If you’ve ever wondered how long it will take to see a full return on the investment of solar panels, this article is for you. Using solar panels is saving people thousands of dollars a year. If you don’t take my word for it, take a look at the numbers.
A typical 7 kW system costs a total of $24,000. To start off, you get a 30% federal income tax credit, which comes out to $7,200. This tax credit offsets taxes on real estate, stocks and carries over until you use all of it. The net cost of the system then comes out to $16,800.
So you have the system set up, now let’s talk about savings on energy costs. A typical system of this size will save about $180 per month. In one year, you’ll save $2160 ($180 x 12 months). This means that your investment of $16,800 yields a return of 13% in just the first year.
Considering that the cost of energy increases each year by around 6%, your savings will increase each year following the installation of the system. Using 6% as the average increase in energy cost, your savings will be $2289 (14% return on investment) in the second year and $2426 (15% return on investment) in the third year. This means that each year that you have your solar system, your yearly return on investment will increase by about 1%. Using this calculation, you’ll have 100% return on investment between six and seven years. And after ten years? You’ll have saved $28,455.
Not only will you pay for your system in about 6.5 years, you also have a 25-year warranty to protect your investment and a 30-35 year average solar panel lifespan. Not a bad deal at all. On top of that, having solar panels increases the value of your home. Think about it this way, would you rather live in a house that pays full electric bills or one that has significantly reduced electric bills. Now is the time to take advantage of the federal tax credit and start saving on your electric bill!