in the sun all day, you'll produce a ton of electricity, and see a quicker payback. You probably never thought much about your roof, but it makes a big difference in how your solar investment will play out. Electricity production of your solar system That's why it's important to think about your home's energy efficiency before you consider solar panels - you can save money on energy and get a smaller solar panel system. If you consume a lot of electricity, solar might only translate to a small reduction in your electricity costs, which means it could take longer for you to see a return on your investment. Sometimes rooftop solar can completely cover your electricity needs - reducing your utility bill to $0 - and sometimes it only covers a portion of it. It goes without saying: The steeper the price, the longer the payback period. A solar battery could easily increase the cost of your system by $10,000 or more. Solar systems can range in price from a few thousand dollars to tens of thousands, depending on where you live, your electricity needs and what type of system you choose to install. The more you pay for your system, the longer it's going to take to recoup your costs. "It seems like an easy answer, but it's more complicated," Haenggi said.Ĭalculating your potential payback period will depend on a lot of variables. No two solar systems are the same, and that means no two solar payback periods are the same, either. Factors that influence your solar payback period That means your solar payback period is 10 years. You also know the panels will help you save about $1,500 a year on electricity bills. You know you qualify for $10,000 in incentives, so now the net cost is $15,000. In practice, here's what that could look like: Let's say the total system cost for your home is $25,000. Here's another look at the formula: (Total solar system costs - rebates) / Electricity bill savings per year = Payback period in years
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