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Understanding The Solar Payback Period

May 19, 2017 by dev-greenleaf

Understanding the Solar Payback period

If your home is going solar, or if you’re even thinking about it, you’ve probably already thought about the benefits. Reducing your family’s carbon footprint and having energy even during power outages is certainly attractive, but GreenLeaf Solar knows that you probably have a very strong interest in the cost-saving benefits of solar. Particularly, you want to know when you’re going to start to recoup your investment. The time it takes to see a return on investment (ROI) is called the solar payback period.

When analyzing the payback period, there are a variety of variables to take into account such as roof orientation, or the direction your roof faces, roof pitch, which takes into account how close your roof is to the sun, and available money-saving solar incentives. Depending on these variables the typical solar payback period on Long Island is between 4 to 7 years. While solar payback periods do vary somewhat depending on the factors just mentioned, it is critically important to realize that residential solar installations are warranted for twenty-five years and can produce for upwards of forty years. So even a 7-year payback period results in eighteen years of warranted free electricity.

Impact of Payback Period for A Residential Solar System

Let’s delve more deeply into the factors that impact the payback period of a residential solar system. First, it’s important to understand that south facing roofs produce the most electricity. This is because they are exposed to the highest solar radiation of any roof surface and have the highest energy production potential, leading to the most rapid solar payback. While south facing roofs are typically fastest, both east and west facing roofs are also highly viable options for a solar installation. The payback period on a south facing roof is typically around 4 to 5 years while an east or west facing roof may result in a roughly 7-year payback period.

Roof Orientation, Pitch and How They Relate to Payback Period

While roof orientation is important, and south facing roofs do result in a somewhat faster payback period than east or west roofs, virtually any roof orientation other than a north facing roof can result in a highly attractive payback period.

In addition to the orientation of a solar system, the pitch of the roof that the solar system will be mounted to also plays a role in payback period. Generally speaking, the closer the pitch of a roof is to the home’s geographical latitude (roughly 41 degrees for New York) the more rapid the payback period will be. In other words, a south facing roof with a pitch close to forty-one degrees will yield the most rapid payback period. But even a flat roof can still result in a solar payback period of seven years or less. Ultimately, the vast majority of homes on Long Island have roofs that offer the potential for a very attractive solar payback period.

Important Factors to Consider for Potential Payback Period

Yet another important factor to consider when evaluating the potential payback period is tree shading. In order for solar panels to function effectively, they need to receive direct sunlight. Consequently, tree shade can greatly hinder production. However, while tree shade can greatly decrease the production potential of a solar system, this obstacle can easily be dealt with by tree trimming. In fact, there are even solar incentives available to help offset the cost of tree trimming when it’s shown that the tree work will increase the productivity of the solar system.

Federal and State Tax Incentives Available For Solar

When examining the ROI you’ll receive from solar, it’s critically important to highlight the federal and state tax incentives available. Currently, the federal government offers a 30 percent tax rebate for homeowners who install solar. So if a homeowner purchases a solar system with a gross cost of $30,000, they are eligible for a federal tax rebate of $9,000, ultimately reducing the cost of their solar system to $21,000. In addition to to the federal tax rebates offered by the federal government, there is also a New York State tax credit of $5,000 available to homeowners who purchase a solar system. In other words, a homeowner who purchases a solar system on Long Island with a gross cost of $30,000 is eligible for a total of $14,000 in federal and state rebates, which greatly improves the ROI of a solar installation.

Purchasing A Solar System and Return on Investment

Finally, it is also worth noting that when purchasing a solar system, a homeowner does not need to fund the project out of pocket to realize the ROI discussed above. Due to the booming solar market in New York, there are a variety of zero-down loan options available allowing homeowners to realize a 4-7 year ROI with no money out of pocket. There are many factors to take into consideration, and many paths to get there, but overall, most homeowners on Long Island can realize that 4-7 year ROI when purchasing a solar system.

Filed Under: News

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