Savings Breakdown: When Solar Will Start Paying Off


by Erin Vaughan

We all know solar benefits the environment. It’s healthy and sustainable—but can it save you money, too? We at Modernize believe in knowing your options when it comes to solar. With so many factors involved—costs, rebates, and incentives—it can be difficult to figure out how much this all is going to cost you in the end, but with some smart planning, you can get a good idea of how long it will take to pay off your initial costs and start saving some green!

Buying the Right Equipment

When you start crunching the numbers, your overall savings will be offset by the cost of equipment and installation. But system costs can vary, depending on the size, your area, and whether you want to go totally off the grid. To get started, you’ll want to think about the energy needs of your home. Start tracking your energy costs. Look at not only the total cost of your bill, but also your usage, which your utility company will express as the number of kilowatt hours (kwh). The average US home uses approximately 900 kwh per month, but your household’s consumption may be higher or lower.

You’ll also want to start thinking about your setup—would you like to be tied to the energy grid, or is your goal to get totally off-grid? Keep in mind an off-grid system will be larger and more expensive. Additionally, if you’re not tied to the grid, you won’t be able to participate in sell-back programs that exist in some states, which allow you to feed in excess power to the local grid and pay you for it.

Generally, the average system costs around $10,000. You can use that as a rough estimate of startup costs in your calculations—or go ahead and pick out the system you want and get a quote. That will help you figure out your eventual savings

Leasing Equipment

If $10,000 sounds too daunting a price, you may want to consider leasing your equipment. Many installation companies have lease-to-own programs to help defray the startup costs of solar energy. Leasing also has other benefits: the solar company performs all maintenance on the equipment. Of course, like any leasing program, you’ll have to pay interest—in this case, usually about four to eight percent. It’s something you’ll need to factor in when you’re making your cost versus savings worksheet.

Federal Tax Incentives

Now we get into the good stuff—the money the government pays you for using solar. The current tax return rate for solar costs is 30 percent, so subtract that from your overall costs. Note that the rate is expected to drop as more people adopt solar, so time is of the essence!

Local Incentives

Now we get to where it can get really murky. Each state and municipal area is different in how they handle local incentives. For instance, Austin, where I’m writing from, has a rebate program with Austin Energy that gets you $1.00 per square foot of solar film used. You’ll want to do your homework in order to really calculate the savings here. This database is a great place to start.

Some states and areas also have net-metering, which means they connect you to the city’s grid and pay you for when you generate overages (think really sunny days). This is especially true in areas that get higher numbers of full sun hours (check out this map for more details on your area’s sun hours).

Savings on Your Bill

If you’re thinking about solar, you’re in it for the long haul. And that’s where the savings really are—in the lower electricity bill you’ll pay each month. Going with the national average of 900 kwh per month, and estimating that your area gets an average amount of sunlight, even a 3kwh system could cut your bill in half. If you pay about $100 per month in electricity, that’s $6,000 after 10 years. Think about what you could do with all that money.

These are just the basics of costs and savings for solar. To really get started, you’ll want to start doing research about your area’s costs and programs. Good luck and happy savings!



Steve Ulrich is a principal at Bay Integrated Marketing: I have been working with people to maximize their use of social media and internet publishing, optimize their websites to turn prospects into customers, and establish their personal brand on the internet. We are also working with Eco Distribution, Inc. to find and implement practical solutions to help clean up our air and the environment. Eco Distribution, Inc. is a California based Distributor and Representative Firm dealing in environmentally friendly and Green solutions. We have leveraged 30 years experience in responsible construction management to provide solutions for some of the most impactful challenges facing our air, water, and land. We have an oil/hydrocarbon remediation system that is effective on everything from simple oil stains on a driveway, to complex oil disasters in the ocean. My approach to social media and internet marketing is simple. Instead of spending a fortune “buying” keywords and ads that don’t return anything we concentrate on three areas: I CAN GET YOU FOUND ON LINKEDIN - NUMBER ONE, PAGE ONE.
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