It’s vital to compare solar panel costs with energy savings before you decide to go solar. How much you save will depend on your local electricity rates, power usage, and solar system size. In addition, your solar system’s efficiency will also factor into the payback period. The more efficient your panels are, the faster you’ll recoup your initial investment.
Payback Period
When deciding whether to invest in solar panels, homeowners often want to know how much money do solar panels save and how long it will take them to break even on their upfront costs. This is referred to as the payback period. The average solar panel payback period is around 7 to 10 years, but it can vary based on your area’s energy cost and available incentives. The most important factor to consider when calculating your payback period is the total cost of your solar system minus any incentives, such as the federal tax credit or state and local rebates. Another critical factor to consider when figuring out your payback period is the efficiency of your solar panels. Modern panels retain around 80% generation efficiency for their average 25-year lifespan. A final factor to consider is the price of electricity in your area. Electricity rates vary by state, and they can change frequently.
During the past 25 years, national electricity rates have increased an average of about 3% per year. This can make it more difficult to predict how long it will take for your solar panels to pay for themselves, especially if rates go up. One way to get a better idea of how long it will take for your solar panels and savings to pay for themselves is by comparing quotes from multiple installers. With multiple binding quotes from vetted solar companies, you can quickly determine your payback period and decide whether or not solar is right for you!
Energy Savings
Solar panels are a major energy-saving investment for homeowners, potentially saving them money over time. They generate their electricity, use it to power lights and appliances at home or sold back to the electric company.
The amount you can expect to save depends on where you live and the size of your system. For example, a 5 kW system can be installed for around $18,000 to $20,000.
To calculate how much you will save, log in to your electricity company account and get an estimate of your current electric bill. This will consider how your household uses energy, the average cost of electricity in your area, and what net metering policies are in place. After you’ve determined your savings, calculate the payback period of your solar system. This will depend on how many panels you install, your average energy usage and how quickly you can sell excess electricity back to the utility company. During your solar system’s first year, you’ll likely spend a small amount on installation costs. However, the savings you’ll earn from your system over time can compensate for that expense. You’ll save money on your energy bills within a few years of installing your solar panel system. You’ll also benefit from a 30% tax credit, which can help you pay off your system faster and save even more money over time.
Tax Credits
While solar panels are more expensive than utility power, there are many tax credits that you can claim to help offset the cost. These can include state and federal rebates, as well as other incentives. The federal government offers a tax credit that can cover 30% of the cost of solar panels. This is known as the Investment Tax Credit (ITC). It is available to homeowners, as well as businesses and farms. You can claim this nonrefundable credit against your federal income taxes. This credit can be claimed by anyone who has purchased a new residential solar energy system before December 31, 2023, and installed it during the tax year. You can also claim it if you have an existing residential solar system that you are using to heat your home or a pool or hot tub. If you are installing a new system, it must be in service during the year and produce electricity to operate your household. The tax credit will be credited on your next tax filing.
Maintenance
Solar panels are designed to last a long time but can still be damaged by extreme weather. These include lightning, hurricanes, hail storms and tornadoes. It is recommended to have your system checked annually, especially if you live in an area that experiences extreme weather. A professional can assess the damage and suggest the best solution. Repairs can range from a few hundred dollars to a couple of thousand, depending on the severity of the issue. Maintenance costs can also increase if you have more than one panel or a system with several panels on the same roof. These systems may require more time to install and access the panels.
Most solar companies recommend annual inspections and panel cleaning at least twice yearly. This is so the panels don’t become obstructed with dust, leaves and pollen that can significantly reduce their electricity output.
In addition, it is a good idea to clean the panels after every major rainfall. During this process, the professionals can remove any dirt or pollen that builds up on the panels over time. The average cost for solar panel cleaning is around $12-20 per panel. Warranties don’t typically cover this service, so you must budget.
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