If you are considering installing solar panels on your home, you probably have several questions. Many potential buyers will wonder if solar power is worth it or if solar panels will eventually pay for themselves. The answer to both questions is yes. However, there are many variables, especially when it comes to your specific home.
The idea of installing solar panels on your roof is probably exciting. A door-to-door salesperson will promise low monthly electric bills, tons of long-term savings, and added value to your home. That said, it’s also a significant investment that will take years to fully develop.
So how long does it take for solar panels to pay for themselves? Well, it’s complicated, but on average, it will probably take US owners between 6 and 12 years to recoup the costs.
What is the solar rebate?
Once you start searching for home solar panels, you will see the term “solar payback” or solar payback. It’s basically a combination of the cost of solar panels, federal tax credits, and your energy usage. The solar panel payback calculators will give you a rough idea of what to expect.
The “solar payback period” is the time it will take for the savings in your energy bill to pay for the entire solar panel system. After saving money on your electricity bill for several years, you will break even, the solar system will pay for itself, and everything else will be pure savings.
Of course, how long it takes depends on how much money you spend to get started. The average price to equip a home with solar power in the United States is around $16,000. Some spend more, while others pay much less.
What is the Federal Solar Tax Credit?
An important aspect of reimbursing your solar panels is the federal tax credit and other state incentives for using renewable energy. The federal solar energy tax credit began in 2006 and, unless Congress extends it, it will expire in 2024.
In December 2020, Congress extended the credit through 2023, giving the United States up to 26% tax credit for systems installed in 2020-2022. But that rate drops to 22% in 2023. So if you’re on the fence, you’ll want to decide sooner rather than later.
Those who take advantage of the federal solar energy tax credit can deduct the cost of solar energy from taxes. This includes the cost of panels, labor costs, mounting equipment, assembly, and energy storage devices like a battery. You will get a $1 to $1 tax reduction of up to 26%. However, this only applies if you purchased or financed the purchase. Those who rent a solar installation are not eligible for the credit.
US Average Solar Payback Period
Now that you have some more details, we want to go over the average time it will take for your solar panel system to pay for itself. Again, this varies depending on the cost of panels, incentives, energy prices in your area, and how much electricity you use throughout the year.
According to most sites and calculators, the medium US homeowners can expect to pay off their solar panel system and see a return on investment within 6-12 years.
If we haven’t said enough, it can vary wildly depending on where you live and how much you spend. For example, many parts of California get a lot more sun than other states. Also, California has high energy prices compared to the national average, so technically you could pay it back faster since energy costs more in the state.
Some states, like Louisiana and Nebraska, have very affordable energy prices, around 7.5 cents per kWh, and it’s likely to take a lot longer to spend $16,000 on your energy bill to pay your bills. solar panels.
As we said before, many solar websites and companies have solar ROI calculation tools to help you figure things out. Make sure you know how much you plan to spend on an array of solar panels on your roof, your average monthly energy consumption, and any tax or state incentives available. Then enter all this information into a solar calculator.
For example, here in my state of Nevada, the average electricity price is around $0.13 per kWh. Many Nevada residents consume approximately 12,900 kWh of energy per year. With a budget of $13,000 for solar power, it will take me almost six years to save enough electricity to pay for the entire solar panel system. That’s better than the national average, and of course your situation may be different.
You’ll also need to consider the equipment you use, such as the efficiency of the panels, the angle and location of your roof, and whether you’re financing the solar panel system. Not everyone can afford to spend $10,000 to $16,000 on solar power, and many homeowners end up financing the installation. However, you will now want to factor in any fees or interest on this loan.
Can solar panels be self-financing?
So, again, can solar panels pay for themselves? Absolutely. If you live in specific states, you could quickly pay off an entire home solar panel system in less than five years. Or, in other regions, more than 12 years before the system is self-financing. But once that’s done, everything else from that day on is just savings and extra money left over in your bank account.
And even if you don’t live in the house long enough for that to happen, a solar panel system can still be a good investment because it adds value to your home. Well, until it’s a lease, not every homebuyer is going to want to take over your lease.
How long do solar panels last?
Finally, we wanted to quickly mention the lifespan of solar panels. If you wait over 10 years for the savings on your energy bill to pay for it, is it worth it? Well, that depends on your situation and how long you plan to stay in the house.
According to Energy.gov, most rooftop solar panels can easily last more than 25 to 35 years. The most common type, photovoltaics (photovoltaic panels), are very reliable and built to last. Many homes that added solar power in the 1980s and 90s still work well.
Remember, however, that energy production could decrease over time, especially without proper maintenance over the years. On the other hand, energy prices are slowly rising, which can help you pay off your panels faster down the road.
Another way for your solar panels to pay for themselves these days is to buy one of the many exciting electric vehicles released or to come. Charging an EV from home with solar power will save you the gas pump and you won’t need to use EV charging stations, effectively paying off the entire solar system even faster.
Ultimately, you’ll need to decide if solar is right for you by weighing the pros and cons, determining how long you’ll own your home, and finding the optimal configuration for your family.