Calculating Solar Panel Payback Period: A Guide for your Las Vegas Home!
We Install Solar Panels in Las Vegas. The financial benefits of installing solar panels on your rooftop are immense. From helping you shave hundreds of dollars off your energy bill, you also become a hub for producing clean, sustainable energy. Furthermore, a 2016 report by the Lawrence Berkely National Laboratory presents evidence that comprehensively establishes that solar panels will boost your property’s value.
Being a sizeable investment, it is essential for homeowners shopping for solar systems to consider the solar panel payback period. This metric calculates the break-even point of your solar investment. Why is this important? Post the point of break-even is when your solar panels will start to generate positive returns. Continue reading to understand how the payback period is calculated! Here are the elements required to calculate the payback period:
- Gross Cost of Solar System
This expense will depend on the size of your solar system and other equipment. The USA national average is a 6000 watt (6 kilowatts) solar system. As of January 2021, the cost per Watt in Las Vegas is $2.66, making a 6kW system cost approximately $15,960. (6000*2.66). This figure is considerably lower than the national average, estimated to be around $2.80 per watt.
- Financial Incentives
The Federal government offers significant tax breaks and rebates in support of homeowners going solar. All systems installed in 2020 are eligible for the federal solar tax credit worth 26%. If you install a solar system in 2021, this will decrease to 21%. The Nevada government also offers rebates and financial incentives you may be eligible for. Assuming the system was installed in 2020, our solar system worth $15960 (refer to point 1); subtracting the federal tax credit would bring the cost of installation down to around $11,810.
- Monthly Electricity usage
The average monthly electricity bill you incur will indicate what size system you need and the amount of electricity you can offset with solar: the higher your expense, the lower the payback period. In Las Vegas, the average monthly electric bill is $135.
- Other Financial Benefits
In some states, you may be eligible to sell solar renewable energy certificates or SRECS. Unfortunately, Nevada does not have a viable SREC market. However, in states like California, you can save thousands of dollars from this incentive.
Calculating Payback Period
- Determine Combined costs– Cost of your solar system minus all tax rebates and other financial incentives
- Determine Annual Benefits- The savings per year coming from your solar system and other incentives
- Divide Combined Costs and Annual Benefits- the result will be the number of years required to break even
Consider our example. Our Combined cost is $11,810 (Approximate Gross Cost of Solar system- Federal solar tax credit. Refer to points 1, 2). Our Annual benefit would be $1620 ($135*12), assuming the 6kW will cover 100% of the household energy use. Hence the Payback Period for this system would be 7.2 years (11,810/1620). Every month after this period would be a positive financial gain.
I hope the above guide was simple and shed light on the calculation method! Solar Panels Express is the number one choice to reliably and affordably install solar panels in your Las Vegas home. Contact us today!