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Every solar energy system is customized based on many different factors, including your electricity needs, home structure, utility company rules, state and federal incentive programs, geography and topography. System production may be decreased by several factors that would affect the production guarantee. Refer to your specific installation agreement for exclusions and/or other factors.
The statements made by Freedom Forever are based on the data available as of the last update to this website. There is no express or implied dollar savings guarantee. Statements regarding tax rebates and/or incentives are not guarantees you should seek advice from a tax professional regarding any rebate terms and/or qualifications. Warranty and repair of the system are subject strictly to the specific terms and conditions stated in your installation agreement.
For more information about the Illinois Shines Adjustable Block Program by the Illinois Power Agency, please read the Illinois Shines Brochure.
Optimise Your Usage Of The Electricity Generated By Your Pv System
It is possible to use the excess electricity generated by your PV system to heat water and heat your property during the day, although once again the viability of this option depends on your energy consumption and efficiency. It is also possible to charge appliances that you use at night during the day, at times when your PV system is generating the most energy.
Another way of storing electricity generated by solar PV systems is to use lead acid batteries. This option, although more popular with off-grid properties, is rare for grid-tied systems. Whats more, in economic and environmental terms it makes little sense: the batteries are very expensive and require the use of hazardous materials, thus making them difficult to dispose of.
Calculating Solar Return On Investment
Take your payback timeline and subtract it from 25 years, the expected lifespan of your system based on the standard length of solar panel warranties. Then, multiply by the amount of electric bills you knocked out by going solar.
Solar Panel ROI For DIY system:
25 years – 6.7 years = 18.3 years
18.3 years * = $30,001.75
In this example, if we opt for a DIY installation, we can expect our solar panels to save us $30k in electric bills over the life of the system.
Divide the net profit by the total cost of going solar to figure out your ROI:
$30,001.75 / $10,983.60 = 273.15% ROI
Solar Panel ROI for Professionally Installed System:
25 years – 9.9 years = 15.1 years
15.1 years * = $24,755.54
If we hire a professional installer, we can expect our solar panels to save us nearly $25k in electric bills over the life of the system.
Divide the net profit by the total cost of going solar to figure out your ROI:
$24,755.54 / $16,311.60 = 151.76% ROI
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Return On Investment For A 4 Kw Solar Panel Installation
If you have the roof space and finance for a large 4 kW installation, then you may benefit from even greater returns. The array will cost around £4,500 7,000 and will produce a Feed in Tariff return of approximately £79 a year. Combine this with energy savings of nearly £170 a year plus your export tariff, then you are looking at income and savings that equate to nearly £300. That means you may well pay off the cost of installment within fifteen years.
With all installations, once you have paid off the initial investment then you head into a period of pure profit. With most installations lasting a minimum of 20 to 25 years, you will have around five to ten years where your solar panels are working just for you.
Offsetting Your Energy Consumption
Solar power will always offset your traditional electricity consumption it may even entirely replace the need to use grid-provided electricity.
The average American household spends over $1,500 a year on fossil fuel electricity. By installing several solar panels on your property, you could replace up to 100% of your energy needs and save up to $100 every month. Plus, energy costs are currently rising at around 2.2% per year, while solar power installation costs get cheaper.
The higher your current electricity bill, the shorter your expected solar panels payback period, and the more likely you are to benefit from offsetting your energy consumption with solar power.
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Solar Investment Tax Credit
Right now, the ITC provides a 26% credit to qualified individuals through 2022. The ITC rate drops to 22% in 2023, before phasing out completely for residential solar installations in 2024. One of the provisions of President Biden’s Build Back Better plan includes an extension of the Investment Tax Credit for another ten years, as well as other incentives for renewable energy projects.
“Before the investment tax credit fully phases down under current law, the solar industry will continue to break annual installation records every year for the next three years,” said Wood Mackenzie in its third-quarter 2021 report.
Learn more about the ITC for residential solar systems, including who qualifies for it.
Solar Roi And Payback For Virginia Homeowners
With net metering, property and sales tax exemptions, and an SREC market, a solar system can be a great investment for Virginian homes. On top of that, Virginia has the lowest solar cost per watt on our list.
Average System Size: 11.01 kW
Average Price Per Watt of Installed Solar: $2.85
Whats the Average ROI of Solar for Virginia Homeowners? The average ROI for a residential solar system in Virginia is 6.22%.
What is the Average Payback of Solar for Virginia Homeowners? The solar panel payback for Virginia homeowners is 15.18 years on average. Compare that to solar panel warranties lasting 25 to 30 years, and your system could last nearly twice as long as the payback period.
Whats the Environmental Impact? Each year, the average residential solar system in Virginia will offset 10.48 tons of CO2 or 22.10 barrels of oil.
What Is Solar Power For The Home
Homeowners who install photovoltaic power systems receive numerous benefits: lower electric bills, lower carbon footprints, and potentially higher home values. But these benefits typically come with significant installation and maintenance costs, and the magnitude of the gains can vary widely from one house to another. This article will help homeowners make the financial calculations required to determine the viability of solar power in their homes.
What Are The Two Main Disadvantages Of Solar Energy
The first is the initial investment cost.
The purchase and installation of a solar system are pricey. However, in the long term, its cost-effective and beneficial for personal use and the private sector.
Overall, extremely beneficial financially and environmentally.
Secondly, solar panels are best suited for homes that receive ample sun exposure throughout the year. Solar energy is weather dependent.
Although solar energy can be generated on cloudy and rainy days, the efficiency of the solar panel does drop. However, over the last few years, technology has greatly improved, increasing its efficiency.
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Factor : Available Solar Incentives
What solar incentives are available when you purchase your system has a tremendous impact on your return on investment. The Federal Investment Tax Credit refunds you for 26% of the total cost of your installation in your tax returns. Additionally, Massachusetts offers a state tax credit thats worth up to $1,000.
Depending on which community you live in, there are also performance-based incentives that help put money back in your pocket, so you can see a larger return on investment. For example, you could also take advantage of net metering to see a larger return on investment. With this billing mechanism, your system automatically sends the surplus energy you produce back to the grid and you receive credits on future bills in exchange. This increases your avoided energy costs, which strengthens your return on investment. If its available in your neighborhood, you can also join the Solar Massachusetts Renewable Target Program, which is a performance-based incentive that compensates you monthly for 10 years for every kilowatt-hour of electricity that your panels generate. However, these state and federal incentives are dwindling, so if you want to maximize your ROI, its best to go solar sooner. Return on investment in Massachusetts used to be quicker under older incentive programs, so many of our past clients received four-to-six year ROIs.
Business And Commercial Solar Panels Return On Investment
For many businesses who want to install commercial solar panels, the major issue they first need to address and quantify is the potential return on investment. Of course, there is the initial cost of installation versus the consequent lowering of energy bills and greener credentials that could boost business. There is also the federal tax rebate and individual state incentives such as tax credits, exemptions and access to low interest loans.
Whether you have small or large business premises, investing in solar panels can have a number of wide ranging benefits, particularly if you are lucky to have a sizeable space available for the development. Solar panels can be placed on any building whether you are on in the industrial sector, have an office building in a city or are out in the country on a farm.
The size of space you have available will obviously depend on the approach you take to commercial solar panels. For instance, if you have a large piece of land, as many American farmers do, you may look to rent the space out to an energy company or solar panel installer / investment company, rather than undertake the responsibilities of construction yourself. If you share ownership of a building with other businesses, you might want to collaborate to bring down the costs and provide a more sustainable investment and resulting energy profile.
The return on investment for any business that chooses solar panels will depend largely on a few factors:
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Solar Payback Period & Roi For Battery
The above examples highlight typical ROI calculations for a grid-tie solar system one that connects and stores power in the public utility grid. A grid-tie system is the most cost-effective option for homeowners looking to eliminate their electric bill.
Adding batteries to your system gives you a local energy storage option, giving you more independence and control over the power you generate. In grid-tie systems, a local battery bank provides backup power to keep appliances running during an outage. In off-grid systems, your battery bank is what allows you to deliver power to a remote location that cant be reached by utility power.
Batteries are the most costly part of any solar system, which is why grid-tie homeowners often opt to skip them if their primary goal is to save on their monthly electric bill. If you choose to add batteries, know that it will extend your solar payback period, and you likely wont turn a monetary profit from your solar panels.
However, the value of batteries shouldnt be compared to the cost of grid power, but to the alternative of going without them. In grid-tie backup systems, batteries can be invaluable if you suffer frequent outages due to fierce storms or an unreliable power grid. In off-grid systems, solar + batteries is often cheaper than the cost of bringing a power line to your property, or powering your home entirely off a gas generator.
Mount Angle & Orientation
Solar panels work best when they face directly into the sun. But that task is complicated by the fact that the sun moves across the sky throughout the day. It also changes angle in the sky as the seasons change.
You can buy pole mounts or trackers to adjust your panels to the optimal angle throughout the year, but the production gains from these adjustments are minimal. Most system owners will be happy enough to mount panels at a fixed angle, which saves money on racking and installation costs.
Ideally, solar panels should be tilted at an angle that is equal to your latitude. The natural slope of your roof should come pretty close to this angle, so you usually dont need additional adjustments.
You also want to point your panels toward the equator so that they are facing the sun. In the US, south-facing arrays offer the most production. You can generally make do with east or west-facing arrays, but will need to oversize your system to account for a dip in production.
PVWatts is an invaluable tool for calculating the efficiency of your system based on the above factors.
For more info, check out our article on angle and azimuth, which explains the optimal position to mount your panels.
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How To Calculate Solar Panels Roi
How do you get a return on your investment?
Say I invest $10 in your bespoke chandelier business. Now, no-one makes bespoke chandeliers quite like you do, and in 5 years time, your business has grown to three times its original size. I cash in on the investment and get $30 back.
Whats my ROI?
In this case, thats 100*/$10 = 200% ROI. Not bad at all.
But wait, do you get 200% ROI over a year, or 200% ROI over 3 years?
Good question. As you can see from the formula, ROI doesnt take time into account. Its a blunt measure of how much money you put in, and how much you get back out again. So for solar panels, then, how do we define ROI?
Well measure ROI over the panels lifetime. As the industry-standard performance guarantee is 25 years, thats the timeframe well use.
Solar Payback And Roi For Maryland Homeowners
Net metering, SRECs, sales and property tax exemptions, and the Clean Energy Grant all make going solar in Maryland a great option for homeowners. If youre considering offsetting your electricity bill with solar energy, heres what the average investment looks like.
Average System Size: 15.21 kW
Average Price Per Watt of Installed Solar: $3.26
Whats the Average ROI of Solar for Maryland Homeowners? The average solar ROI for homes in Maryland is 7.65%one of the highest on our list.
What is the Average Payback of Solar for Maryland Homeowners? The average payback period for residential solar systems in Maryland is just 13 years. That leaves over half of your solar systems life to produce 100% free electricity, as most solar panels are guaranteed for 25 years to 30 years. However, they can go on producing electricity even longer than that.
Whats the Environmental Impact? The average residential solar system in Maryland will offset 12.89 tons of CO2, or 27.19 barrels of oil each year. Over its lifespan, that quickly adds up to a significant reduction in greenhouse gas emissions!
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How Many Solar Panels Do I Need To Power My House
When asking yourself how many solar panels you need for your home, there are again a number of variables to take into account. The most significant contributing factor here is how much energy you use. While theres no single answer, a good rule of thumb is that it takes roughly four solar panels per kilowatts needed.
Most solar panels produce around 250W every four hours of full sunlight. So how does this all play out reality?
A 3kW PV system will be sufficient for roughly three residents, according to average energy consumption. Using this formula, a system of this size would use about 12 panels on average.
A more common size for homes in the UK is 4kW, which can provide for three to four residents. If you use the same formula, a 4kW system would need an average of 16 solar panels.
You can always use a solar PV system to power some of your home instead of all of it. That would certainly lower the number of solar panels you need, but may not be as profitable in the long run.
Return On Investment For A 5 Kw Solar Panel Installation
Most solar panel installation across the US are going to achieve some kind of return on investment, but in some places it is better than others.
In Arizona a 5 kW array will provide the following return on investment:
- Initial cost: $17,500
- Federal tax credit: 30% making the price $12,250
- Estimated energy savings in first year: $1,308
- Net profit after 25 years: $29,244
As an indication of how things can look different in states where the electricity prices are slightly lower, heres a look at the ROI for a 5 kW installation in Florida:
- Initial cost: $17,500
- Federal tax credit: 30% making the price $12,250
- Estimated energy savings in first year: $796
- Net profit after 25 years: $18,739
A variety of things can alter the return of investment that you get on your solar installation. There are states that have very low electricity prices which makes a good ROI less likely, though still possible, and those with higher prices which can boost net profits. Add into the mix the states that offer more incentives and greatly reduce the starting price of installation and you can see how difficult it is to find an average across the US.
For individual state costs for installing solar panels, visit our renewable energy incentives page.
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Tax Incentives Can Help A Lot
Homeowners can receive a one-time tax credit of 26% off the purchase price of a solar system. If the initial solar panel investment typically costs around $20,000 in your area, the tax credit would net you $5,200 when you next file taxes.
What’s more, some utilities offer incentives and rebates for installing solar power. Check with your local energy supplier to see if they offer any incentives.