Solar Investment – How Long Is The ROI

Solar Panel Systems
Solar Panel Systems

Investing in solar energy creates new opportunities to increase household savings and save the environment at the same time. Different factors determine how much can be saved for households using solar energy. Such factors also determine the length of time it takes to gain adequate return on investments. Return on investment of solar power systems are, among other factors, affected by property characteristics, electricity rates, solar renewable energy certificates, financial incentives.

Increasing Home Value

Solar power systems should be considered as a financial product, contributing 10 – 30 percent increases in home value. It is important to consider the solar panel payback period (also known as the break-even point) when deciding on the best solar option. The payback period is an estimate of how long it takes to break even on solar energy investments. It typically takes seven to eight years to earn a strong return on investment on solar. By dividing financial benefits per year by initial investment, annual returns can be calculated.

A 5-kilowatt photovoltaic (PV) system may cost between $18,000 and $25,000. The system includes solar pannels, batteries, and an inverter. Federal grant programmes and tax incentives help reduce such costs. The federal solar investment tax credit (ITC) gives homeowners the opportunity to reduce the costs of their PV system by 30%. A year after installation, a rebate of $7,500 on a $25,000 installation can be made. Federal grant programmes provide loans of up to $25,000 over a twenty-year period. Loans which allow for payments in cash for the investment which helps with savings.

10kW systems also provide similar savings. Rebates can reduce costs of a 10KW system by $25,294, bringing total costs of the system down from $55,000 to $29,706. Rebates help save $25,294.

State-Level Incentives

State-level incentives allow for costs of solar panel systems to be reduced to $14,000. Incentives provided on state level may include property tax credits, sales tax exemptions, and cash rebates.

Solar credit may be collected from solar aggregators. Companies usually buy them as part of their social responsibility goals. Solar credit generates revenue which is usually handled by solar aggregators. Households may sell credits for up to 10 years after installation of the solar system. Solar aggregators typically help to sell them.  Solar credits can provide over $3,000 per year in revenue. Homeowners with solar power systems gain from utilising renewable energy certificates. Solar renewable energy certificates can be worth as much as $300 in some states.

Property characteristics determine how much solar energy can be generated. The roof and land size must provide the necessary surface area necessary to accommodate panels. This also requires households to consider how much energy they plan to use. Naturally, the costs of solar panel systems rises with voltage power.


A home can reduce the gross cost ($30,000) of a solar panel system with upfront incentives of $10,000. With $1,200 in savings per year and additional incentives of $1,500 the payback period may be as low as seven years. It is important to keep in mind that getting a good deal from bigger installers can be quite difficult. Large installers charge $2,000 to $5,000 more than small solar companies.

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