GreenDIYenergy Is Our Choice As The Best Overall Guide For 2010 |
DIY Solar Panels, Is It a Good Investment? Facts About Return On Investment.
Mark Spencer Guest Editor
We all know that the initial costs of most traditional green energy system can be high. They pay themselves off but often it can take a number of years. But, how many years?
The first thing that you'll need to know is how much the system that you are considering purchasing is going to cost you. Let's pretend that building the system costs $1,000. Then, you will break even when you save $1,000.
The federal government allows homeowners to take tax credits on the purchase of solar panels, so you'll want to reduce your total cost by the tax credit that you receive, assuming you can take advantage of it. Currently, for solar panels, homeowners are allowed to take a tax credit of 30% of the purchase price up to $1,000. In this example, the system cost $1,000, 30% of $1,000 is $300, leaving $700 as the new "cost" of the system. Now, you need to save $700 on your electric bill before you will break even.
The next thing that you need to know is how much energy your solar panels will collect. You don't want to know what it can collect, because that will probably not be the same amount as what it actually will collect, based on the location of your home, placement of the panels, etc. Make sure that you ask the distributor of the panels that you are buying specific questions about this because having an accurate number is key to your calculations. Let's say for calculation purposes, that, for your $1,000 you built a 1 kW panel that will collect 5 kWh per day. The number that you are interested in right now is how much energy your system will give you each day.
Next, you'll have to know how much you pay per kWh. This number will be on your electric bill. The average around the nation is $0.10/kWh.
Now that you have all the information you need, you are ready to calculate how long you'll need to own your solar panels to break even. If you pay $0.10 per kWh and you collect 5 kWh of electricity a day, you are saving $0.50 a day - or approximately $15 a month. To figure out how long it will take to break even, use the following formula: Total Cost of System after Tax Incentives Divided by Total Savings per month, or $700/15. The result is that it will take 46.6 months to break even on your purchase. Dividing this value by 12 and you will see that it will take you 3.8 years to break even on your purchase. Any energy that you produce after this is really a return on your investment. Life expectancy of solar panels can be around 20 years.
