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How Long Does It Take Solar Panels to Pay for Themselves?

August 9, 2023

One common question from property owners is, how long does it take for solar panels to pay for themselves? Once you’ve reached this point, any savings you enjoy from those panels goes right into your pocket! However, if those panels take too long to pay for themselves, they might not be the right investment for you.

On average, solar panel systems typically have a payback period of around 6 to 10 years. In some cases, this can range from as few as 4 years to more than 15 years, depending on the circumstances.

To find out more about how long it takes solar panels to pay for themselves, keep reading. While there is no “one size fits all” formula, some added details can tell you what to expect. Also, you can call a solar panel installation contractor if needed. Their expertise ensures a solar array that works for your power needs and budget.

how long does it take for solar panels to pay for themselves

How Long Does It Take Solar Panels to Pay for Themselves?

The time it takes for solar panels to pay for themselves, or the "payback period," varies. Your payback period depends on installation costs, sunlight your location receives, and your electricity rates. Also, you’ll need to factor in available incentives and if you financed the panels. Here are some key factors that can influence the payback period for solar panels:

System Cost

The initial cost of purchasing and installing solar panels is a significant factor. Solar cost has been decreasing over the years due to advancements in technology and increased demand. However, it still varies widely based on system size, quality of panels, installation, and local market conditions.

Sunlight and Location

The amount of sunlight your location receives directly affects the energy production of your solar panels. Areas with more sunlight will generate more electricity, leading to faster payback periods. On the other hand, less sunlight means less solar power production. In turn, it takes longer for those panels to pay for themselves.

Electricity Rates

If you have high electricity rates, the savings from generating your own solar power will be greater. As an example, suppose you might pay $250 per month for electricity on average. Using solar for one month means saving $250.

However, in an area with lower power costs, you might pay $150 per month for electricity. In turn, a month of solar power only saves you $150. Consequently, the higher your electricity rates, the shorter that payback period.

Energy Consumption

Your household's energy consumption also plays a role in your payback period. Larger energy consumers will benefit more from solar panels, as they offset a larger portion of their electricity bills. On the other hand, if you don’t use much power, solar won’t save you much money.


Government incentives, tax credits, rebates, and local utility programs can significantly reduce the upfront cost of solar panels. As a result, the more incentives you use to purchase your panels, the shorter your payback period. Your installation costs will be lower, so you won’t need as much time to earn back that money from solar power.

a home with a solar racking system

Net Metering

Net metering policies allow you to earn credits for excess energy your solar panels produce. Your system feeds that power back into the grid and the power company credits your bill. This further accelerates your payback period by reducing future electricity bills. If you’re curious about net metering in your area, check with your local power company.

Financing Options

If you finance your solar panels, the monthly payments may be lower than your previous electricity bills. In turn, you might start saving from day one. This also means a shorter payback period than if you chose a loan with a high finance rate.

System Longevity

Solar panels are designed to last for several decades. The longer your system continues to generate electricity, the more savings you'll accumulate over time.

Do You Really Save Money With Solar Panels?

Yes, solar panels can save you money over the long term. The extent of your savings depends on various factors, as said. Check out some added details about how solar panels can mean more money in your pocket every month:

  • Solar panels generate electricity from free sunlight, allowing you to generate a portion or even all your own electricity. By using solar power instead of purchasing electricity from your utility company, you reduce your monthly electricity bills.
  • Generating your own electricity allows you to become less dependent on your local utility company. This means not being as affected by fluctuations in electricity prices. This stability can protect you from future price increases.
  • Many regions offer net metering or similar programs, allowing you to earn credits for excess electricity your solar panels produce. These credits offset future electricity bills, resulting in additional savings.
  • Solar panels often increase the value of your property, making it more attractive to potential buyers. A solar-equipped home is often seen as more environmentally friendly and energy-efficient, which can be a selling point. In many cases, you can expect your property values to increase by 4% or more.

solar panels on a residential home

What Happens After You Pay Off Solar Panels?

After you pay off solar panels, you continue to enjoy the benefits of solar energy without loan payments or financing. Here's what typically happens after you've paid off your solar panels:

  • With no more monthly payments for your solar panel system, you'll enjoy essentially free electricity generated by your panels. Any excess energy your panels produce can often be sold back to the grid or credited to your utility bill.
  • Solar can reduce or eliminate your electricity bills, depending on the size of your solar panel system and your energy consumption. You'll be drawing most of your electricity from your solar panels rather than the grid. After you’ve paid off the panels, that savings all goes right to your pocket!
  • Solar panels are designed to last 25 to 30 years or more, although their efficiency gradually decreases over time. After paying off the panels, you'll continue to benefit from reduced energy costs for their lifespan.
  • By generating clean, renewable energy, you contribute to reducing greenhouse gas emissions and dependence on fossil fuels. This environmental impact continues as long as your solar panels are operational.
  • Your home's value may continue to benefit from a solar panel installation. This makes your property more attractive to potential buyers if you decide to sell.

It's important to note that while solar panels can provide long-term financial benefits, there are some factors to consider. These include the gradual decrease in panel efficiency over time and potential maintenance costs. Regular monitoring of your system's performance and addressing any issues promptly can help maximize their benefits.

A Word From Our Solar Team

Solar Savings Calculator is happy to explain, how long does it take for solar panels to pay for themselves? Hopefully we’ve given you some good information to consider. Also, feel free to call our solar installation contractors when you’re ready to go solar. We offer FREE consultations for solar installation and are happy to answer all your questions. To find out more about clean, green solar energy, or for your no-cost consultation, reach out to our team today.


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