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Go off-grid with solar
Payback for PV
Whether your intention is to go completely off-grid, or you just want to cut your power bill in half, solar panels are a fantastic investment. Yet, despite their obvious merits, it took a while for solar panels to go mainstream due to the upfront cost involved. Potential solar customers should first calculate the break-even point, or payback period, for solar panels before making the investment in photovoltaics (PV).
“What most people don't understand is that the long-term benefits, or "payback" offered by solar PV panels in the long run far outweigh the initial cost. In fact, the installation of the panels has experienced a drop in cost over the years, making them accessible to the average home owner,” explains Sabrina from Renergy Limited.
But don't get excited just yet. Here's what you need to consider about the average payback period of PV panels before you take out your credit card.
The Costs Involved When You Go Solar
Remember that you're not just paying for the PV panels but the actual installation process as well. The installation process encompasses a variety of costs like paying for the solar panel design, the equipment used for installation; and of course, the actual labor.
Your rates will also vary depending on where you live and the type of installation company that you rope in to assist with the installation. You'll also need to contemplate in advance how you wish to pay for it.
For instance, you may choose to have your PV panel investment financed, but this may be a costlier option in the long run. You are looking at paying between $12,000 to $14, 000 minimally for PV panels for a modest sized home. There are absolutely no cutting corners on the cost if you wish to have an excellent job done.
Know How Much You Will Save Before You Install
You already know that going the solar-powered route is a great way to cut electricity costs, but to yield real value from your investment you need to know how much you'll save. You ought to begin by looking closely at your monthly electricity bill.
Once you've ascertained how much you pay monthly you can work out a rough estimate of your yearly electricity bill. If there's no way to determine your individual electricity bill, use the internet to find out the average amount of electricity used in your area.
That will assist you to work out the cost of electricity. Knowing how much you spend on electricity means finding out if the solar investment is a cost-effective one that will pay for itself within a few years.
Look At Your Payback Period
While getting your solar installation investment financed is a costly solution, it might take a good few years to save up to be able to pay for it yourself. If you do opt for a financing option, calculate how long it'll take for you to pay off the costs. Only then you can truly work out your savings with solar installation.
For many homeowners, it's tedious to calculate the actual savings after paying the installation off. You may only see the true value of your solar panels once all your installments have been fully paid off. Rest assured that if you install solar PV panels with extended lifespans, having a short payback period means that you have made a successful investment. Payback periods usually range from 6 to 8+ years. This is the amount of time it takes to reach the break-even point between the initial investment, and the savings due to reductions on your energy bill now that a bulk of electricity for the home is provided by solar PV panels.
Think Of Government Incentives
Research the government incentives offered for solar panel installation. In the USA for example, the government offers citizens who have installed a solar panel the chance to deduct up to 26% of their solar installation amount from their taxes.
This is a fabulous saving if you can get it. Depending on the state that you live in, there are other incentives offered that could lead to exceptional savings, and it’s worth doing your research about them. Many manufacturers and retailers of solar PV also offer special financing, rebates, and other financial incentives.
The Actual Calculation
Keep track of your gross installation cost. Remember your individual gross cost is calculated based on the size of the solar system that you select and the material from which your system is made. Once you understand your gross cost subtract the incentives offered to you from this amount. This will give you the total installation cost.
Thereafter, work out how much you'll save yearly by assessing your electricity bills. If there are any additional incentives offered to you in your state for installation, add this incentive amount to your saving. This will give you your annual savings amount.
Then, take your total installation cost and divide it by your savings amount. The answer you derive will provide an indication of how long it will take for you to obtain a payback. As mentioned, this ranges between 6 to 8 years. If you get a payback of 10 years or more, you may need to reconsider your investment or the gross installation cost and opt for a cheaper installation option.
Here's a snippet in which solar experts quote a payback period of 8+ years for most solar customers:
The typical solar payback period in the U.S. is just above 8 years. If your cost of installing solar is $20,000 and your system is going to save you $2,500 a year on foregone energy bills, your solar panel payback or “break-even point” will be 8 years ($20,000/$2,500 = 8)." FROM - energysage.com/understanding-your-solar-panel-payback-period
Advice For Purchasing A Solar Panel:
Here are a few tips for you to consider before you start your search for solar panels.
Keep Your Options Open
The most well-known solar panel brand may not always be the best option financially. There are reputable solar installation companies that don't necessarily have the biggest brand name but still do the installation excellently.
Start by doing tons of research on the diverse solar panel installation companies available out there and opt for one that suits your budget and requirements the most. You can save a good amount of money if you research well and choose your installer wisely.
Take Your Time
Just because you've decided to buy solar panels doesn't mean that you must be rash about it. This is an important decision.
Take your time, research the different materials used for solar panels, speak to homeowners who have already installed solar systems, and ask for multiple quotes.
The more considerate you are when making this decision, the more you will save. Also look at the lifespan of solar panels, the type of materials that are most durable, and if the materials from which the solar panels are made are hazardous or not.
Here are additional resources for purchasing solar PV:
- Types of Solar Panels and How to Choose
- How Many Solar Panels Do I Need?
- Solar panels 101: How to calculate your payback period
- The Real Cost of Leasing vs. Buying Solar Panels
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