Solar Panel Costs:
Lower Solar Panel Prices = Good News for Homeowners
First, the good news: The installed cost of solar panels has dropped dramatically in recent years. Solar panel prices have decreased 80 percent , on average, over the past five years. In some parts of the country, solar can provide electricity at a cost that is at or below the current retail cost of grid power from utilities.
The lower cost of solar PV panels has made purchasing solar panels an easier investment for Maryland homeowners than ever before.
Calculate Your Solar Power ROI
and Solar Panel Payback Period
Knowing how to calculate your potential return on investment from solar panels can make your purchasing decision easier.
When considering an investment in solar panels, it’s important to look at two calculations: Annual ROI and payback period. The ROI is how much return on your investment you’ll get each year. The payback period is the timeline for when your solar panels have paid for themselves.
Here’s a 6-step process for calculating your solar ROI and solar panel payback period:
- First, you’ll need to determine the total installed cost of a PV system. Your total installed cost factors in expenses (PV panels, installation costs, permits, etc.) as well as rebates, solar tax credits, and other incentives offered by manufacturers or federal, state and local governments.When you hire Renewable Energy Corporation, we handle all the paperwork to claim all government incentives for solar in Maryland, so you can avoid the hassles and pitfalls. More on that later.
To request an estimate of costs for installing solar panels, complete our FREE estimate request form.
- Next, determine how much electricity your solar panels will generate. This will vary day-to-day, of course, and depends on the installed capacity of your PV system. This is the maximum amount of electricity your panels are capable of generating.Renewable Energy Corporation will calculate the amount of electricity you can expect to generate based on the installed capacity of your solar system, the placement of your panels, the amount of sunlight exposure you receive, and other factors. Click here to get started.
- Third, determine your average electric costs. Look on a recent electric bill from your utility company to determine how much you pay per kilowatt hour (kWh). The average cost of electricity in Baltimore is $0.15/kWh. If you need help calculating your electric rate, your Renewable Energy Corporation installer or sales rep can help.
- Calculate the total financial benefit of your solar power system. This will include a lower monthly electric bill, and will also include any SRECs you can sell to the utility company. Selling SRECs to the utility company helps them meet their renewable energy requirements and is a great way to generate additional revenue with your solar panels.
- Calculate your solar panel payback period and return on investment. Your payback period would be the initial net investment divided by the yearly benefit. For example, if your installed costs were $15,000 and your yearly benefit was $3,000, your payback period would be five years.
- The return on investment in solar is calculated by dividing your upfront investment into the yearly benefit. A typical 5 kW solar PV system can easily see an ROI of 20% in the first year.
If you’re curious how much solar panels will cost, or if you’d like to know when your PV panels will pay you back for your investment, request an estimate. We’ll ask you a few questions about your current electric bills, so have your latest electric bill handy.
Sample Solar Panel ROI Calculation
Disclaimer: The figures used in the calculations below are for illustration purposes only. Each home is unique; as a result, the cost of your home’s solar energy system may vary. Get a FREE estimate based on your energy needs by filling out the form.
In the example below, the homeowner installs a 5kw solar array. The initial costs of the solar panel installation are $40,000, but after Federal, state and local incentives, the final installed cost is $32,000.
Based on the average cost of electricity in Baltimore, among other factors, this typical photovoltaic system has a payback period of less than five years. The ROI in year is more than 21% — more than 5x better than the average stock market ROI.
|Solar Panel Installation Costs:||$40,000|
|30% Federal Incentive||-$6,000|
|MD State Incentive ($1000)||-$1,000|
|Local Incentives (vary)||-$1,000|
|System generates:||6,600 kWh|
|Electricity Savings @ $.15/kWh||$990|
|6.6 SRECs at $300||$1,980|
|Total Annual Benefit||$2,970|
|Payback period on initial investment||10 years|
|Year 1 Return on Investment (ROI)||9.2%|
|Average Stock Market ROI||4.1%|
To get started with solar panels for your home, request an estimate.