Solar Panel Payback Period: Is It Worth The Cost?

Solar Panel Payback Period: Is It Worth the Cost?

    A Solar Panel Payback Period You Should Expect

    While the trend of switching to solar powered technology is gaining more traction, many individuals and organizations are reluctant to install solar systems simply because of the upfront price. However, breaking even on your solar investment is easier than you initially thought. As you decide whether or not to integrate solar energy into your business, calculate your solar panel payback period to ensure you are making the best choice.

    How is a Solar Panel Payback Period Calculated?

    In order to determine your payback period, there are two categories you must be aware of: combined cost and annual benefits. To break this down further, start with the gross cost of the solar panel system, in other words the cost of installing the panels. In your favor are the values of up front financial incentives such as tax breaks and rebates. You can deduct up to 30% of the cost of the system from federal taxes. There are potentially local tax breaks as well. Once you factor in average monthly electricity use, estimated electricity generation, and any other financial incentives such as solar renewable energy certificates, you will be able to calculate how long it will take to break even on your initial investment.

    Trends in Projected Solar Panel Payback Period

    A common point that solar power critics highlight is that the energy payback time for solar power is too long, thus making solar renewable energy invalid. This is no longer the case. Solar cells have become much more efficient compared to years ago. Combined with the increased efficiency in performance and the manufacturing processes, the solar panel payback period available today is only a matter of years. The National Renewable Energy Laboratory has found that energy payback estimates for rooftop solar PV systems are anywhere from one to four years depending on the specific type of panel.

    In addition to the short solar panel payback period, the panels have a working expectancy of around 30 years. Furthermore, more than 87% of the energy generated by the PV systems won’t negatively impact the environment.

    The viability of solar PV was reaffirmed by the calculations conducted by the International Energy Agency in Australia. They calculated that the energy payback period in Australia would be under two years. In other words, it would take under two years for the solar PV system to generate enough energy to break even with manufacturing costs.


    If you want to learn more about installing solar panels into your business, CADsourcing has professional services that will help you understand the calculations behind your specific solar panel payback period. Contact us today to get started.

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