The Payback Period for a typical Residential solar panel installation is around 7 years. Currently available Incentives mean you only have to pay 36% of the total cost.
You have a 1 to 2 year window to install panels at this 64% discount so start getting yourself up to speed. Start with the Roof Assessment section in menu above.
$ 13,000 Initial Cost of Solar Array.
$ -3,900 Federal Tax Credit.
$ -4,400 Solar Renewable energy Credits (SREC)
$ -4,700 Remaining cost will be offset by electricity production over the next seven years.
PAYBACK PERIOD & INTERNAL RATE OF RETURN
The panels are expected to produce $ 4,700 worth of electricity in just over 7 years. And $ 17,760 worth of electricity over the life of the panels for an Internal Rate of Return of 10%.
WHY INSTALL SOLAR PANELS NOW?
The 30% Federal Tax Credit starts to go away after 2019 so start getting yourself up to speed so you can complete your research and installation by the end of 2019 at the latest.
The recent passage of the Illinois "Future Energy Jobs Act" as well as the passage of a Illinois State Budget signaled political stability and locked in favorable solar incentives. The drop in solar panel installation costs along with rising electricity prices have now made it cheaper to generate electricity on my roof than to buy in from the utility.
Every square meter receives 1,500 kWh of solar energy per year.
With this roof being visible from the street, all black panels/frames, racking and flashing were selected. All black panels are 20% less efficient than regular panels but it was decided the added curb appeal made this trade-off worthwhile.
BILL OF MATERIALS
15 Solar Panels ( 280Watt - All Black )
- Canadian Solar (Model: CS6K-280M)
15 Power Optimizers (Frame Mounted)
- SolarEdge (Power Optimizer)
Inverter (Converts DC to AC)
- SolarEdge (Model: SE3800A-US)
Roof Connection (Black Flashing/Post)
- IronRidge (Model: FM-FF2-001-B)
Racking (Black Rails and Skirt)
- IronRidge (Model: XR Rail)
Knoch Knolls Nature Center, Naperville, Illinois
72 Panels @ 260W/Panel = 18.7kW System)
Supplies 13% of the power needed for the building
RETURN ON INVESTMENT (ROI)
$ 13,000 = The total initial cost before incentives. Payback Period is 7 years.
$ 9,100 = Cost after this years 30% Federal Solar Tax Credit ( Saves me $3,900).
$ 4,700 = Cost after my 1st 5 year SREC contact that pays me $220/quarter. ( Saves me $4,400).
$ 0 = Cost after 7 years and a few months I will have generated $4,700 worth of electricity.
$ 600->900 = Then every year the panels will continue to generate at least $600 worth of electricity.
Here is a graphic representation of cash flow from installation through the 25 year life expectancy of the panels.
You'll notice that in addition to generating your own electricity there are two critical sources of income.
You will deduct 30% of the Solar System cost from your federal taxes. (2017/2018)
Ensure your solar installer sets up your initial 5 year SREC contract as part of your installation contract.
Learn more about SRECs here.
The combination of Federal Tax Credit and SRECs gets your payback period as short as 7 years. With generated electricity alone your payback period can be as long as 22 years.