Let’s use the following example:
Your new solar system costs $15,000 and you received a tax credit of $4,500 in addition to a $1,500 rebate from your state. In this case, your total solar system cost is $15,000 and your upfront incentives ($4,500 + $1,500) total $6,000. This means that your combined cost is $9,000.
Your annual savings is your monthly power bill multiplied by 12 months, so if your monthly solar energy bill is $100 a month, you’ll save $1,200 per year on your electric bill.
As we said before, some states and utilities also offer incentives that pay you extra for the solar energy your panels generate. It’s not uncommon for those incentives to put an additional $600 into out pocket each year, meaning total annual savings of $1,800.
($15,000 – $6,000) / ($1,200 + $600) = 5 year payback period
By dividing your combined cost of $9,000 and your annual benefit of $1,800, you get an estimate of a five-year payback period.
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