Solar Panel ROI: When Will You Break Even in CA?

With the rising cost of electricity and the power grid becoming less reliable every day, it’s no secret that solar panels are a good investment for California residents. Unlike other home improvements, solar panels will eventually pay for themselves in a process known as a solar payback period. But exactly how long does it take to see a return on your investment?

Six Rivers Solar has been a leader in the renewable energy industry since 1980. We’ve helped thousands of homeowners and businesses calculate their solar payback periods and get the most out of their solar energy systems. Here’s how our process works.

Average Payback Period for Solar Panels in CA

The average payback period in California is 9 years, but several factors can affect how quickly you’ll see a return on your investment.

  • Total Investment – How much you pay for your solar panels has a significant impact on your payback period. In general, larger solar energy systems will have a longer payback period, but may offer more savings in the long run depending on your energy consumption. 
  • Solar Financing – Solar financing offers a way to install solar panels without a large upfront cost, however, you will accrue interest and slightly extend your payback period.
  • Electricity Usage & Cost – The more you pay for electricity now, the faster you’ll see a return on your investment, making solar a good choice for homeowners and businesses in Humboldt and Del Norte counties where electricity rates are high. 
  • Energy Production – When your solar panels produce more electricity, you’ll shorten your payback period. 
  • Solar battery storage – Solar batteries allow you to store the excess electricity produced by your solar panels for later use, including when the grid is down and when electricity rates are at their highest. To reap the greatest benefits of solar under NEM 3.0, install solar battery storage!
  • Incentives – Utilizing solar incentives, like the solar tax credit, will lower your out-of-pocket costs for installing solar panels, and help you recoup your investment faster.  

Solar panels are designed to last up to 30 years, so a good payback period for solar is usually somewhere under 10 years. Once you reach the break-even point, you’ll be making money with free electricity. 

How to Calculate Your Solar Payback Period

To get an estimate of how long it will take to get a return on your investment in solar panels, you’ll need to gather some data:

  • Total solar cost – Add up all of your expenses for solar installation, including permitting and labor. Make sure to subtract any savings from solar incentives.
  • Annual energy savings – If you don’t have a year’s worth of electricity bills, take a recent one and multiply it by 12 to get an average cost of electricity for a year. 

Divide your total cost by your total savings to get an estimated payback period. For example, let’s say your solar energy system costs $20,000, which would be reduced to $14,000 with the solar tax credit. If the average cost of electricity is $150 per month, your annual savings will be $1,800. The solar payback period calculation would look like this: 14,000/1,800 = 7.7 years.

Shorten Your Payback Period with Battery Storage

Maximizing your energy production is crucial for getting a return on your investment as quickly as possible, and adding solar battery storage to your system can help by allowing you to:

  • Avoid costly time-of-use (TOU) rates
  • Get more value from NEM 3.0
  • Use more renewable energy
  • And more

Six Rivers Solar now installs the revolutionary PointGuard Home. These 5-in-one, fully integrated systems combine battery storage, EV charging, and everything you’ll need for optimal energy independence in one unit. The PointGuard Home offers storage capacity up to 390 kWh, expandable design, and unrivaled safety.    

Maximize Your Savings with Solar Installation from Six Rivers Solar

There are a few ways that you can expedite the solar payback process and recoup your investment faster, and one of the easiest is by choosing a professional solar company, like Six Rivers Solar. Our knowledge, experience, and attention to detail will help ensure that your solar energy system is operating at peak performance and producing as much electricity as possible. 

At Six Rivers Solar, we consider several factors when designing residential, commercial, and off-grid solar energy systems to ensure optimal ROI for our customers, such as:

  • Solar panel placement
  • Access to sunlight
  • Roof orientation
  • Electricity usage
  • And more!

We work with a wide variety of industry-leading solar brands and will help find the right panels, inverters, and battery storage options for your home. We’ll also keep you updated on the progress through every step of the process, and every Six Rivers Solar energy system is backed by a 25-year performance warranty. We’re a locally owned and operated business here on the North Coast and provide solar services you can trust.

Get started with a free in-home consultation today. Call 707-443-5652 or contact us online for more information.