When Will a Solar Panel System Show an ROI for My Family?

Posted by on July 5, 2017 in Renewable Energy | 0 comments

When Will a Solar Panel System Show an ROI for My Family?

By Hannah West


The promises of a residential solar energy system may start to feel a little iffy when you’re looking down the barrel of a big investment. Are lower (or nonexistent) utility bills, environmental stewardship, and energy independence enough to balance out an initial price tag of tens of thousands of dollars? Well, that depends on how soon your PV solar system starts to pay off.

When you ask how long before you start to see a return on the investment, getting the answer “it depends” isn’t exactly comforting. Thankfully, you can get a ballpark estimate on your ROI. Here are the factors you should analyze to find out when your residential solar system will start to put money in your pocket.

Family standing in front of their solar panel investment

Factors That Affect Your Solar System’s Return on Investment

  • Are you planning to buy or lease the system? If you go with a solar lease, your utility bills will immediately take a nosedive. However, you’re paying rent for a solar system that you will not own – plus, you enter a long-term contract that could make it more difficult to sell your house. The savings are immediate, but ultimately the solar panels are not yours and you’re giving away your chance at incentives to the company who actually owns them.
  • The output of your PV system. This factor in and of itself is determined by several sub-factors, like how much sunlight your property receives, how big your home is, and how well the system has been installed. Most importantly, what size do you need?* Do you want to merely ease your home’s energy demands by supplementing grid energy with solar, or do you want your entirely eliminate your electric bill? Both can be done, but the latter will call for a larger system. A 10kW system can meet the average U.S. home’s demands. But if that’s too large of an investment, you can start small and expand as is financially viable.
  • The total cost of installation. Including the 30% federal tax incentives, a 10kW solar energy system in New England will cost you anywhere from $15,000 to $25,000. Aside from the federal tax credit, rebates vary between states and regions, so be sure to visit the Database of State Incentives for Renewables and Efficiency to find out what’s offered in your area. A property tax exemption is another profitable incentive, since it gives you a pass from paying increased property taxes due to the added real estate value solar panels offer. If you’re considering going solar, it’s a great idea to research all incentives available to you.
  • Grid electricity rates in your area (cost per kilowatt-hour). The more you’re spending on utility bills, the sooner your solar system will pay off.
  • Net metering opportunities. Many states will only allow you to produce enough energy to meet your own needs. Net metering, however, allows you to receive credits for any additional energy your system produces. You can then sell those credits to utility companies and help them meet their quotas. There’s a cap on how much energy you can sell to utility companies, but this profit will certainly help you balance your initial investment.

So What’s the Answer?

The average payback time in New York is eight years, while in Vermont it’s 16. In Massachusetts it’s only four. We could throw around averages all day, but the bottom line is that your individual situation determines the payback period. And regardless of what it is, your family will still benefit from a decade or more of free, clean energy.


* Real Goods’ free, no-obligation online solar quote tool can help you calculate your energy requirements and solar PV system size. And if you get stuck, just contact the pros at our Tech Desk.

Click here for a free quote for a home solar PV system from the pros at the Real Goods Tech Desk

The solar pros at the Real Goods Tech Desk

Guest blogger Hannah West of Home Improvement LeadsHannah West writes for the roof replacement experts at Modernize Roofing with the goal of empowering homeowners with the expert guidance and educational tools they need to take on big home eco-friendly projects with confidence.

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