Solar Panel Return On Investment

As a follow up to the most recent post on solar payback periods, we will now consider solar panel return on investment.

This post can be seen as part two of the previous post about solar panel payback time frames. Instead of looking at solar ROI (return on investment) from a payback period point of view, we’ll now consider various rates of return now possible with residential solar power.

A typical solar panel roi is now substantially better than ordinary investment products. Common, low risk investments are typically in the 2 to 5 percent range. On the other hand, a homeowner can expect a roi for solar panels that is quite a few times greater than traditional investments. Also, unlike some investments, solar returns are as guaranteed as the sun rising everyday.

So what kind of rates can the typical homeowner expect from a solar panel system? Let’s consider a few examples.

Solar Power ROI

All examples involve a 5 kilowatt system that costs only $9,000 after tax incentives and rebates.

Example #1 (typically priced utility electricity) –

Cost of utility power – $0.15/kwh
Average monthly power usage – 900 kw
Yearly cost for electricity without solar – $1,690
Cost offset by solar (80 percent) – $1,296
Solar ROI is $1,296/$9,000 = 14.4%
solar panel return on investment
Example #2 (high priced utility electricity) –

Cost of utility power – $0.25/kwh
Average monthly power usage – 900 kw
Yearly cost for electricity without solar – $2,700
Cost offset by solar (80 percent) – $2,160
Solar ROI is $1,296/$9,000 = 24%

Example #3 (low priced utility electricity) –

Cost of utility power – $0.10/kwh
Average monthly power usage – 900 kw
Yearly cost for electricity without solar – $1,080
Cost offset by solar (80 percent) – $864
Solar ROI is $864/$9,000 = 10%

Of course, impressive rates of return greater than 15 percent are only possible with access to very affordable solar panel installers. However, the average return on investment for someone going solar is still a considerable 10 to 15 percent.

Getting a great return on your money coupled with the idea of doing the right thing from an environmental point of view is a double win. This is the power that solar now holds for our society.

So whether you’re just looking for a great solar power return on investment, trying to reduce your carbon footprint, or both – solar power is increasingly the answer.

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2 Responses to Solar Panel Return On Investment

  1. Price for system I want is a ground mount, 6.76, 26, 260 panels. Since I am not eligible for rebates is $25,000, too much to pay. This is is mass. Where utility is high. Thank you.

    • nickt says:

      Hi Cynthia. Thanks for the comment. Actually, here is a better way to look at it. If you do nothing and continue renting all of your electricity, you will spend at least $50,000 over a 25 year period. Or you could go solar and spend closer to $30,000 by financing your system that would last at least 25 years. Which is better – spending $30,000 on solar or doing nothing and spending $50,000?

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