Let us guess: you have discovered that solar is becoming more and more popular as time goes on, but you don’t know if you can afford it, or how long it would even take to payback the cost. This is a common concern of many homeowners and a very understandable one, as well. While there are a ton of different variables that go into answering that question, here are a few guidelines to consider while learning if it is a feasible option for you.
The exact payback period depends on a number of different factors, including:
- The price of electricity in your area. In markets with expensive utility rates, the payback period is comparatively shorter.
- The amount of energy that your PV installation generates. This output depends on the amount of direct sunlight your property receives and the quality of your installation.
- The total cost of your installation, including incentives ( tax credits, rebates, and net metering, – most of which vary by region).
- How you choose to finance your solar installation. Leasing your panels offers the most immediate savings. After all, you receive a brand new installation for free and still enjoy years of lower electricity bills. But if you own your PV system, your monthly savings will eventually exceed the upfront installation cost—many times over.
Because each solar customer & installation is different, no two payback periods are completely the same. But we can still speak in averages. A state such as New Jersey, for example, offers average payback periods of about 7 years. It takes as little as 9 years to recoup all upfront costs in California. Your payback period may vary greatly depending on the specific circumstances surrounding your solar installation.
A few things are certain, however:
- As grid electricity rates continue to rise with time, the payback period of your solar installation becomes shorter – and the ROI of your system becomes higher. No matter what your local utility company chooses to charge in the future, the sun will remain the same price forever (free!).
- After reaching the payback period, you enjoy a lifetime of free electricity for the remaining lifetime of your solar installation (most systems come with a standard 25-year warranty, but many panel brands last 40 years or longer).
Lower monthly bills, a smaller carbon footprint, and a lifetime of free, clean electricity. Solar is a low-risk investment that offers maximum environmental & financial returns.