The amount of money you save by investing in solar energy varies, depending on factors including where you live, the incentives available from your state government, and the type of system you install.
To calculate the solar panel ROI you can expect, you need to get a customized quote for your specific installation. Regardless of individual circumstances, however, the savings are significant.
For example, installing a 5-kilowatt system could result in lifetime savings of $38,000 in Oregon or more than $70,000 in California. While these are very different numbers they still represent an excellent value.
Read on to find out more about solar panel ROI or how long it takes to see a return and the specifics of what you can expect in terms of returns and various incentives.
What are the start-up costs of a solar energy installation?
It depends on whether you are building a solar panel system onto your home or buying the components individually. On average, it costs between $12,500 and $20,000 to purchase a 5-kilowatt solar energy installation for someone with no existing panels. It is possible to spend less if you choose not to buy everything at once or if you find a used set-up.
If you already have solar energy at your home and want to add more panels, then the installation is usually less than $2,000. You can also go this route if your system breaks down and needs replacing. The average price of an additional kilowatt for someone with existing solar panels is $1,000.
The other big start-up cost is the installation itself. If you hire a solar panel technician to do the work for you, then this will be between $1,500 and $5,000 (depending on your system size). Perhaps you want the technical experience to make sure everything goes smoothly, assuming there are no major mistakes, you should budget between $500 and $1,000.
If you want to save even more money you can do the work yourself. This option includes buying the materials in advance (at about $250 per kilowatt) and then waiting for your rebate check. You can expect to pay an additional $2,500 to $3,000 for this amount of materials and installation.
How long does it take to see a return on my investment?
The short answer is that you can expect your system to repay itself within 10 years. However, the time taken varies depending on where you live, the size of your solar panel system, and whether you get any additional incentives like tax credits.
In sunny states with higher-than-average electricity rates, your solar energy system could pay for itself in as little as 7 years. If you live somewhere less likely to get a lot of sun or where electricity prices are lower, then it could take 13 years
What factors affect the return on my initial investment?
To understand how long it takes to see a return on your investment, you need to consider three things:
1. Where you live
2. The size of the system you buy
3. Any additional incentives available in your area
Where are solar panels most efficient?
The amount of sun that falls on different parts of the country is very important when it comes to solar panel efficiency. Solar energy is most efficient in the southwest and California, where there is a lot of sun for most of the year.
If you live somewhere with less sun then your system will produce less energy and it will take longer to pay itself off. In areas like Oregon, Wisconsin, or Michigan that experience cold winters where little sunlight falls, your panels will also produce less energy.
What incentives are there to help pay for solar panels?
There are numerous grants and rebates available to help pay for solar energy systems, especially if you buy them for your home. However, most of the incentives only apply to new installations, so they do not affect people with existing systems. A list of some of the popular ones is provided below:
1. Federal tax credits – In most states, you can save as much as 30% of the solar panel installation costs by claiming a tax credit. Not all states offer this incentive, but those that do include California, Colorado, Connecticut, District of Columbia, Massachusetts, New Jersey, and Utah.
2. State rebate programs – Some states reward people who install solar panels through a state rebate program. Depending on your system size, the amount of money you get back can be between $1,000 and $5,000.
Some examples are Massachusetts Solar Renewable Energy Certificate Program, New York State’s Megawatt Block Incentive Program, and North Carolina’s Residential Clean Energy Self-Sufficiency Program.
3. Homeowner association subsidies – If you live in an area where your home is part of a homeowner association, then you may be eligible for a rebate from the association. This is especially true if there are no other associations that offer it in the same area.
What is the cost of solar energy per watt?
The cost of solar energy per watt is also an important factor to consider. This should always be lower than the cost of electricity from your utility as it means you can save money over time.
The average residential system size in the United States is 5 kilowatts (5,000 watts), but many homeowners find that a 2 kW system will meet their energy requirements. If it is within your budget, we recommend getting a slightly larger system as you will be able to generate more power and this means bigger savings – especially if you live somewhere sunny or warm.
It’s also important to remember that the cost of solar panels varies depending on the brand and where you buy them from. Although they may cost around $0.45 per watt in bulk, you can expect to pay about $1.00 per watt for them.
How much does the average consumer save each year using solar energy?
The average American household spends around $1,400 each year on electricity. This is largely due to the costs of producing and distributing power increasing over time.
Switching to solar energy can help you avoid this expense as you no longer have to pay for electricity generated by coal or natural gas power plants that release carbon gases into the atmosphere. As a result, the average homeowner will save around $1,400 each year after switching to solar power.
How long will it take to recoup the cost of solar panel installation?
The time it takes to recoup your costs for solar panels depends on a number of factors, including the size of your system, climate conditions where you live, and whether or not you are eligible for incentives. For example, if you have a smaller system that is installed in an area with less sunlight then it will take longer to pay itself off.
Do I still need to pay for utilities if I’m using solar?
Yes, you will still need to pay for the utilities you use. In most states, if your solar panels generate more energy than you use at home then the excess electricity is sent back to the grid. Your utility company will turn off your power supply once all your savings have been used up so that it can sell any excess power on the market.
Conclusion
Solar panels can be a great way to save money and environmental resources, but make sure you do your research before committing to the investment. This article will help you learn more about where to buy solar panels from and how much they cost. It should also prepare you for any questions that come up during the buying process.
Though there’s no one-size-fits-all answer to how long it takes for solar panels to pay for themselves, you can learn more about the time required based on your particular installation. If you’re eligible for incentives you can anticipate your system paying for itself within approximately 7 years.
Of course, this depends on the size and startup costs of the system you choose, which determines energy production and therefore your average annual savings and solar panel ROI.