Solar Energy ROI Continues to Improve

By October 4, 2016RESIDENTIAL, solar
Solar Energy ROI

Forty years ago, most homeowners and businesses couldn’t afford to install a solar energy system to generate their own electricity. But today, thanks to large-scale advancements in how solar energy systems are produced, installed, and maintained, more people than ever are adopting solar, and the cost of solar panels and systems has dropped dramatically, enabling people to realize a continually increasing return on their investment (ROI).

For example:

  • The reports that in the late 1970s the cost of solar was 100 times higher than it is today, and that solar prices have fallen nearly 15 percent per year over the last few years.
  • Federal and local subsidies such as the U.S. federal renewable-energy tax credit, which expire the end of 2016, have further reduced the cost of solar energy systems by 30 percent.

Because of these and other factors, such as lower production costs, in most cases, it has become more cost effective to own a solar energy system than to buy electricity from a local utility company. As a result, the vast majority of solar customers are now seeing a strong ROI within six to 10 years.

Why More People are Switching to Solar

According to, the average American family spends nearly $2,000 a year on their home energy bill. And since more and more people are looking to cut their energy costs, reduce their environmental impact, and be more self-reliant (by either getting off the grid completely or obtaining access to power in remote locations), they’re increasingly turning to solar to power their homes and businesses.

Obviously, installing solar can be a big decision, but there are a lot of benefits, including:

  • The ability to significantly reduce or even eliminate your electric bill, as well as limit your future financial exposure to continually rising energy prices.
  • More control over your energy consumption.
  • Unlike fossil fuels, such as coal, oil, and natural gas, which are a finite resource, there’s an abundance of free sunlight available that can easily be turned into energy—and that energy is cleaner, too!
  • Having a solar energy system can increase the value of your home, farm, or commercial building. For example, Realty Times states that “Studies show buildings and homes that are equipped with solar energy systems have higher property values. Realtors have found that clean-energy homes sell twice as fast as those homes without solar panels. Records also show that solar homes sell for a price 3-4 percent higher than similar homes in the same neighborhood without solar.”  

How to Determine the ROI of Solar

Although a wide variety of factors can affect the ROI of a solar energy system, (such as where you home or business is located, your roof, your electric bill, the size of the system you use, and more) some of the most common items that can be used to calculate the potential ROI include:

  • How much energy you consume per month, and the average cost of electricity per kilowatt-hour generated.
  • How much sunlight your home receives during the year. (To reap the full financial benefits of a solar energy system, solar panels should be placed in high sunlight areas.)
  • The cost to install the system (e.g., installation, permits, PV panels, minus solar tax credits or rebates, etc.).
  • How much solar energy you can produce with your own system.
  • The projected annual increase in traditional electric rates, and potential loan costs.
  • State and local utility programs and policies pertaining to solar energy systems.
  • How much you’ll save, when you’ll start seeing those savings, and what your annual return on investment will be.
  • How long it will take for your solar panels to pay for themselves.

However, when done right, not only can a solar energy system save you money, but it also offers a great alternative to traditional power companies.

For more information on how to calculate solar energy ROI or to request a solar evaluation to assess your property’s ability to produce solar, contact Sunworks for a free quote.