Your solar power system is a financial commodity in several respects – one that can produce annual returns ranging from 10 per cent to over 30 per cent everywhere. The typical EnergySage shopper pays off their solar investment in just seven to eight years and receives a strong solar ROI, earning free energy for the remainder of the 25 + year life cycle of their solar panel system.
You can measure your annual returns by splitting your initial investment in your solar power system into the financial benefits that you earn each year. Several factors can affect the ROI of your Solar Panel, including:
Energy rates: How high are your electricity bills now? It will assess the savings over machine life. The higher your Solar level, the more you can save.
Financial incentives: Does your region have municipal or state tax schemes or rebates that promote solar adoption? Are you an enterprise or other entity that can benefit from tax depreciation benefits like accelerated depreciation? Higher bonuses mean lower operating costs and a shorter time of payback.
Renewable Energy Certificates (RECs): Does your state or utility have a market where you can sell electricity from the RECs associated with your solar power system? Which kind of revenue would you receive from selling those RECs? New RECs revenue will allow you to break faster even on your solar investment.
Cost: Did you compare the options in order to find the right price? Have you been able to take advantage of the rebates and tax benefits that cover your construction costs? Lower costs means the payback period is shorter.
Technology: How effective is your method, that is, how effective is it to generate electricity at optimum levels? A more effective device would cover the monthly energy bill by a larger amount.
Property Features: How sunny is it where you are? Which way do you face your roof? What's the Roof's Pitch? All of these factors may affect your level of output.
Property Value Increases: How much increases your property value while building a solar panel system? Ownership of a solar panel system appears to increase the land resale value while ownership by third parties ( e.g. leasing) does not.
Company Benefits: How much can raise the earnings because of reduced costs? What is the interest your solar power system creates for the goodwill? What amount of sales is your green certification due to? All of these factors will increase the return on solar investment for your business.
Payback time for solar panels = ROI
Taking into account all of the above considerations, you will get an idea of what your solar payback period could be, which is the best way to put a figure on your solar panel ROI. A payback period for solar panels is the amount of time it would take you to receive back the money you spend on a solar energy system up front, typically in the form of reduced electricity costs.
For example, if your solar panel payback period is 7 years, you can easily measure your actual monetary solar panel ROI after that amount of time just by looking at your energy consumption and local electricity rates. When you normally use 1,000 kilowatt hours ( kWh) of electricity a month at $0.15 per kWh, that's $150 you 'd spend without solar on electricity a month. With Solar installed (and your payback period is up), you 're basically pocketing $150 every month. Because energy prices historically increase over the years, this money saved ends up being much more every month over time.