What Is the Payback Period for Solar Panels in California?
Installing solar panels is one of the best investments you can make in your home because it pays for itself through electric bill savings. As soon as you break even, every dollar you save on your bills is money earned.
But just how long does it take for that to happen, and is it worth the wait?
In this guide, we break down solar panel payback periods and explain how long it takes for the typical homeowner to break even on solar.
How Solar Payback Periods Work
Your solar payback period is the amount of time it takes for the savings your system generates to equal the initial cost of the system. To calculate your solar payback period:
Take the total cost of your system, including all material, installation, and permitting fees
Subtract any incentives you claim from the initial cost, such as the 30% solar tax credit
Calculate your expected annual electric bill savings
Divide your total costs by your expected savings
Want help calculating your estimated solar payback period? Taylor Energy can do the math for you. With just a few pieces of information about your roof and your annual electricity bills, we can tell you how much you can expect to spend on a solar energy system, how much you’ll save, and when you should break even. Reach out to us today to get started. There’s no cost and no obligation.
Average Solar Panel Payback Period in California
The break-even point for residential solar panels is usually around the 8 to 10-year mark, but it can vary significantly from one system to another. Several factors influence your solar payback period, including:
System cost: Your overall costs are a huge factor in determining your payback period. Solar installation costs can vary widely depending on the size and complexity of your system as well as the type of panels, inverters, and batteries you choose to install.
Electricity consumption: The more money you spend on electricity, the more you’ll save with solar, which leads to a faster payback period. Since we have some of the highest electricity rates in the country, California homeowners can break even on solar quickly.
Electricity generation: Solar energy production and the accompanying savings vary by location due to differences in sunlight exposure. The more sunlight your solar panels have access to, the more you’ll save and the shorter your payback period will be.
How Net Metering Impacts Solar Payback Periods
Net Energy Metering (NEM) 3.0 changed California's long-held net metering policy and reduced the rate at which homeowners are credited for the solar electricity they generate for the electric grid.
The changes to net metering were, for the most part, negative for California’s solar industry. But there is a bright side—under NEM 3.0, solar payback periods are shorter for solar plus storage systems than they are for solar panels alone. If you include battery storage in your solar installation, you’ll be able to use more of the electricity you generate and avoid paying expensive time-of-use electricity rates, increasing your solar savings.
Solar batteries also allow you to use your solar system for backup power during a grid outage. That benefit alone makes them a worthwhile addition to your solar installation, and when you factor in the faster payback period, it’s really a no-brainer.
Find out how long it will take you to break even on solar. Call (707) 785-8773 or contact us for a free consultation and estimate.
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