Going solar is no more an environmental precaution or to fight Global warming only.  It has also become one of the best investments a person can make in their lifetime, as the return on it starts to come very quickly. Not only that, it is one of the only few investments that can pay back for itself in the long run.

Some widely known advantages of going solar and the benefits that it brings with it refer to the subsidies, incentives, and rebates from the government as well as the reduction in the monthly cost in terms of energy billing. It also contributes greatly to increasing the overall value of the property you own. Most Investments you make are risky, and their return on investments starts after a certain period of time. Whereas solar investment starts to pay you back from that very moment you go solar, and simultaneously help increase the financial value of your home.

It is often argued and questioned though, how much exactly is the payback on Solar Investment, and what amount of value is actually added to your home by opting to go solar.
Potential new buyers looking for a home, especially those who opt for a mortgage for buying home, find the consideration of installing solar panels very attractive as they understand that it is an important investment which not only gives great returns but also increases the value of the asset they are about to own, along with saving them money at the same time by reducing their monthly average bills for energy. For every watt, a total of $4-5 is added to the overall sale value of the home that employs a PV System.

Having solar installation at your home provides you another advantage. It gives you an edge over the other homes in the market. It not only helps you sell the property at a better price but also help the property find a potential buyer 20% faster than other homes without these solar installations.

To put all this perspective on paper, we need to consider the following:

  • The savings from solar panel installations start from day 1 and continue to be a means of saving for the next 2-3 decades. The savings continue to grow proportionally with the increase in utility bills as well.
  • Even if the person decides to never sell their home and enjoy the perks of getting extra value for their asset, the solar installation would have paid for itself many times over in that period already.

You can easily get a very high premium if you plan to sell your property, and it will very conveniently cover the overall cost of panel installation.

Factors We Need to Consider Before Calculating the Period for Payback on Solar Installation:

  1. Overall Cost of the system – The overall cost of the system depends mainly on the equipment and the scale of the system. The greater the scale of the system greater will be the size of investment but equally big and quick will be the return of your upfront cost as a bigger system generates more power.

Despite involving a bigger investment in terms of upfront cost, a bigger system helps in greater savings in the long run. It helps you generate profit by selling the excess power generated to the Grid and increasing your savings.

  1. Incentives – Even though the upfront cost of Solar installation might feel like a big investment to people, but eventually it becomes a significant mode of savings and profit due to the LGC and STC Tax incentives and rebates.
  2. The average cost of monthly electricity bill – The exact size of the system needed for your home is determined by the calculation of the average monthly electricity bill you are paying and it also gives an indication of the exact amount of financial savings you will be able to make by opting for solar installations.

The greater the average monthly electricity bill you are paying, the greater the need for a bigger system, and quicker will be the time for your return on investment of the solar installation as the monthly energy bill becomes nearly obsolete with the functionality of these panels.

  1. Average Estimated generation of Electricity – The average amount of savings you will make are also dependent on the amount of electricity your system will produce, hence it is very important to calculate the overall savings.

Calculation of Payback Period:

  1. Overall Cost = Gross Solar PV cost minus Upfront Incentives
    – Calculations of the gross cost of the system, which is actually the amount needed to be paid upfront to get the Solar PV system installations at your home.


– Deduction of the upfront incentives – from the overall upfront cost, minus the rebates, incentives such as STC’s, as well as the tax benefits.


  1. Annual Profits = Annual Savings + added incentives

– Calculate the yearly savings – suppose if you are paying $100 monthly as your electricity bill, and solar installation completely eliminates your bill, you will save a total of $1200 every year, or if it lessens the electricity bill by 80% nearly, you still only pay a monthly amount of $20 instead of $100, which means you are annually saving nearly $1000.

– Additional Incentive – Calculate the overall amount of money you make by selling the extra amount of energy your system produces to the Grid, this will be calculated as your added incentives over the savings you are already making annually.



PAYBACK PERIOD = Combined Cost / Annual Benefits

So, to get an estimate of average time for the return of investment on your solar installation, you need to calculate the ratio of the upfront cost for the system installations against the incentives and savings you make annually.

In conclusion, going solar for your home, is the best decision one can make for themselves, as the return of investment is huge, nearly 200% to the initial cost, and at the same time, it significantly raises the overall value of your asset. This means going solar is only a win-win situation.