The length of time it takes for your solar energy investment to pay off, also known as the payback period, depends on several factors, including the cost of the system, the amount of energy it produces, and the cost of electricity in your area.
On average, the payback period for a residential solar energy system in the United States is around 7 to 8 years. However, the payback period can be shorter or longer depending on the factors mentioned above.
To calculate the payback period for your specific solar energy system, you can use a simple formula:
Payback period = total cost of system / annual savings on electricity
For example, if your solar energy system costs $20,000 and saves you $2,500 per year on electricity, the payback period would be:
Payback period = $20,000 / $2,500 = 8 years
It’s important to note that while the payback period may seem long, solar energy systems typically have a lifespan of 25 to 30 years, meaning that you will continue to generate savings on your electricity bills long after the payback period is over.
In addition, with federal tax credits and state incentives available for solar energy systems, the initial cost can be significantly reduced, further shortening the payback period and increasing the overall return on investment.
Overall, while the payback period for a solar energy system can vary, it is typically a smart long-term investment that can generate significant savings on your electricity bills over the life of the system.