How Long Does It Take for Solar Panels to Pay for Themselves?
Do solar panels pay for themselves? It’s one of the big questions all homeowners ask when they are thinking about going solar. The answer, ultimately, is “yes,” but determining how long it takes can be challenging.
Multiple factors affect the ROI on solar panels. Sometimes a system can pay for itself in as little as 5 years, while others might take 8 to 10 years or more.
At REenergizeCO, we often get the question “Do solar panels pay for themselves?” We are prepared to work with you to find the answer. Contact REenergizeCO today to find out if solar energy is a cost-effective solution for your home.
What Do Solar Panels Cost Upfront?
The average cost of a solar energy system in Colorado is approximately $15,000. This includes the solar panels and other components, including the inverter, mounting brackets, power meter, etc.
A number of different incentives and rebates will bring down the upfront cost. In addition, how you pay for solar will affect both the initial investment and how long it will take to pay off the system.
Option 1: Paid in Full
If you pay for the full cost of the system upfront, you need to take what you paid in cash and subtract any rebates, incentives, and tax credits. The number you are left with represents the “break-even” point, or the amount of money you need to save on electricity with solar for the system to pay for itself (also called the “solar payback period”).
Energy rates are subject to change, which can affect the length of time it takes to pay off the initial cost of solar panels and the system as a whole. Overall, however, the calculation of solar ROI in this scenario is relatively straightforward because the upfront cost represents a solid figure.
Option 2: Solar Loan
Some homeowners who are interested in solar but can’t afford to pay for the system all at once will take out a solar loan. A variety of financial institutions and solar-specific lending companies offer these loans, each with different requirements for down payments and interest rates.
When you take out a solar loan, you are paying less for the system upfront. However, in addition to paying off the principal of the loan, you will be charged interest. As such, it may take longer for the system to pay for itself if you have a solar loan.
When Will My Solar Energy System Pay for Itself?
Solar is not one size fits all. The system needs to be customized to your home to get the most value. A number of different factors will affect not only the initial cost of solar panels but the duration of the solar payback period:
- The number of solar panels you need
- How many solar panels the roof of your home can support
- The overall energy efficiency of your home
- Your home energy usage
- Where you live – some states have a much more favorable climate for solar energy, as well as public policies to support solar
- The quality of the solar panels and other components
It is important to have a goal in mind for how much you want to save on energy each month when your system is activated. At the most basic level, the matter of when do solar panels pay for themselves is most effectively addressed by comparing your monthly electricity consumption to the monthly output of your system, then multiplying by 12 to get a yearly estimate of your solar savings.
Subtract the yearly estimate from the total cost of the installation minus tax credits, rebates, and incentives, and you should get a rough figure for the number of years it will take to totally recoup the cost of your investment.
How Does the Cost of Electricity Affect ROI on Solar Panels?
The number one factor outside the control of homeowners is the cost of energy. When energy costs rise, a solar system that is still connected to the grid will take longer to pay off.
However, if you rely on solar panels for most of your energy production (or go entirely off the grid), rising energy costs actually work in your favor. The less you rely on the grid, the more cost-effective your system is. And, the more money you save with solar, the sooner it pays for itself.
The best way to maximize energy savings with solar is to install a solar storage battery. During the day, the battery will bank additional electricity you can use at night or on cloudy or stormy days. You can either (a) use the stored energy yourself, reducing your reliance on the power grid; or (b) “sell” the excess energy back to the electric company, and your monthly utility bill is reduced in turn (a process known as net metering).
Get Started on Your Solar Energy Installation
Though you can find any number of solar calculators online, the only way to really know how long it will take for solar panels to pay for themselves is to work with a knowledgeable solar installer. REenergizeCO is Colorado-born and bred, and we have helped hundreds of homeowners throughout the Front Range achieve more affordable, sustainable lives with high-quality solar panels.
We use only A-rated solar panels. The more efficient the equipment, the more energy is produced (and, over time, the more money you save on electricity). We also apply for any and all incentives and rebates you qualify for, which further reduces the upfront cost.
In addition, REenergizeCO monitors your system for 10 years to ensure that the solar panels and other components are functioning properly. You get the most value when the system is working at optimal capacity. What’s more, the solar panels start to pay for themselves sooner.
Ultimately, REenergizeCO wants to help you save money while enjoying sustainable energy solutions for your home. We find that solar panels are paying for themselves faster than ever before, and our team looks forward to designing and installing a system that fits your budget and helps you reach your home energy needs and goals.