What is a return on investment (ROI) for solar panels?

Return on investment (ROI) for solar panels is closely tied to the payback period. Instead of measuring the time required to break even, ROI assesses the total financial benefit a PV array provides over its lifetime. Here’s a simplified ROI calculation: Lifetime Utility Costs – Lifetime Solar System Costs = Solar System ROI

How do you calculate the return on investment for solar panels?

The return on investment of a solar panel installation depends on its location, performance, efficiency and size, but 10% is average. To calculate the ROI for solar panels, divide your net profit over the lifetime of your panels by the cost of their initial purchase and installation. Then multiply by 100.

Do solar panels have a positive ROI?

A positive ROI means that over the lifetime of your solar panels — usually between 25 and 35 years — the amount of money you save on energy bills or earn through your solar panels will be greater than the initial investment cost. It usually takes about 10 years to cross that threshold with the federal solar tax credit and about 13 years without it.

What is a good ROI for solar panels?

The average ROI for solar panels in the U.S. is about 10%, but results vary. Olivia Ellis of Solar SME explained to us that “a good ROI for solar panels is considered to be between 6% and 8%.” In some cases, ROI may be as high as 20% or more, though. ROI is usually given as a percentage, representing your profit relative to your investment.

Should solar panel degradation be factored into ROI calculations?

Panel degradation should be factored into ROI calculations and solar panel return on investment calculations, since panels will put out a bit lower production near the end of their lifespan. Electricity rates have risen gradually over the past few decades, from 1% to 6% a year depending on the area.

What is a solar panel payback period?

The solar panel payback period is the time it takes to break even on solar panels. This can be calculated by dividing your initial cost by the annual savings you experience on your utility bill. Most households should expect payback for solar panels within eight to 13 years.