How Long Before DIY Solar Panels Pay for Themselves? Posted on 10 Jun 09:00
DIY solar panels are a solid investment, as they save you money on your power bill every month until they eventually pay for themselves.
But you probably already knew that. What you want to know is when, exactly, you will reach that point.
You’ll have to do a little math, but figuring out the answer to that question is not too difficult. Let’s take a look at how you can calculate your solar payback period.
How Much Did Your DIY Solar Power System Cost?
First, you need to calculate your total initial investment costs for adopting solar technology.
Your DIY kit price includes the cost of your photovoltaic panels, inverter and mounting components. To determine your total expenses, add in your wiring costs, including labor charges for your electrician and any costs you may have had for permits or HOA approval.
Now, subtract the local, state and federal tax credits and rebates you received for adopting solar energy. These financial incentives can bring down your initial DIY solar investment costs by up to 50 percent, adding up to thousands of dollars in savings.
How Much Electricity Savings Will Your DIY Solar Panels Provide?
How much is your average monthly electricity bill?
You can figure it out by adding up your last year’s worth of bills and dividing by 12. Or you can base it on the national average. Most homeowners, according to the U.S. Energy Information Administration, pay roughly $110 per month for electricity.
You’ll pay significantly less than that after installing a DIY photovoltaic system.
The amount you save depends on the percentage of home electricity your solar panels will provide. For example, if your system is sized to generate 60 percent of your energy, your monthly bill would be about $44 instead of $110:
$110 (monthly electricity cost) x .60 (generation capacity) = $44
In this case, the DIY photovoltaic array would end up saving you a total of $792 for the year. To determine your annual savings, simply switch out the figures in the example equation for your actual electricity costs and generation capacity.
Calculating the Payback Period for DIY Solar Panels
Now that you have figured your initial investment costs and yearly electricity savings, you can easily estimate the payback period for your DIY photovoltaic system. The math is simple:
(initial solar costs) ÷ (annual financial savings) = years for solar payback
Of course, this is a very rough estimate. A variety of other factors such as the weather and solar radiation at your location can affect your payback period.
Finally, consider the costs of future electricity rate increases. Although that amount varies greatly from utility company to utility company, the U.S. Energy Information Administration estimates an average annual rate increase of about 3 percent. And, if you’re like many U.S. electricity customers, you can expect to use more power as the years go on.
These might seem like small differences, but over the period of just a few years, they can significantly reduce your payback period.
If you’re considering installing your own PV panel array, visit the Solar GOODs online do-it-yourself superstore. We have everything you need to calculate your correct system size and order your DIY solar panels.