This a typical question asked by people considering owning solar panels for their house or business. Since solar panels are supposed to help you reduce your energy costs; knowing the pay-back period before purchasing your solar panels will help you make an informed decision and answering the question: Are solar panels worth it?
Solar Panel Payback Period
The solar panel payback period is considered as the amount of time taken to payoff your solar investment or as put by the EnergySage it is “the calculation that estimates how long it will take for you to “break even” on your solar energy investment. Solar panel payback period is not a constant and varies from state to state or country to country. The solar panel payback period depends on the following aspects of going solar.
1. The amount of tax-credits or rebates present in your state.
2. Utility rates i.e. commercial or residential power rates as charged by your local utility.
3. Solar panel brands
4. Accessibility to multiple solar quotes
1. The amount of tax-credits or rebates available in your state.
The Federal government offers a 30% tax credit to help lower the high initial cost of solar panels and hence the financial burden to the end-user in a time when the cost of solar panels is not yet at grid-parity in many states. The 30% tax credit is set to remain at 30% through 2019, and then will decline gradually for two years and eventually fall to 10%, before it is phased out by the end of 2022.
It is anticipated that the solar panel cost will continue to reduce and when grid parity is reached in most states; the solar subsidies will be phased out. As such, the federal investment tax credit is provided in all the states, however, different states provide different rebate system to further lower the solar panel cost. As a result, the amount of tax-credit or rebates available varies from state to state as explained because of the different financial incentives provided in different states to help people go solar.
2. Utility rates, commercial or residential power rates as charged by your local utility.
Different states have different utility rates based on the form of energy resource sourced by the utility company. States with a significant amount of coal tend to have lower utility rates compared to those of solar power. Going solar in such states may not be easy, since solar does not provide a good amount of savings when compared to the rates provided by the local utility. In such instances, the amount of savings accrued will not be significant and hence it will take a long time to break even or recoup your solar investment. The payback period in these states can be 15 years or more which is not very good when compared to the US national average of between 6 and 8 years.
On the other hand, states that rely heavily on oil to produce their electricity; have high utility rates that make solar a good candidate for lowering energy prices. As such, commercial or residential places in these states can save more with solar and can expect payback periods ranging between 5 and 7 years.
3. Solar panel brands
Different solar panel brands will have different costs or prices for their solar panels and this fact is affected by where solar panels are sourced and how they are manufactured. High end solar panels depending on the manufacturer will tend to be more expensive affecting your payback period. However, whether you choose expensive or affordable solar panels is dependent on the needs or requirements of the user. For instance, customers looking for high efficiency solar panels will be expected to pay more for their solar panels. Also, some solar brands offer high warranty periods and great service or customer service may tend to offer high solar panels prices which means high payback period of perhaps over 10 years.
The vice-versa is true when you buy low quality or low efficiency solar panels that could be cheaper for the end-user in the short-term or would have a low payback period, but in the end may affect the durability or performance of your solar panels.
4. Accessibility to multiple solar quotes
Considering all the above factors affecting the solar panel cost, it may be easy to give up on the process of going solar because of the information you need to gather before making your final decision. However, you don’t have to do all this research when you have online solar tools that analyze all these factors and provide you the best solar quotes that you can find online. Online solar marketplaces such as the EnergySage or Pick My Solar provide tailor made solutions based on the size of your roof and the amount of solar rays that is hitting your rooftop. Using your home/business address on these online tools you can access several solar quotes for your specific case making it easier to select the best quote. It means you can select the best quote based on your circumstances of affordability.
Solar quotes aggregators like the EnergySage and Pick My Solar can help you reduce your solar quotes significantly as confirmed by a 2017 study conducted by the National Renewable Energy Laboratory (NREL) titled “the value of transparency in distributed solar PV markets”. The NREL study found out that PV installers bid $0.24 per watt lower on the aggregators quote platform than when they bid directly to the same customers, on average. Also, the study found out that the prices decline as customers receive more solar quotes because of increased solar installer competition.
Hence, answering the question “How long does a solar panel take to pay for itself?” depends on several factors as explained above and we recommend using such solar aggregators like the EnergySage or Pick My Solar to get started. Also, to answer this specific question and to determine whether solar energy is right for you, the use of online solar tools like the solar panel cost calculator can help you conduct this exercise .
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