Residential and commercial property owners have started realizing the benefits of installing solar systems on their properties. Homeowners can now eliminate the exaggerated electricity bills by simply installing solar systems in their homes. In addition, solar systems are viable investment opportunities with strong rates of return. If you are in the process of reviewing different quotes, there are different metrics that can help you make the right decision, especially the solar panel payback period.
Why compare multiple quotes?
The solar panel system payback period is the calculation that shows you the estimated period it will take you to “break even” on your solar panel investment. It is easier and less expensive to own solar systems than lease because of the current lower equipment costs and inflated utility electricity rates across the nation. To understand the financial merits of each solar panel option, you need to compare the payback period of multiple quotes. This will help you identify the point in time when your solar system will start earning you money.
What is the average payback period?
In the United States, the typical solar system payback period is around six to eight years. For example, if your solar system will enable you to save $2,500 every year on foregone electricity bills by investing in a solar system worth $20,000, then your payback period will be calculated as $20,000/$2,500=8(years). It is also important to know how the value of up-front financial incentives applies. Tax breaks and rebates can immeasurably reduce the cost of installing solar systems. You are allowed to deduct 30% of the cost of your solar system from your taxes by the federal government. You can also benefit from the additional local financial incentives available in your state. The gross cost of installing a solar system on your property is determined by the type of solar system you select and the equipment or components that make up that system. The amount of electricity you consume in your home on a monthly basis indicates the size of solar system suitable for your home and the amount of electricity bills that you can offset by installing the solar system.