The solar payback period — the time it takes to reach the break-even point for a home PV system — is much shorter than you might think. For most homeowners, solar payback takes less than 10 years, and some homeowners are able to recoup their photovoltaic investment in just a handful of years.
If you would like to calculate your return on investment in Utah residential solar power, use our easy formula to figure out your solar payback period.
To determine how quickly your photovoltaic power investment will pay off, you need to know how much you’re paying for electricity.
Utah homeowners, on average, pay 11.62 cents per kilowatt hour (kWh). And the average household uses 901 kWh of electricity each month, or 10,812 kWh annually. So that means energy costs for most Utah residents total about $105 per month, or $1,256 for the year.
Your electricity bills may be different. To add up your annual energy costs, plug your own numbers in here:
(Utility rate in cents per kWh) × (monthly usage in kWh) = monthly energy costs
Multiply that by 12, and you’ll have your annual electricity total.
The next piece of information you need to calculate your solar payback or return on investment is your total PV system installation cost.
To arrive at your this number, you need to add up your photovoltaic installation expenses. Include the solar panels, inverters, mounting racks, wiring, permit fees, financing charges and labor expenses.
Utah residential solar power systems are also eligible for several lucrative financial incentives that can help shorten the solar payback period.
The federal solar tax credit offers 30 percent back on a home PV installation. The state of Utah also offers a tax credit. If your photovoltaic system is installed before the end of 2018, you can claim 25 percent of the cost, up to $1,600. And if you’re lucky, you might score a rebate through the utility company or local government.
To determine your solar return on investment, you’ll need to add up all your savings, then subtract them from your Utah home PV installation costs. So if you paid $15,000 for a photovoltaic system and your financial incentives total $7,000, your net solar costs would be just $8,000.
How many years will it take you to break even on your PV system investment? To get the answer, take your net home solar costs and divide by the amount you’ll save on annual electricity.
Let’s say your net cost is $8,000 and you’ll be saving $1,256 every year on electricity. Here’s how the math looks:
$8,000 ÷ $1,256 = 6.37 years
That means your Utah home solar payback period would be less than seven years — and with net metering, you may be able to reach the break-even point even faster.
Investing in a home PV system pays off quickly in Utah — particularly when you plan your installation with Intermountain Wind & Solar. As Utah’s leading residential solar provider, our professional team knows the ins and outs of designing efficient, cost-effective home photovoltaic systems.
Do you have questions about your return on investment in residential solar power, or are you ready to get started planning your installation? Intermountain Wind & Solar offers free consultations to homeowners throughout Utah. Contact us today to find out how we can help you achieve a speedy solar payback period on a home PV system.
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