Discover the Amazing ROI of Solar Panels
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Last Updated: December 21, 2020
Which of these three home improvement projects offers the best ROI (return on investment)? Kitchen remodel, window replacement, or solar power?
While shocking for HGTV watchers who love the big unveiling of a snazzy new kitchen, solar actually has a higher return on investment. Yes, some home remodeling projects return up to 100 percent of their value when the house sells, but granite countertops have nothing on solar panels. And you don’t have to sell your home to enjoy the financial benefits solar offers.
Here’s how solar pays for itself and generates significant ROI over the 40-plus year lifespan of your solar installation (25 years of which are warrantied at exceptional production standards).
The Basis of ROI: How Much Will This PV System Cost and Payback Period for Solar Panels
The cost of a solar energy system has a lot of different variables. However, the average system size is a six-kilowatt system with 22 solar panels. The national average in June 2020 for an array this size equals $19,200 before tax credits and other local incentives.
Those who go solar in 2021 can qualify for a 22 percent federal solar tax credit, which adjusts the price to roughly $14,976.00. A savings of $4,224.00. Depending on the state and local utility incentives, solar homeowners could save even more. However, this amount varies greatly, so we will only account for the federal tax credit here.
Since buying a solar system effectively locks in today’s power prices for the next 12 years, the primary drivers of ROI on solar panels include:
- The cost of financing the purchase (unless paying with cash; cash = more ROI)
- The cost of electricity from the power company
- The price of electricity you sell to the power company
Solar Payment Program: Solar Loans
Go Solar Group’s loan partners currently offer fixed rates as low as 2.99 percent APR with no money down and no lien. This means that the monthly payment on a $14,976 solar system equals $124 per month for 12 years.
At the end of 12 years, you will likely enjoy 13 plus years of solar-generated electricity for free. See this solar calculator for a more accurate estimate based on individual circumstances.
The Cost of Non-Solar-Powered Electricity
Since 2001, the retail rate for residential electricity increased by 4.43 cents per KW, which equals a 51.63 percent increase. While four and a half cents may not seem like much, when multiplied by the amount of energy used in a year and over many years, it adds up.
The past 10 years have only seen a 15 percent increase with an average increase of 1.95% a year. The higher the rates rise, the faster solar power pays off, but just because current rates haven’t increased as much as in past years doesn’t mean solar won’t save money.
The Energy Information Association’s (EIA) projected utility rates indicate that residential electricity rates will increase to 25 cents per kWh by 2050. However, even if the rates continued to rise at a steady 0.2 cents per year, solar power would save customers thousands.
Three Ways to Boost Your Clean Energy ROI
Homeowners can make money by installing solar and sitting back as the world gets more expensive. Or they can take steps to save even more. Discover the three things Go Solar Group customers can do to boost their solar ROI.
Add an Electric Car to Your Solar Home
The average American driver bought 656 gallons of gasoline in 2016. Since COVID-19, the 2020 gasoline consumption decreased uncharacteristically, but in 2019 the average consumption hadn’t changed much from 2016 at 626 gallons per American driver.
Since the average solar energy installation eliminates electric bills, any electricity used to drive won’t increase costs. Instead of factoring in gas money each month into the budget, EV owners save almost $2,000 per year.
Adding Electric Appliances
Solar homeowners who switch out natural gas cooking and heating for electric appliances reduce their gas bills significantly. While the price for natural gas varies from state to state, the average bill in 2020 equals $72.10 per month, saving homeowners $865.20 a year.
These savings don’t justify replacing working gas devices. However, replacing old appliances will reduce the carbon footprint of the home while also saving money.
The Added Value of Selling a Solar House
While homeowners don’t need to sell their house to see the upside of a solar installation, they can if they need to. A study from Lawrence Berkley National Laboratory found that buyers paid an extra $15,000 for homes with an owned 3.6-kilowatt array, which equals $4,000 for every kilowatt installed. However, homeowners should consider that the market they live in and the condition of the system will impact the actual value solar adds to the house.
To determine if an investment in solar makes sense, fill out the form below.