How Long Does It Take to Save Money with Solar Panels (2023)

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Solar panels are expensive. Here's how to figure out how long it will take for your energy savings to make them worthwhile.

How Long Does It Take to Save Money with Solar Panels (2)
How Long Does It Take to Save Money with Solar Panels (3)

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Mike De Socio is an independent journalist based in upstate New York, telling stories about cities, climate change and the LGBTQ+ community. His work has been published in Bloomberg, The Guardian, Fortune, HuffPost, Xtra, YES! Magazine and beyond.

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Mike De Socio

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There are many different reasons to considersolar panels.

You might, like many Americans, want to help the environment while simultaneously saving money by giving your home an alternative source of power. Or you might just want to save money on your power bill.

"Solar is what's coming, in terms of how we start powering our homes, how we connect as a community to support energy needs within our community,"Jamie Haenggi, president of ADT Solar, told CNET.

But solar panels are expensive, and you need to consider how long it will take for the savings you earn from solar power to outweigh what you paid to put the panels on your roof. Before you invite a crew of solar installers onto your roof, you'll want to understand when -- or if -- the panels will start to pay for themselves.

Here's your guide to how long it takes for you to start saving money with solar panels.

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What is a solar panel payback period?

A "solar payback period" is a fancy way of talking about how long it takes for the money you spent to be outweighed by the money you're saving (or earning) on your electricity bill.

It's a key number -- usually a matter of years -- that tells you how long you'll wait to see a real return on your investment. Solar payback periods can vary widely, and also depend on how you pay for the system in the first place.

"There's a lot of factors that play into that for any given home or household," said Becca Jones-Albertus, director of the US Department of Energy Solar Energy Technologies Office.

Haenggi from ADT Solar said an average payback period in the US is between six to 12 years, with most households leaning closer to the latter. Like Jones-Albertus, she emphasized that it's a moving target.

"People are reluctant to say, 'Well here's the payback,' because the energy market has been so volatile," Haenggi said.

Factors that influence your solar payback period

No two solar systems are the same, and that means no two solar payback periods are the same, either. "It seems like an easy answer, but it's more complicated," Haenggi said.

Calculating your potential payback period will depend on a lot of variables.

Total solar system cost

The more you pay for your system, the longer it's going to take to recoup your costs. Solar systems can range in price from a few thousand dollars to tens of thousands, depending on where you live, your electricity needs and what type of system you choose to install. A solar battery could easily increase the cost of your system by $10,000 or more. It goes without saying: The steeper the price, the longer the payback period.

Incentives and tax credits

Once you know the total cost of your solar system, you also have to factor in any state or federal rebates you might qualify for. The federal residential clean energy credit, for example, gives you 30% back. Your state might also have additional incentives. Those credits can lop off a significant chunk of the money you pay for solar panels, making your payback period shorter.

Your home's energy consumption

Sometimes rooftop solar can completely cover your electricity needs -- reducing your utility bill to $0 -- and sometimes it only covers a portion of it. If you consume a lot of electricity, solar might only translate to a small reduction in your electricity costs, which means it could take longer for you to see a return on your investment.

Electricity production of your solar system

You probably never thought much about your roof, but it makes a big difference in how your solar investment will play out. If your roof has room for lots of panels that soak in the sun all day, you'll produce a ton of electricity, and see a quicker payback. But if you live on a shady lot, and your panels' production is more intermittent, you won't see a payback quite as quickly.

Cost of electricity and rate of increase

This is a huge, but sometimes overlooked, factor in the solar payback period. Basically, the higher the electricity rates where you live, the more lucrative solar can be for you. That's because, as utility rates increase, you save more money by relying on your solar panels instead of drawing power from the grid.

How to calculate your solar payback period

If you want to get a rough idea of your potential solar payback period, here's a way to do it. Keep in mind, you'll want to consult the experts (read: solar installers) to make sure you have accurate numbers here. But this can help you get an idea:

  1. Start with the total cost to install solar on your home. (Be sure to consider interest and fees if you're taking out a loan.)
  2. Then, subtract the value of any rebates, incentives or tax credits.
  3. Now you have the net cost of your solar system, after discounts.
  4. Estimate your annual electricity bill savings with solar panels. (Again, your solar installer or utility provider might be able to help here.)
  5. Divide the net cost of the system by the annual bill savings.
  6. The number you end up with is the number of years it will take for your panels to "pay for themselves."

Here's another look at the formula: (Total solar system costs - rebates) / Electricity bill savings per year = Payback period in years

In practice, here's what that could look like: Let's say the total system cost for your home is $25,000. You know you qualify for $10,000 in incentives, so now the net cost is $15,000. You also know the panels will help you save about $1,500 a year on electricity bills. So, $15,000 divided by $1,500 is 10. That means your solar payback period is 10 years.

How Long Does It Take to Save Money with Solar Panels (5)

Why knowing your payback period is important

Now you have your solar payback period. But how does that factor into your decision?

"It depends on what is motivating the household to make the decision to [install] solar," Jones-Albertus said. Maybe you just want to help the environment, and aren't worried about the costs. But "folks are interested in the resilience aspect and the economic aspect, as well," she said.

If you are interested in the financial aspect, then the payback period is an important number for your decision making. A payback period around 10 years, give or take, is pretty average, and could end up being a solid investment, Haenggi said.

But again, it depends on your goals and your comfort level. If you're planning on moving or selling your home in the near term, for example, that changes the calculus. You might not be in the home to see the payback in the form of electricity savings, but you could see a payoff in a higher sale price for your home.

"That system on your roof does translate to an increase in property value," Jones-Albertus said.

There are few scenarios, Jones-Albertus and Haenggi agree, when installing solar probably doesn't make sense, no matter the payback period. If you know your roof will need to be replaced soon, you'll definitely want to wait until that is done before you install solar panels on top of it. And if you have a ton of trees looming over your home, a solar system is unlikely to ever generate a significant return; in that case, Jones-Albertus recommends considering community solar.

How to pay for solar panels

There are a lot of different ways to pay for solar panels, and they all affect the solar payback period.

  • Cash: If you simply save up for the purchase (using a high-yield savings account, for example), you'll avoid paying any loan interest, and reduce the overall cost of solar panels. "In the long run, typically the highest rate of return comes from paying for cash for a system," Jones-Albertus said.
  • Solar loan: Some banks offer loans specifically designed to fund solar installations. Check in with your installer or with lenders to see what the options are.
  • Home equity loan or line of credit, aka HELOC: Generally speaking, using the equity in your home to fund home improvements can be a solid idea -- especially because solar panels will increase the value of your home.
  • Lease or power purchase agreement:If you want to minimize the upfront investment in solar, you could actually lease the system from the installer. The developer would own the panels, and would sell you the electricity generated at a reduced rate, basically negating the idea of a "payback period" all together.

More solar advice

  • Save On Your Next Home Energy Upgrade With These Incentives
  • Do Solar Panels Save Money? Yes. Here's How
  • How Many Solar Panels Do You Need to Power Your House?


How Long Does It Take to Save Money with Solar Panels? ›

The most common estimate of the average payback period for solar panels is six to ten years. This is a pretty wide range because there are many factors that will influence the number of years it can take to pay off your panels and the monthly savings you can expect.

How long does it take for solar panels to save you money? ›

Solar panels typically pay for themselves within nine to 12 years. Solar panels reduce or eliminate the cost of electric utility bills. Utilities may pay solar panel users through a process called net metering.

Do you actually save money going solar? ›

Most Californians pay around $116.94 each month for power, so you'll save just over $1,400 annually if you can eliminate your energy bill. The average lifetime savings enjoyed by California solar customers is around $29,734, and that's after the upfront expenses of going solar are recuperated.

How much money do you save a month with solar panels? ›

The average 5 kW residential solar system can save $100 to $150 monthly on electric bills. The actual savings depends on various factors, including solar array size, energy usage, and electricity costs in your area.

Why are my solar panels not saving me money? ›

Many homeowners use more power after going solar

If you start using more power after going solar than you were before going solar, you may not be saving money on electricity. Keep in mind that your solar system is designed to produce the amount of electricity your household was using before you went solar.

What happens when I pay off my solar panels? ›

Once you pay off your loan or buy your system outright you will essentially be getting energy for free. When it comes to payment, those who are using solar energy will still get a monthly utility bill. This will show how much energy you produced versus how much energy you used for the month.

Will solar panels be cheaper in 5 years? ›

Even their most conservative model suggests a 4-20% decline in costs from 2022 to 2038, with more optimistic models calling for the cost of solar to decrease by more than 50% between 2022 and 2038. Part of the cost reduction comes from an expected influx of polysilicon solar modules with higher efficiencies.

How does solar reduce your bill? ›

Imagine you spend $200 a month on your electricity bill from your utility company before going solar. Your solar panel system can produce enough electricity to cover 80% of your needs. Because you need 80% less power from the utility, your monthly electricity bill is now down to roughly $40 per month.

Can solar panels work with AC? ›

The simple answer to this question is yes. You can most definitely run your AC on solar power. As long as you provide steady voltage and continuous current, you will have no problems.

What are the pros and cons of solar panels? ›

Pros and Cons of Solar Energy
Advantages of Solar EnergyDisadvantages of Solar Energy
Decreases use of non-renewable resourcesHigh upfront costs
Reduces power billSunlight dependent
Energy independenceSpace constraints
Long-term savingsEnvironmental impact of manufacturing
5 more rows
Jan 5, 2023

Can solar panels power a whole house? ›

Fact vs Myth: Can Solar Energy Really Power an Entire House? [2023 Update] One of the most frequently asked questions by homeowners in regard to solar power is, “can it really power my entire house?” The answer to that is actually quite simple – yes, solar can indeed power your entire home.

How much money can solar panels make you? ›

There are several factors to consider when determining the profit margin of an acre of a solar plant, but generally speaking, you can earn anything between $21,250- $42,500 per acre each year. What is this? The rates can be lower or higher than this after factoring in some variables.

Why is my solar true up bill so high? ›

Increased Usage

If your electricity use increased from that initial 12-month usage estimate – for example, maybe you've installed a pool or switched from working in an office to working from home – you may be surprised with a larger True-Up Bill as a result.

What happens if my solar panels produce more electricity than I use? ›

In most cases, if your solar system generates more energy than your home needs at any given time, the excess energy will flow back to your utility. Your utility company may provide you with a credit for energy you send back to it. This credit is called net metering.

How can I maximize my solar savings? ›

Tips to Maximize Your Solar Energy System
  1. Keep your solar panels clean by removing dust or animal droppings that accumulate on them over time. ...
  2. Utilize federal tax credits and state utility rebates. ...
  3. Remove trees and combat other sources of shade by investing in microinverters or a string inverter.
Aug 23, 2022

At what point do solar panels pay for themselves? ›

In the U.S., the payback period for solar panels is about eight years on average, but this can vary quite a bit from one homeowner to the next. In fact, your solar payback period may fall anywhere between five and 15 years.

What credit score do you need for solar panels? ›

Frequently asked questions about credit and solar financing

Usually, you'll need a minimum score of 600 or 650. However, a credit score isn't the only important number when getting a solar loan: the overall requirements to get approved depend on your lender and other factors, including your existing debt.

Is it worth it to finance solar panels? ›

You may get sticker shock when you see that it can cost tens of thousands of dollars to install solar power at your home. But it may still make financial sense because of the potential long-term savings. Your investment could pay off by significantly reducing or even eliminating your power grid usage.

Will solar prices drop in 2023? ›

In 2023, solar panels in the U.S. cost about $20,650 on average down from more than $50,000 10 years ago. In this article, we'll break down the cost of solar by system size, state, and panel brand, all of which can significantly impact the final number you pay.

Is solar worth it in 2023? ›

In 2023, we predict solar panels will be a substantial investment for homeowners with the available capital to overcome the upfront costs. With rising electricity rates and further increasing monthly electricity bills, more homeowners each year will be drawn toward solar panel systems to offset monthly utility bills.

Are solar panels a good investment in 2023? ›

You get a good price for solar: in 2023, an average 10 kilowatt (kW) solar panel system costs about $20,020 on the EnergySage Marketplace. Prices on EnergySage are usually lower than market prices, so you know you're getting a good deal.

Is switching to solar worth it? ›

In most cases, installing residential solar panels is worth it. Solar panels typically last 25 years or more and can dramatically reduce or even eliminate your electricity bills — you can save an average of $1,346 annually on energy bills by going solar.

What can go wrong with solar panels? ›

Here are the most common problems affecting solar panels:
  • Delamination and internal corrosion. If moisture finds its way into the panel, it can cause internal corrosion. ...
  • Electrical issues. Faulty wiring prevents your solar panels from performing well. ...
  • Micro-cracks. ...
  • Hot spots. ...
  • PID effect. ...
  • Birds. ...
  • Snail trails. ...
  • Roof issues.
May 16, 2019

How much battery does it take to go off the grid? ›

In a typical off grid cottage application, you would have a 24 or 48-volt battery bank which is somewhere in the range of 600 to 800 amp hour. They can go as high as 6,000 amp hour or more in larger systems.

How much money does solar actually save? ›

But just how much money can solar panels save homeowners each year? You could save around $1,346 on annual energy bills — based on a 6 kilowatt (kW) home solar system generating 9,000 kilowatt-hours (kWh) of energy and the average national electricity price of 14.96 cents per kWh.

How many solar panels does it take to power a house? ›

An average-sized home in the United States (2,480 square feet) will need about 15 to 22 full-sized solar panels to completely replace traditional energy sources. That being said, the exact number of solar panels needed for your house depends on several other factors.

How can I reduce my solar installation costs? ›

How to Reduce Solar Panel Installation Costs
  1. Payment Plans. Most solar companies offer solar loans. ...
  2. The Federal Solar Investment Tax Credit. ...
  3. The Residential Solar Tax Credit. ...
  4. Choose an Honest Solar Company.

How many solar panels does it take to run a window air conditioner? ›

Solar Panels for AC Unit
Air Conditioning UnitNumber of Solar Panels Required
Central air30 x 100W solar panels
Large window unit20 x 10W solar panels
Medium window unit10 x 10W solar panels
Small window units5 x 10W solar panels
Apr 4, 2023

How many solar panels does it take to run a 1 HP air conditioner? ›

For each one ton of capacity, AC consumes 1 unit of power per hour and to run the same for 8 to 20 Hours daily with solar panels you will need 5 to 12 numbers of 330 Watt solar panels with a grid-tie inverter and net-metering.

How many solar panels required to run 2 ton AC? ›

A 2.4kVA solar panel can be utilized to match the 1900 watts or 1.9 kW requirements of higher-powered ACs like 1.5 tonnes. If this isn't enough and you need to run a 2-tonne AC, you'll need a 3 kVA solar panel with a wattage demand of roughly 2500 watts or 2.5 kW.

How often do you have to clean your solar panels? ›

It is generally recommended to clean solar panels every 6 months to a year in order to maintain the productivity, efficiency, and effectiveness of the panels. However, based on where you live and the level of dirt and pollution, the need for cleaning may be more frequent.

Is solar better than Electric? ›

Although solar equipment can be more expensive initially, the main reason that people choose solar power instead of electricity is the cost savings. Solar energy is very efficient and able to pay back the cost of installation over a number of years.

Do solar panels work on cloudy days? ›

Photovoltaic panels can use direct or indirect sunlight to generate power, though they are most effective in direct sunlight. Solar panels will still work even when the light is reflected or partially blocked by clouds. Rain actually helps to keep your panels operating efficiently by washing away any dust or dirt.

How many solar panels does it take to run a clothes dryer? ›

The Big-Ticket Items
Washing Machine2,500 - 3,000 W2
Dryer2,500 - 3,000 W1
Ceiling Fan31 W1
Vacuum650 - 800 W<1
4 more rows

Can 2 solar panels power a house? ›

How many solar panels does it take to power a house? Based on average electricity consumption and peak sun hours, it takes around 17 400-Watt solar panels to power a home. However, this number will vary between 13-19 based on how much sun the panels get and how much electricity the home uses.

What is the best off-grid solar system? ›

Top 5 Off-Grid Solar Systems of 2023
  • Renogy 400 W 12 V Complete Solar Kit: Most value for your money.
  • altE Off-Grid 300 W Base Kit: Most customizable.
  • Goal Zero Yeti 1000X + Boulder 200: Most portable.
  • WindyNation Complete 100 W: Our pick for minimal design.
  • Eco-Worthy 4800 W 48 V Kit: Our pick for whole-home usage.
May 11, 2023

Do you get money from electricity when using solar panels? ›

Can you make money with solar? A rooftop solar array could save you tens of thousands of dollars in electricity costs over the panels' lifetime. You're unlikely, however, to make money with solar. Most utility companies still charge a basic fee for service even if you put more energy into the grid than you take out.

What state generates the most solar power? ›

California has the most megawatts of solar currently installed, coming in at 38,145 MW. This powers 27.3% of all energy in the state. Nevada and Hawaii both have large percentages of solar power utilization.

How much money can you save a year with solar panels? ›

Given solar panels usually last for 25 to 30 years before losing efficiency, you would still have 17 to 22 years of savings on energy costs. With an estimate of $1,500 each year in savings, you could easily save $25,500 to $33,000 on electricity during the life of your system—and that's if energy prices don't rise.

Can solar panels be overcharged? ›

What Happens When Solar Power Batteries Are Full? Solar power systems use batteries to store solar energy. However, if the power generated exceeds the solar battery's capacity, it can overcharge the system. An overcharged solar system can severely damage a battery's life.

What is a true-up payment for solar? ›

The True-Up statement reconciles all the cumulative energy charges, credits and compensation for the entire 12-month billing cycle. If you have a balance due after all charges and credits are reconciled, that amount will appear on the last PG&E bill of your 12-month billing cycle.

What is a true-up fee? ›

True-Up (M&A Glossary) A payment made post-closing to adjust for any difference between the purchase price, which was determined on a transaction's closing date and based on estimated financial metrics, and the actual purchase price determined using financial metrics that become known only after the closing date.

Can you have too many solar panels for batteries? ›

Some utility companies limit the amount of electricity that a grid-tied solar system can generate. But the amount of solar panels you can have is limited only by how much space you have to install them in.

What happens to unused electricity on the grid? ›

If it cannot be put to use, excess electricity might have to be dissipated in a dump load, which is usually a simple resistive heater or a bank of light bulbs. In some cases, excess energy can be curtailed rather than dissipated.

How much can I save a month with solar panels? ›

The average 5 kW residential solar system can save $100 to $150 monthly on electric bills. The actual savings depends on various factors, including solar array size, energy usage, and electricity costs in your area.

Do you save money switching to solar? ›

Besides the federal tax credit, solar panels increase property values while lowering utility bills. Compared to gas or electric heating systems, solar panels save you much more in the long-run. Your solar panel system can pay for itself in three years!

How do you pay off solar panels? ›

There are three primary ways to pay for solar: with a cash purchase, with a solar loan, or with a solar lease/power purchase agreement.

Are solar panels a good long term investment? ›

Is getting solar panels a good investment? Solar panels are a good investment for many US households, especially those with ample sunshine and high utility rates. Going solar can lead to hundreds of thousands in energy savings over the 25-year lifespan of a system and can increase your home value.

Do you get money back from using solar energy? ›

What are the residential solar tax credit amounts? Installing renewable energy equipment on your home can qualify you for Residential Clean Energy credit of up to 30% of your total qualifying cost, depending on the year the equipment is installed and placed in service. After 2034, the credit is scheduled to end.

How long can a house run on solar power alone? ›

How long can a solar battery power a house? Without running AC or electric heat, a 10 kWh battery alone can power the basic operations of a house for at least 24 hours, and longer with careful budgeting.

How many solar panels do I need for a 2000 square foot house? ›

Thankfully, we've got the answer for you! A 2000 square foot house will need 28- 34 solar panels, which comes out to an average cost of \$3.50 per watt. Not only will installing solar panels save homeowners money on their electric bill, but they can also increase the value of their home.

How many solar panels do I need for a 1500 sq ft home? ›

How many solar panels are needed for a 1500 sq ft home? A 1500-square-foot home, on average, will need between 14 and 17 solar panels to power the home. This is based on an average energy consumption of 967 Kilowatt hours per month.

Is solar cheaper in the long run? ›

The benefits of solar energy don't end with cost-savings. When you install solar panels, you'll increase the overall value of your home by an average of about 3%. If you eventually sell your house, you'll actually make money on your smart investment in renewable energy.

Can solar panels last 40 years? ›

Solar panels last about 20 years, according to the Federal Trade Commission. The great news is that, with proper maintenance, your panel may actually run for as long as 40-50 years.


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