How Long Does It Take to Break Even with Solar Panels?



Solar panels can be a smart investment. However, many homeowners want to know how long it takes to break even with solar panels.

The average solar payback period in the United States is around 10 to 12 years. Depending on your location and your installation cost, it should take you around 10 to 12 years to break even with solar panels in the United States.

Keep reading to discover everything you need to know about the payback period for solar panels, including how long it takes to break even with solar panels in the United States.

The Average Solar Payback Period in the United States is 10 to 12 Years

If you install solar panels on your home today, then you can expect to pay off those solar panels within 10 to 12 years.

To calculate your breakeven point, you need to consider the cost of installation and the cost of electricity in your area.

If you pay $30,000 to install solar panels on your home, and your solar panels save you $3,000 per year on electricity, then you’ll pay off your solar panels within around 10 years. Your break-even point is 10 years.

How to Calculate your Solar Panel Break-Even Point

Solar panel break-even points vary widely depending on a range of circumstances. To calculate your solar panel break-even point, consider all of the following:

Total Installation Cost: Your installation cost varies based on the size of your system, the quality of components, the cost of labor, and other upfront factors.

Financial Incentives and Tax Breaks: Governments at various levels provide solar panel installation incentives. Installing solar panels on your home can give you a 26% federal tax credit, for example, allowing you to deduct 26% of the cost of your solar panel system from your taxes. You may qualify for additional incentives at the state or municipal level. You need to consider these incentives when calculating your solar panel break-even point.

Monthly Electricity Consumption: How much electricity does your house use per month? The average American spends $117.65 per month on electricity, according to the Energy Information Administration, or around $1,500 per year. You may spend significantly more or less based on climate (which affects your heating and air conditioning expenses) and lifestyle factors (like the number of appliances in your home and how you use them).

Monthly Electricity Generation from Solar Panels: How much electricity do your solar panels generate each month? When buying a solar panel system, your contractor will attempt to build a system that matches your electricity usage. A good solar panel system could eliminate most or all of your electricity bill.

After calculating the numbers above, you can easily determine your solar panel break-even point.

Let’s say your solar panel system costs $25,000. You received $7,000 in upfront incentives and tax breaks. Your solar panel system saves you $2,500 per year on electricity bills. Based on these numbers, you would pay off your solar panel system in 7.2 years, which is faster than the nationwide average.

Other Tips for Breaking Even on Solar Panels

By taking advantage of the following, you could speed up your solar panel break-even point even further:

Compare Quotes: Homeowners who get multiple solar panel quotes save $4,000, on average. Don’t accept the first solar panel installation quote you receive.

Research Incentives and Tax Credits: Many people are surprised by the number of federal, state, and municipal incentives available for solar panels. Do your research today to save thousands.

Maintain and Optimize your System: Solar panels require minimal maintenance. However, homeowners who practice basic cleaning and maintenance can ensure their solar panels stay optimized throughout their lifespan, speeding up the solar panel break-even point.

Final Word

It takes the average homeowner around 10 to 12 years to break even on solar panels.

However, by finding a good installation company and taking advantage of tax credits, you could break even on solar panels within as little as seven years. 


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