Advice to People Considering Investing in Solar Power
For solar power to be an investment, the panels to save you money in the long run.
The solar panels cost you a certain amount of money to install. They then make a certain amount of energy each year, saving you a certain amount of dollars off your power bill.
And so, after a number of years, the cost of the panel will be paid off in power bill savings. After this, the power your solar panels make comes is pure profit. The years it takes to reach this 'break even' point is called the solar payback time.
Ideally, you want the solar payback time to be as short as possible.
On average, solar electric panels take between 10-15 years to break even. Solar hot water panels usually have 5-8 year payback time.
This is why it's important 'guarantee' your investment by getting solar panels that have a 20-25 year warranty. Otherwise, you're not guaranteed of having that eventual cost savings once the payback time is over.
Buying a solar panel that's not properly guaranteed is like having a home with no insurance. It's a big risk, and is usually not worth it.
Calculating your Payback Time
There a few ways to calculate your payback time.
You can look at a simple money saved/cost of solar panels equation.
The thing to remember here is that electricity prices rise consistantly every year. This means that your solar panels will save you increasing amounts of money over their lifetime. This makes your payback time shorter.
Another factor to consider when calculating solar panel ROI is the added value to your house. Realtor studies have shown that solar panels add value to your house. This added value is estimated at:
15 x your yearly solar savings.
This can become a considerable amount, and increases every year. By taking this into account, many solar panels can be seen to break even after a few short years.
If this is starting to sound complicated, try our Solar Calculator.
This does all the basic calculations for you. Click here to get an estimate of your payback time.