Do Solar Panels Pay for Themselves?
Jun 1, 2022
Solar panels are increasing in popularity with both homeowners and commercial building owners. This is because they’re not only environmentally friendly but also because they can save building owners money on their energy bills. But do solar panels actually pay for themselves?
Can Solar Panels Pay for Themselves?
The short answer is yes. Solar panels can pay for themselves over time. The longer answer is that how long it takes for solar panels to pay for themselves depends on the amount of sunlight in your area and how much your energy bills cost.
How Long Does It Take Solar Panels to Pay for Themselves?
Homeowners can calculate how long it would take for solar panels to pay for themselves by gathering the following information:
- Cost of the solar panels
- Energy costs
How Do You Calculate How Long It Will Take Solar Panels to Pay for Themselves?
If you already have solar panels, you can divide the total amount you spent on your solar panels by the amount you spent on utility bills each month prior to purchasing the solar panels. If your solar panels can cover your entirely monthly utility bills, then the result will be how many months it will take for your solar panels to pay for themselves. If you don’t have enough solar panels to cover the entire cost of the utility bills, then you should divide the solar panel costs by the amount you’re saving each month instead.
What Can Affect the Pay-Back Time for Solar Panels?
The basic calculation involves dividing the total amount the solar panels cost by the amount your energy bills would have cost. Once the energy bill cost adds up to the cost of the solar panels, then the solar panels have paid for themselves. How quickly this occurs, however, depends on some additional factors:
- Amount of sunlight
- Cost of electricity
The more your electricity bills cost, the faster your solar panels will pay for themselves. It’s for this reason that some of the more popular locations for solar panels aren’t actually very sunny. San Francisco has a growing solar panel market, despite being known for its fog. This is because energy costs are high there and even though the total amount of sunlight is less, solar panels can still help to reduce those costs for home and building owners.
What Is the Average Pay-Back Period for Solar Panels?
Because the pay-back period for solar panels depends on the amount of sunlight you get and the costs of electricity, the average pay-back period depends on where you live. You can look up the average solar panel pay-back period for your area, but there isn’t a national average for the United States because it ranges from five years to sixteen years.
Hawaii, for example, has both high energy costs and a lot of sunlight, and so has a much shorter pay-back period at five years. North Dakota has lower energy costs and less sunlight and is therefore at the higher end of the scale at sixteen years.
What Is a Good Pay-Back Period?
Just because there’s no real average pay-back period for solar panels doesn’t mean there isn’t a pay-back period you should be aiming for in your calculations. Ideally, the pay-back period for your solar panels should be half the lifetime of the solar panels or less. If your solar panels have a life expectancy of 25 years, then 12.5 years or less would be the ideal pay-back period.
What Can Improve the Pay-Back Period?
In some locations, you can get rebates or tax credits because you’ve invested in environmentally-friendly products. If you can get money back or save money on taxes, then that can contribute to reducing the overall pay-back period. If you live in a very sunny place, you may also be able to reduce the pay-back period by using solar batteries to store extra energy for use during the nighttime or on cloudy days. You could also participate in net-metering programs that allow you to sell extra energy back into the grid
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