If you’re like most people who are thinking about investing in a solar system for their home, you likely have plenty of questions about how your investment will benefit you both now and in the future. You’re right to question the payoff of solar, as it typically requires a hefty initial investment of anywhere between $5,000 and $80,000 dollars to get started, depending on the kind of system you want to implement.
Modernize believes that it’s important to gain insight into when your solar system will start paying off before you make an investment—here are some aspects to consider that should help you make your final purchasing decision:
On the Grid or Off?
If you choose to invest in a solar system that can be tied to your local energy company’s power grid, you can get away with a smaller system and use traditional power as backup while still saving plenty of money on your energy bills each month. On the other hand, if you purchase a grid-tied solar system that fully meets your household’s energy needs, you should be able to sell any leftover power you generate at the end of the month to the electric company for a tidy profit.
Investing in an off-grid system will require a bigger investment upfront, as you’ll have to provide your home with energy to meet its daily needs plus a significant bumper for those days when it’s overcast or stormy outside, and your solar panels have access to limited sunlight throughout the day. With a grid-tied system you can expect to save about $1,000 a year on energy costs, and with an off-grid system you’ll eliminate your energy costs altogether.
Looking at Tax Incentives
Luckily, you can look forward to tax incentives as a result of investing in solar power, which will help offset your initial investment costs and minimize the time it takes for the system to pay for itself. The incentives you are eligible for depends on the state in which you reside and the type of solar system you plan to have installed on your home. Depending on where you live, you may be eligible to receive a rebate for up to 70 percent of the cost of your solar system purchase and installation. In addition, you may be able to claim a deduction on your taxes for your solar system when filing time comes around.
|Solar Savings Breakdown|
Putting it All Together
To get a good idea about when your new solar system will start paying off and whether or not the investment is a worthwhile one, you’ll need to sit down and determine how much power your household uses on a daily basis. There are many online calculators that will help you get the job done.
Once you know how much power your home needs, you can figure out what size solar system is required for your home and how much it’s going to cost you upfront. You can then figure out what kinds of incentives and tax refunds your state will offer you to estimate how much you’ll save in upfront costs.
To determine your monthly energy savings, you need to figure out how much power you will still be using from the energy company compared to what you used before the solar was installed. You will pay the difference (if any) to your energy company and keep the rest for yourself as savings.
It’s a good idea to sit down and speak with a professional solar system provider to determine exactly how much power your home needs and how much money you can expect to save.