Solar Panel Break Even Time

In the united states the most important incentive for solar is the federal residential energy tax credit.

Solar panel break even time.

When considering that lifetime any payback period less than about half that time or 12 5 years can be considered decent more important than payback time is a concept called internal rate of return or irr for short. On average solar panels can take anywhere from seven to eight years to break even. If your break even point is reached within 5 years and you expect to save at least 2 000 a year for electricity assuming you purchased the system with cash then you benefit from around 20 years of no electricity bills about 40 000. However the savings after those seven to eight years can be quite significant.

How is the solar panel payback period calculated. Is around seven and a half years. Generally solar panels create enough energy to power your whole house. The typical solar payback period in the u s.

If your cost of installing solar is 20 000 and your system is going to save you 2 500 a year on foregone energy bills your solar panel payback or break even point will be 8 years 20 000 2 500 8. Is just above 8 years. Yes solar panels break sometimes but probably not in the way you are thinking. Most solar panels are manufactured to withstand some pretty heavy beatings from the elements so its pretty unlikely that you would see a physically broken solar panel.

Solar isn t ideal if you re about to move solar is a great financial investment but it can take some time to reach the break even point so often heralded by industry sales reps. In addition to this there is also an increase in the value of your home. The availability of solar tax credits have a big impact on the amount of time it takes to break even on an investment in home solar. In 2019 it takes 30 off the cost of a home solar system.

Let s imagine you spend 15 000 to install a solar panel system and are eligible for a 26 federal tax credit on that. Solar panels are designed to last at least 25 years and many modern brands will last much longer than that. However if you live in a state with low electricity prices and few incentives you ll most likely break even faster with an outright purchase.