Q: If I install solar panels at my house, how long will it take for them to pay for themselves?
A: To narrow down this discussion I am going to make a couple of assumptions. Number one, I think you are talking about the type of solar panels that generate electricity. We call these photovoltaics or PV for short. Number two, I am going to assume that when you say pay back, that you are referring strictly to a simple financial payback. I won’t attempt to add any environmental benefits into the equation.
We have an educational, net-metering PV installation at our office so you can see what is involved in installing a system like this. It is a 1000 watt (1 kW) system that was installed in 2009. It generates about 1200 kilowatt-hours (kWh) per year.
At today’s residential rates of 8.8 cents per kWh. That’s about $105 worth of electricity you won’t have to buy from the grid.
I just got an updated material bid and it came to $5,000 not including the 4” schedule 40 pipe and concrete foundation it would be mounted on. We also paid $2,500 in electrician labor to get it installed. If you can do part or all of the installation yourself, you may be able to save money on that part.
Even if we just look at the material cost with no installation labor and we ignore interest expense, $5,000/$105 per year = 47.6 years. An optimistic lifetime of the PV panels is 20 years. So, as you can see, you’ll need to have more reasons than just a financial payback to justify PV at home.