Do you want to install solar energy in your home but are worried about the initial cost?
Do you know that solar panels can pay for themselves and generate a return on investment (ROI) over time? Solar panels may even increase the value of your home.
What is the solar panel ROI? This guide will show you the return on investment that solar panels can provide.
What is the solar panel ROI?
ROI is the return on investment. The ROI of solar panels for a home refers to the money you save on energy bills and the added value your property gains after the installation costs are repaid.
Solar panels have a very high return on investment, especially in areas with lots of sunshine where you can eliminate your energy bill and meet all or most of your electricity needs. Solar energy is now more affordable than ever, thanks to falling equipment prices and rising utility costs.
How to calculate ROI
Solar panel systems can provide a return on investment based on their cost and the amount you save on energy bills. You need to take into account the following factors when calculating ROI:
Installation costs, including labor and equipment
Size of your home
Costs of preparation, including insulation
The next are examples of
Insurance
Borrowing costs
Government incentives
Estimated solar energy output
Electricity prices
Average electricity consumption
You will know the initial cost and how much time it will take you to recover your investment once you receive tailored quotes from solar panel installers. The payback period is what we call it.
According to Consumer Affairs, the average cost to install solar panels in a US home can range from $5,000 to $40,000. Prices are affected by the type of solar panel, the manufacturer, and how many boards you require for your home.
The average household energy bill in the US totals around $1,489 per year, data from the US Energy Information Administration (EIA) shows. This means that the average installation of $12,000 will pay for itself in eight years. This compares to a solar energy system’s average lifespan of 25-30 years.
Use a solar panel ROI Calculator to compare payback periods for quotes from different solar installers. You can use this calculator to determine when your investment is likely to start generating a return. This can help you decide on which installer to select.
Government Incentives: What Role Do They Play?
Solar panels can be purchased at a higher ROI with federal, state, and local incentives. All levels of government have pledged to support renewable energy in order to achieve their environmental goals.
Federal Solar Investment Tax Credit
The ITC is an incentive that allows homeowners to claim 26% of the cost to install a solar energy system. The solar panels must be owned, not leased. It would be best if you also claimed the credit during the same taxation year that you installed the system. Any unused credit can be carried over to the next tax year.
It would be best if you took advantage of this higher rate before it drops to 22%.
State Incentives
State governments offer a variety of subsidies. These include exemptions from sales taxes, property tax credits, and credits for renewable energy. It is important to find out what incentives are available in your locality. All of these incentives will reduce the cost of solar installations beyond what can be saved with the federal ITC.
You can sell excess electricity generated by your solar panels back to the local grid. This can increase your return on your investment and reduce the payback period.
How to maximize the ROI of solar panels
You can reduce your upfront costs and maximize your return on investment by maximizing your solar panel installation. The cost of the system and its operating time will affect the amount of money you can earn.
Shop Around
According to a study by the National Renewable Energy Laboratory, large solar installers charge on average 10% more than smaller ones. You can save money on installation costs by getting quotes from both local and larger installers.
Compare Equipment Options
Solar panels, inverters, and other components are priced differently depending on their manufacturer, technology used, and quality. High-end boards may have higher efficiency ratings, but they might not be the most cost-effective for your home. To get the most out of your money, look for the combination of price and efficiency that offers the best value.
Maintain Your Solar Panels
You can maximize the return on your investment once you install your solar energy system by maintaining it properly.
Keep your solar panels clean to ensure they produce the maximum amount of electricity over their lifetime. At least once a calendar year, have them cleaned by a professional. Inspections regularly will reveal any components that are damaged and need to be replaced.
Solar panels that are operating at maximum efficiency will produce a higher return on investment.
Solar Energy Investments to Earn Returns from Your Home
Installing solar panels at your home can save you money and help to create a healthier environment. Solar panel ROI can be maximized by finding the best installer, utilizing the available incentives, and maintaining your panels regularly.
Simply Solar has over 20 years of experience and offers high-quality services that get you the best return on investment. Our goal is to make your solar switch a seamless process. Our technicians will install a system that is customized to your home. This ensures you get the most energy-efficient design. Contact us for a free estimate.