Solar Panel ROI and Financing Options

Solar Panels’ Amazing ROI 

Quick, which of these three home improvement projects offers the best ROI (return on investment)? Remodel the kitchen, replace the windows, or add some solar power?

The answer is shocking for HGTV watchers who love the big unveiling of a snazzy new kitchen. Yes, some home remodeling projects return up to 100 percent of their value when the house is sold, but granite countertops have nothing on solar panels.

And you don’t have to sell your house to enjoy the financial benefits of solar.

Here is how solar can pay for itself in as little as five years and how it can generate many times ROI over the 25-year life of your system. (Why 25 years? Because that is how long a Go Solar energy system is guaranteed for both quality and performance.)

The Basis of ROI: How Much Will This PV System Cost & Payback Period for Solar Panels 

The cost of a solar energy system is affected by a lot of different variables, but Go Solar has installed enough systems across Utah to know what an average system looks like.

It is a six kilowatt system with about 22 solar panels and a cost of about $30,000. And while that sounds like a lot (it’s the price of a new Ford F-150), that is not the actual price you pay.

The price of a solar energy system is offset by a 30 percent Federal Tax Credit and a $2,000 Utah State Tax Credit. These credits mean the total cost of the average system is just $19,000, that’s still a good chunk of change, but still probably less than you paid for your last car. (And unlike a car, solar energy makes money instead of costing money.) 

So the cost is $19,000. How soon will you make back that money?

Because buying a solar system effectively locks in today’s power prices for the next 12 years, the primary drivers of ROI on solar panels are:

• the cost of financing the purchase (since most people don’t have 19 grand laying around)

• the cost of electricity from the power company

• the price of electricity you sell to the power company

The Cost of Solar Financing
Go Solar currently offers financing of a solar energy system at a fixed rate of just 2.99% APR with no money down and no lien. This means the monthly payment on a $19,000 solar system is just $157 per month for 12 years. At the end of 12 years, your electricity is free. See this solar calculator to get a more accurate estimate based on your individual circumstances. 

The Cost of Non-Solar-Powered Electricity
Once upon a time, Utah had some of the lowest electricity prices in the country, but those days are long gone. Electricity rates are projected to rise five to seven percent for the foreseeable future, and the higher the rates go, the faster solar power pays off. After all, if you have locked in an electric bill, each year that electricity rates go up, so do your savings.

The Selling Price

When you generate solar electricity, you sell what you don’t use to the electric company. In Utah, we have a program called net metering. With net metering, your electric meter runs forward when you are not generating electricity (at night) and backward when you are generating more than you use (during the day).

The effect is that the buying price and the selling price are more or less the same. This may change in the future, but there will always be someone willing to buy your excess electricity.

So how long does it take for your $19,000 investment to pay for itself? Expect to break even within four to seven years.

Three Ways to Boost Your Clean Energy ROI

So, you can make money just by installing solar and sitting back as the world gets more expensive. Or you can take steps to save even more. Here are three things Go Solar customer Dave Gerber of Herriman Utah did to boost his solar ROI.

1. Get an Electric Car
The average American driver bought 656 gallons of gasoline in 2016. Because the average solar energy installation completely eliminates your electric bill, any electricity you use to drive around town is basically free.

This means that while everyone else is paying $2.35 per gallon, you’ll be saving $1500 per year on gasoline.

2. Get Electric Heat
Switching out natural gas cooking and heating for electric can replace your Questar bill with free electricity from the sun. The average Questar bill is about $50 per month, so this will save you $570. It’s not enough to justify replacing a perfectly good furnace, but if you need to replace an old heater or are thinking about a major remodel or new construction, it’s $570 worth of gravy. 

3. Sell Your House
At the beginning of this article, I mentioned that—unlike a kitchen remodel—you don’t have to sell your house to see the upside of a solar installation.  But you can if you want to.  A new study from Lawrence Berkley National Laboratory found that solar panels increase a home’s value by between $3000 and $4000 for every kilowatt installed. So a six kilowatt system should raise the value of your house by at least $18,000.  

To learn more about how an investment in solar makes sense, fill out the form below.