Can a Home Solar System Pay for Itself?

The short answer is, "Yes, over time, a home solar system will pay for itself." There is, however, a more complicated long answer. Every home system will be unique in terms of equipment and location. Consequently, homeowners will have to use their personalized data to answer the payback question.

(You can arrive at ballpark projections for individual systems by using tools like the solar calculator available at findsolar.com.)

It should also be understood that for many homeowners, the primary motivation to invest in residential solar energy is environmental. That does not, however, mitigate the large financial commitment this decision entails or the human desire to completely understand what you're getting for your money.

First, your initial investment will depend completely on the size and capacity of the system you choose. The economic return, on that investment, however, can be calculated by the power the system generates.

The entire mechanical purpose for installing the system in the first place is to offset the amount of electricity purchased from the local power utility. Currently, the average cost per kWh in the United States is .12 cents and the average home uses 10,000 kWh per year.

In the planning stages of implementing your home solar energy system, you should have conducted an home energy audit. You should know exactly what you pay for electricity and exactly how much power your home uses seasonally and annually.

To calculate the length of time required for your solar energy system to pay for itself:

- Add up the total cost of the solar array and the amount of interest that will accrue over time from any financing (loans) taken out to pay for the system.

- Subtract the value of any incentives, rebates, or tax deductions you get from installing solar from this amount.

From this point, you can either record the energy produced by your system for the first year to get a realistic picture of its capacity and the value of that energy, or run a projection by:

- Dividing the total final cost of the system by the system's capacity to arrive a dollar amount per watt.

Since you know how much electricity you use per year and how much electricity your system should produce and the cost per kWh in each case, you can determine how many years it will take for the system to pay for itself. (Typical residential systems have a capacity of 3-10 kW.)

In most cases, home solar energy system installers estimate that a typical residential system will pay for itself in 8 to 12 years, but obviously that can vary widely by location, capacity of system, and quality of solar energy production at the specific site. Also note that systems that have been financed by loans take longer to pay off because interest is involved.

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2 Responses to “Can a Home Solar System Pay for Itself?”


  1. Solar Energy Tax Credits - Tax Incentives For Solar Power Says:

    […] Can I Install Or Build My Own Solar Energy System? Can a Home Solar System Pay for Itself? […]


  2. Affordable Solar Panels and Wind Turbines Kits Says:

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