If you take a look around your neighborhood, there’s a good chance that you will see some homes using solar panels. For many homeowners, the up-front costs are often the biggest barrier to buying in. However, it is important to understand that solar panels can eventually pay for themselves. Learning the time frame over which an investment in solar will pay off can help you decide if installing it is the right decision.
How Long Does It Take for Solar Panels to Pay for Themselves?
Most people want to know when the break-even point will occur for a set of rooftop solar panels. The answer to this question is going to vary from house to house. Here are some of the different variables that will influence just how long it will take for solar panels to pay for themselves:
- The cost of the system
- Current utility costs for the household
- The amount of monthly savings on energy
The Cost of the System
The average cost of a typical 5-kW solar system in the state of Nevada in 2019 is approximately $11,500. When you take into account the benefit of the federal solar credit, the bottom line cost is around $8,100, on average cost. Some systems will cost more or less depending on the size of the home.
Once you know the cost of your system, you can work out some calculations to estimate your payoff time. Keep in mind, paying off this figure also depends on the financial institute that you go through for your loan. There are some 0% interest loan options available, but if you do not qualify, you need to work the interest into your payment numbers.
Current Utility Costs for the Household
In order to accurately figure out your payoff timeline, you need to know the costs associated with your current electric bill. Most households in Nevada save approximately $92 a month when they switch to solar. Once again, this is not a clear-cut number that can be used across the board for everyone. But if you take that as an estimated number to get you started, you will save about $1,104 a year.
Calculating the Amount of Monthly Savings on Energy
It’s easy enough to compare the difference in your utility bills once you get started with your solar panels. Just take the current solar bill from the current month and compare it with your electric bill from the same month during the previous year (before your solar panels were installed). Simply subtract the difference to come up with your savings for that particular month. If you do this each month, you will get a good idea of how your savings will likely be projected by year’s end.
Working through an example is the best way to understand the payoff time with solar panels. Let’s say the final cost of your system ends up at $8,100 (the average cost in Nevada). If you save $92 a month (which is the average savings in Nevada), you would break even at about 7.3 years. If you finance to own your solar panels, you will find yourself saving a lot of money on your energy bills for many years to come.
There’s a reason that you are noticing more solar panels within your neighborhood. More and more people are working out the math to realize that this is an option that will save them money in the long run. Once you work out the numbers related to your specific home, you may notice the same to be true for your situation as well.