Investing in a solar power system will save you thousands of dollars a year on your electricity costs. What’s even better is, depending on where you live, you may qualify for various incentives that could end up saving you even more money. You also have a lot of options when it comes to solar energy systems: you can be grid-connected or go off-grid, you can choose between different types of converters, etc, and these choices will help to determine your costs. Whatever you choose, if you invest in a solar energy system, you will save money because you’re using renewable energy. But just how much will your return on investment (ROI) be? Go Solar Energy can help you calculate the ROI you can expect when you switch to solar energy.
How Much Is Solar Power System Installation?
Solar panel systems can cost anywhere from $12,000 to $20,000 for a 5kw system if you purchase one outright. This includes installation, solar panels, batteries to store the energy for later use, and an inverter which converts the energy into electricity.
The average cost of solar energy is between $0.13 and $0.17 per kilowatt. If you qualify for incentives, then the price could come down to anywhere between $0.08 and $0.11 per kilowatt, which is a lot less than what the average home pays for traditional electricity.
What Incentives Are Available?
There are multiple money-saving rebates and incentives that you can qualify for when you install a solar energy system. These include:
- The Federal Solar Investment Tax Credit (ITC)- This incentive allows you to deduct 26% of the installation costs for your system from your federal income tax. If your installation cost $20,000, then you would get a $5,200 tax rebate.
- State-level incentives– Different states offer different incentives to encourage you to go solar. In order to find out what incentives your particular state offers, speak to one of our agents who is trained for your particular state.
- Property Tax Exemptions– Installing solar panels will most likely increase the value of your home. The property tax exemption allows you to deduct this added value from your property’s value for tax purposes. So even if your property value goes up after you install solar panels, this exemption will allow you to keep your property taxes at their original level.
- Sales Tax Exemptions– This provision exempts you from paying sales tax when purchasing a home solar system, reducing the upfront cost of going solar.
Other Ways To Save More
Aside from the above incentives and the added value to your home, there are other ways that installing a solar power system will help you save money in the long run.
- Net Metering Program- This billing mechanism is available in almost every state and allows you to sell any extra solar electricity that your system produces back to your local utility company.
- Rebates- Some solar panel manufacturers periodically offer mail-in rebates on their products. These will help reduce the costs of your installation by as much as 10% to 20% or more.
- Solar Renewable Energy Credits (SRECs)– This incentive program allows you to earn one SREC for every 1000 kilowatt hours produced by your solar panel system. You can then sell these certificates back to your utility company for up to $300 each.
How Long Until You “Break Even”?
Assuming that your solar energy system cost approximately $20,000 to install, and switching to solar energy saves you around $2,500 a year on your electric bills, then the typical solar payback period is just above 8 years. If you’re eligible for incentives and tax rebates, though, your solar power system will pay for itself within around 7 years.
Calculating Your ROI
If you want to know your exact return of investment, you can calculate it by:
- Figuring out the cost of your solar panel system, minus any upfront incentives and rebates.
- Calculating your annual financial benefits, which includes how much you’re saving on electricity, and any additional incentives.
- Dividing the total from step number 1 by the total number from step number 2. The end result is how many years it will take for you to get your solar payback.
Did you know that when you compare multiple quotes on solar energy systems you can save 10% or more? To easily compare plans in your area, talk to Go Solar Energy. Our agents will compare plans in your area, find any and all incentives that you can get, and even calculate your return of investment for you – and we’ll do it all for free! To get an affordable solar energy system with a faster return on investment, enter your zip code on our homepage, or to speak directly to one of our agents, call 888-290-3112.