When Will the Payback Period from my Utah PV System begin?

When Will the Payback Period from my Utah PV System begin?

Have you been considering going solar but worried about how long it will take you to reach your break-even point for your home PV system? Well, that payback is different for everyone but for most homeowners it takes less than 10 years and for some it is just a handful of years.

Use our easy step by step formula below to figure out what your personal solar payback period would be from an investment in Utah residential solar power.

Step 1: Annual Electricity Costs

In order to calculate the payback, you will get by switching to a PV system you will need to know how much your electricity bill is.

On average, Utah homeowners pay 11.62 cents per kilowatt hour (kWh). The average household uses 901 kWh of electricity per month, or 10,812 kWh annually. That results in a $105 monthly energy cost or $1,256 annually.

To get your exact monthly energy cost plug your own numbers into the following formula:

(Utility rate in cents per kWh) x (monthly usage in kWh) = monthly energy costs

*Multiply the monthly energy cost by 12 to get your annual electricity total.

Step 2: Home PV System Costs

The next step to calculating your solar payback period is finding your total PV system installation cost.

To find this number, you simply add up all of the photovoltaic installation expenses. This will include: solar panels, inverters, mounting racks, wiring, permit fees, financing charges and labor expenses.

Step 3: Savings for Installing a Home PV System in Utah

Utah residential PV systems are eligible for various financial benefits that are important to consider when calculating your solar payback period.

The federal solar tax credit offers a 30 percent rate of return on the total of your home PV installation. The state of Utah also offers a tax credit that is 25 percent of the cost.

To forecast your solar return on investment, add up your savings and subtract them from your Utah home PV installation costs. For example, if you paid $15,000 for your PV system and your financial benefits total $7,000, your net solar costs would be $8,000.

Step 4: Calculating the Solar Payback Period

The final step to find your break-even point for your home PV system is to divide numbers that we found in the previous steps. You take your net home solar costs and divide by the amount you’ll save on annual electricity.

With the example scenario, in step 3 we found that our net cost is $8,000 and in step 2 our annual energy savings is $1,256. We would input that as follows:

$8,000 / 1,256 = 6.37 years

This would mean that your Utah home solar payback period would be a little over six years.

In order to get started on your PV installation and get one step closer to your payback period, get in touch with our professional team at PRVL.

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