Your photo voltaic panels could make you cash. Discover out when and the way

Your solar panels can make you money. Find out when and how

How lengthy will it take earlier than your photo voltaic panels begin making you cash?

Stephen Shankland/CNET

Photo voltaic panel installations are anticipated to extend by 30% in 2021, in keeping with analysis agency IHS Markit. However earlier than you resolve to put money into photo voltaic in your dwelling, it is necessary to know how lengthy it would take to repay the preliminary value.

Residential photo voltaic electrical methods value a median of $20,000 between the panels, different associated {hardware}, labor and extra, though that quantity can fluctuate dramatically relying on location and the variety of panels. So how lengthy does it take to interrupt even on that preliminary funding earlier than you can begin saving cash for actual? We’ll present you the best way to estimate the payback interval for photo voltaic panels.

Learn extra: 5 issues to contemplate before you purchase photo voltaic panels

Are photo voltaic panels actually price it?

A payback interval is the period of time it takes to earn again your preliminary funding. Photo voltaic panels may also help you save sufficient cash on vitality payments over time to offset the upfront prices. How a lot you save monthly relies on the scale of your photo voltaic system, your property’s vitality consumption and different components. 

Calculating the payback interval can be distinctive to your circumstances as a result of variability of the upfront prices, in addition to the distinction in vitality prices based mostly in your location. However listed here are some tips that will help you estimate when you’ll break even. 

Discover out your upfront prices

First, it’s essential estimate how a lot your preliminary funding can be. Together with the system prices, you need to embrace potential set up prices and different charges as a part of establishing your service. Verify value estimates in your space and go from there.

Tax incentives may also help lots

Householders can obtain a one-time tax credit score of 26% off the acquisition worth of a photo voltaic system. If the preliminary photo voltaic panel funding usually prices round $20,000 in your space, the tax credit score would web you $5,200 if you subsequent file taxes.

What’s extra, some utilities provide incentives and rebates for putting in solar energy. Verify together with your native vitality provider to see if they provide any incentives. 

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You need to know how much you pay on your electric bill

This estimate assumes you will get all of your power from solar. While some homes will be able to get 100% of their electricity from solar, or even sell some surplus energy back to the grid, others will still have an electric bill to supplement usage. This will vary widely from home to home, depending on how many solar panels are installed, normal energy consumption and more. Get more tools to calculate your home’s potential savings here.

Now you have a sense of how much energy you’ll save, login to your electric utility company account and calculate an average of your last several electricity bills. Go back at least six months, if possible, to account for seasonal temperature changes and other fluctuations in cost. Let’s assume you get 100% of your usage from the panels and currently pay an average of $125 per month in electricity bills, or $1,500 per year. Now you have the information you need to estimate the payback period for solar panels. 

Estimate how long it will take to pay off your solar panels

First, multiply your solar panel cost by 0.26, which is the tax credit you receive for installing your system. If you spend $20,000 on it initially, your tax credit is $5,200. That takes your initial investment down to $14,800.

Now, let’s factor in energy savings. Divide your initial investment by the $1,500 you typically pay the electric company per year; that’s how long it’ll take for your savings to equal the amount you spend. Using the example above, you’d divide your initial investment of $14,800 by $1,500: The result is a payback period of just under 10 years.

That might seem like a long time on the surface, but solar panels can easily last 25 years. 

You can further expedite your payback period by selling renewable energy certificates, or RECs. These are measured in megawatt hours of electricity that come from a renewable source. Electric companies must purchase some electricity from renewable sources, meaning you could save more by selling energy generated by your solar panels.

One more important thing to know

Some factors could increase your payback period. Before installing solar panels, you need to inspect the condition of your roof. Panels can last 25 years, so if your roof is not in tip-top shape, you might have to make improvements before installing solar panels. If this applies to you, make sure to add these costs to your initial investment. 

Overall, solar power can be an expensive proposition, especially with the upfront costs. However, the long-term efficiency they provide can more than offset the initial investment, leading to savings for years to come.

Save money now: More home energy tips

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