If you’re thinking about installing solar panels you’ve probably wondered how long it will take to recoup the cost of installation. It turns out that the answer is quite variable depending on where you live and what type of solar panels (or other renewable energy equipment) is installed.
Most people are said to have their systems pay for themselves within about 10-15 years. The number of years a solar panel installation takes to pay for itself is dependent on a number of factors.
Solar panels can be expensive upfront, but they also produce free electricity for decades with no additional costs. The return on investment varies based on a number of factors, so it’s important to consider all angles before deciding whether or not to install them at home!
Key Factors to Consider
There are several things to keep in mind when considering whether solar power is a good investment for your home. There are several key factors that impact the return on investment.
Solar Panel Size
The larger your solar panels, the more electricity they will produce which means a faster return on your investment but bigger solar systems also require a larger upfront investment as these are more expensive than smaller solar installations.
Location and Local Weather Conditions
Your location is very important when it comes to how much sunlight you will receive throughout the year, which in turn affects how well solar panels work at generating electricity.
For example, rooftop solar systems installed in a place like Alaska won’t produce as much energy compared to those located in Florida where there are more hours of sunlight.
Weather events such as hail can damage solar panels, so it’s important to factor in the local climate when deciding whether or not solar is right for your home.
Some states offer tax credits, rebates, or other financial incentives for installing renewable energy systems such as solar panels on your home. These programs can lower the cost of going green substantially and help you save money faster when it comes to paying off a system’s initial installation costs over time.
The Type of System You Have Installed
The type of solar energy system you choose will also affect how quickly your panels generate enough electricity to pay for themselves.
If you install a traditional grid-tied photovoltaic (PV) panel system where excess power is sent back to the utility company and credited on your bill then you’ll need fewer panels to meet your energy needs.
However, if you have a solar battery system installed then you will need more panels to produce enough electricity for your home.
Solar battery systems store excess solar energy that can be used whenever needed, even when the sun isn’t shining which means you’ll save money on costly utility bills and never have to worry about having power during a storm or outage again.
Solar batteries are worth it and highly recommended, but they will add to the upfront cost of your system.
Your Average Energy Usage
If you use a lot of electricity, it will take longer for your system to generate enough power and pay itself off.
For example, if you live in an extremely hot climate with high air conditioning costs (and thus increased electricity demands), you may need more solar panels than someone who lives somewhere less sweltering which means it will take longer for your system to pay off.
The average solar panel installation size is around five kilowatts (kW) and produces an estimated yearly output of about 13,500 kWh which can nearly power the typical American household.
It’s also important to bear in mind that smaller systems may require less time to be “paid back” but will also have a smaller impact on your overall energy costs.
The Lifespan of Solar Panels
Most solar panels have a warranty that guarantees them for 25 years or more. Solar installers also offer an extended guarantee after the first 25-year term expires to protect your investment from any defects in workmanship and equipment.
This means that the average household will still have plenty of years left on the guarantee after the solar panels have paid for themselves. This is a great piece of mind to consider.
The Average Solar Panel Payback Period for A Typical Household
For example, if you live in a place that has an average amount of sunshine and your electricity costs 25c per kilowatt-hour (kWh), then it would take about 15 years for the investment to pay itself back.
If you can get the same power from solar panels at 20c kWh or less as is possible in some locations around the world then it would take about 12 years for the investment to pay itself back.
However, if you are looking at the long term investment potential of solar power and considering what future energy costs could be like in 15 or 20 years’ time, investing now is a very good decision!
Solar panels also provide additional benefits such as reduced reliance on the traditional grid and added security against increasing electricity prices.
Is Solar Power a Good Investment to Make?
The investment in solar power is a great investment in your future. For those who live off the grid, it is certainly worth considering as an alternative to traditional energy sources such as coal and oil.
You will need to consider several different factors when deciding whether a solar investment is a good investment or not:
- How much sunshine does your area get?
- How expensive are the traditional forms of power generation in your are
- What are you currently paying for electricity?
- What do green energy suppliers charge for their renewable energy packages?
- How much money will you save on your electric bill?
There are many different investment calculators for solar panels available online, and you should use one of these to get an idea of how long it would take to pay back the investment in a solar panel installation. Solar
The good news is that once your investment in solar power is paid off, you will start to see a drop in your electricity bill.
We have a great guide with tips if you have bad credit and are looking to finance your solar installation.
Why Solar Panels Can Be a Bad Investment
While it may be worthwhile in the long term if you’re looking for a way to save on your energy bills or get tax incentives, there are several reasons why solar panel installation might not be right for everyone yet. These are the main reasons you need to consider:
Solar Panels Take Too Much Time Before They Can Pay Off
The cost of solar panels is high and many people won’t see any short-term financial benefits from switching over their traditional power supply as a result especially when interest rates and electricity prices aren’t as affordable as they used to be.
Solar Panels Can Be Unreliable
As with all things, the more complex something is the higher chance of it failing.
A technical malfunction or human error could lead to costly repairs that outweigh any savings made over time by switching over from the traditional electricity supply which comes on day one!
This idea will eventually become outdated as technologies improve but for now, there are many people worried about how safe their investments might be if they go down this route.
Sunlight Conditions Change Too Rapidly Where You Live
The sun isn’t always out so solar panels can’t always provide energy even when you need it. This may lead to your system running out of power before the day is over, which will mean you’ll have little choice but to use the traditional electricity supply for a short time if there’s no battery backup available.
Solar Panels Are Expensive
Even with government subsidies, tax relief, and environmental incentives – solar panel prices remain high. Taxpayers who want to invest in this technology should factor in how long it might take them to recoup their initial investment so they understand whether or not solar panels are right for them at present.
Ongoing Maintenance and Cleaning
You need to consider ongoing maintenance fees that could run up quite a bill over time. Keeping your solar panels clean is also important if they’re going to work as efficiently as possible.
Solar Panels Are Ineffective Where You Live
If your home is in a location that doesn’t receive enough sunlight to keep the batteries charged throughout the day, solar panels aren’t going to be much help even if they do pay for themselves one day.
Solar Panels Are Unattractive
This may not seem like a big deal but there are some homeowners who do not like the look of solar panels on their roof. If you don’t want exterior elements of your property looking out of place because they’re too modernized then this is another important factor to consider.
Solar Panel Installation Isn’t Always Possible Where You Live
If you want to install solar panels on your property, the local government must approve this idea first. If there are no building restrictions in place then people might be able to do whatever they like but it’s often not that easy.
Solar Panels Come with Installation Fees
The installation fees are necessary for installation but if you have to pay them upfront, it could be one of the biggest barriers preventing people from using solar panels. The cost of a typical solar panel installation can be as high as $20,000 for a modest installation.
Solar panels are a great investment for anyone who wants to save money on their electric bill. It’s a great way to help the environment as well.
A typical solar panel installation can take anywhere from ten up to fifteen years before they pay for themselves
The ROI depends on the size of your home and how much you use energy in that space.
There are a lot of factors to consider when determining how long it will take to pay off your investment but remember this is a long term investment. Your solar panel installation will last a long time. We researched this and have a whole post on how long solar panels last.
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