Installing solar panels is not just an environmentally conscious decision; it can also be a smart financial investment. In this blog post, we will guide you through the essential steps to calculate the return on investment (ROI) for your solar panels, enabling you to make an informed decision about harnessing the power of the sun while reaping the financial benefits.
We’ll be answering the following questions:
- Are solar panels a good return on investment?
- How long until solar pays for itself?
- What is the return on installing solar panels?
- Why are my solar panels not saving me money?
- Will solar panels be cheaper in 5 years?
Are Solar Panels a Good Return on Investment?
Investing in solar energy requires you to trust the process. You’ll have higher upfront costs but a greater return on investment. Thankfully, the cost of solar panels continues to decrease annually. Several government incentives, federal tax credits, and rebates are also available for people purchasing solar panels to encourage renewable energy. These benefits help offset the upfront costs and make it more affordable.
Solar panels are designed to absorb sunlight and convert it into electricity. This can significantly reduce your energy bills over time. In some cases, you can store excess energy and sell it back to the grid to earn credit. Likewise, installing a solar system can increase market value, and choosing an appraiser who has knowledge of solar panels and understands their potential to save on energy can increase your home’s value.
How Long Until Solar Pays for Itself?
The payback period for solar panels is typically 5 to 15 years or eight years on average. At this point, they can reduce or completely eliminate the cost of utility bills. How long your solar system takes to reach the payback period will vary depending on where you live and how much direct sunlight access your system receives year-round, as well as the type of solar panels you decide to install.
What is the Return on Installing Solar Panels?
The average solar panel ROI in the U.S. is around 10%. Again, the return on solar panels depends on the size of the solar system you install, the location, your initial costs, local electricity rates, and available tax incentives.
Why Are My Solar Panels Not Saving Me Money?
Solar panels are highly dependent on the amount of sunlight they absorb. If your system isn’t saving you money, there are several factors to consider.
- Lack of sunlight. In a lot of areas, solar systems will receive less sunlight absorption in the winter months. In the Southwest, we typically receive an adequate amount of sunlight throughout the year. Another reason you’re not seeing a return could be that your solar system sits in the shade for a large portion of the day. Make sure you place your system in the best spot for exposure to sunlight.
- Too small of a solar system. Your solar system needs to be large enough to meet your home’s energy needs. Otherwise, the power generated by your solar panels won’t provide enough electricity or save you money on your electricity bill.
- Internal issues. Make sure your system is installed properly and receives regular maintenance. Over time, performance issues can occur due to dirt or watermark accumulation and damaged or faulty wiring. The best way to avoid this is to schedule regular cleaning and inspections to ensure there are no present problems inhibiting your system’s optimal performance.
- Greater electricity usage than production. Solar systems are great at absorbing sunlight and converting it into electricity for your home, but if you’re using more power than your system is bringing in, it can diminish your solar savings. If this is the case, you might consider switching to more energy-efficient appliances and practicing energy-saving techniques like shutting off lights when rooms aren’t in use and being more frugal with AC.
One or more of these problems could be the reason why you’re not seeing a return on your investment. For the most part, these can be easily avoided during the installation process and through regularly scheduled maintenance. Be aware of your energy needs so you’re choosing the right size system to meet your home’s power requirements.
Will Solar Panels Be Cheaper in 5 Years?
Based on current model trends, solar systems are predicted to decrease by 4% to 20% from 2022 to 2038, which is a modest prediction. The most optimistic models predict the cost of solar systems will reduce by more than 50% within the next 15 years. As technology advances, solar panels are made with more efficient materials. As so, there’s an expected influx of polysilicon solar modules that offer higher solar absorption.
Go With the Pros At OWE for Expert Solar Panel Installation
At Our World Energy, we want to ensure that your solar power system is installed by the best so you can be sure you’re receiving the optimal amount of energy returns.
Contact us today to learn more about solar installation and how to start your journey toward energy independence.