How To Calculate Savings From Solar Panels

How To Calculate Savings From Solar Panels – Before undertaking any type of solar system project, whether it is an On Grid or Off Grid solar system, we need to calculate the return on investment of that project and more specifically their We need to calculate how much money we will earn? In other words, how long does a solar system project take to pay for itself (payback period)? And how much additional money can we get after the solar system project repays the expenses we paid for it.

This is what we call an economic feasibility study, because if we are not going to make a profit from installing a solar system, then why should we pay significant amounts of money? How to buy and install a solar power system? After all, a properly purchased and installed solar system consists of many components including solar panels, solar energy, batteries,  solar charge controllers, and more.

How To Calculate Savings From Solar Panels

Therefore, researching the economic feasibility of a solar energy system is the first right step we need to take before purchasing and installing a solar energy system.

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To calculate the payback period of an on-grid solar power system, we need to know the average value of the electricity bill that we pay every month to the electric utility, the approximate additional electrical power that the system Our sun will generate and we will sell to the electric utility every year. and of course what the total cost of purchasing and installing a grid-connected solar system will be.

By doing a simple logical calculation, we will know what the payback period is and what the return on investment of that solar project will be.

In reality, the payback period varies from country to country based on the electricity tariff and on the amount for which the electric company will purchase the additional kilo-watt hours of electricity generated from the solar system. Some countries power companies buy solar products at high prices, thus motivating customers to generate electricity from solar power, and some other countries power companies offer high prices. Purchase price is less. For example, in Washington, USA, the payback period of an on-grid residential solar system would be approx. 11 years while in Egypt the payback period for the same solar project would be only 8 years, you will see the difference!

Normally the lifetime of the solar system will be approx. 25 years, so the return on investment will be higher in Egypt referred to the aforementioned example, as you will gain approx. The 17-year return in terms of free electricity bills and the amount of additional electrical energy you will sell to the power company, while in the US it will be approx. 14 year profit. In general, most governments have very good incentive programs to encourage customers to use solar energy.

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To conduct a perfect economic feasibility study, you may need to hire a professional contractor to assist, and in that case, you should look for a good contractor with experience and ask someone else. about his experience before contacting him. How much a panel costs – even before you get serious about using it – is important for a number of reasons.

First, it gives you basic information so you can easily spot scams and too-good-to-be-true quotes. Second, it helps reduce sticker shock. And third, it provides financial goals for you to start working towards by saving money and/or improving your credit to qualify for financing.

Our goal, as always, is to provide you with the tools and knowledge to make informed decisions during this process.

Offers a free cost calculator that uses Google’s Project Sunroof and real-time utility rates to estimate how much you can save by going .

Solar Calculator: Savings And Payback Results For Solar Panels

Using the computer is easy. Click the link above to open it in a new tab and we’ll show you how to use it!

Next, choose your financing option (cash or loan) and decide if you want to add battery storage to your home. Don’t worry about your initial settings as they can be easily adjusted.

Once you’ve set your inputs, the calculator will create a side-by-side comparison of your electricity costs before and after your trip. Let’s take a look at some estimates and assumptions so you better understand what the results mean.

For cash purchases, your average monthly electric bill with panels is essentially fixed charges that cannot be offset by the actual meter and any residual electric bill ( this mainly concerns California).

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Your actual loan payments may vary based on current interest rates. It is also important to note that loan terms can range from 5 to 25 years.

Simply subtract your down payment from your down payment to find out your potential monthly savings.

This number represents the amount of utility bills you can offset during the first year of having the panel.

If your loan payment is higher than your average utility bill, your bill reduction will show as zero. However, that doesn’t mean you won’t save money in the long run by Go .

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If you choose cash, this is essentially the estimated cost of your system and any fixed fees that your system cannot cover.

If you choose a 20-year loan, this is a combination of the cost of the system, fixed fees and interest payments.

This is the difference between before and after lifetime energy costs. This number is much higher when buying with cash because there aren’t any interest payments.

Historically, this was the average utility rate over the next 20 years, assuming a 3-5% annual rate increase (based on location).

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This is then essentially your lifetime energy costs divided by the total output of the system. Here’s how the sample system above looks like:

We will be the first to point out that this calculator is based on assumptions and does not represent a binding quote. However, it can give you a fairly accurate estimate of how much your energy costs can be reduced.

It’s often hard to imagine spending $25,000 to save on electricity bills, but people actually save money by using panels.

One way to think about it is to buy electricity in bulk for 25+ years of use. Not only do you get it at a discounted price, but it also lowers your electricity costs while utility electricity costs vary from month to month and increase over time.

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In many ways, moving is similar to buying a house. A mortgage can be more expensive than renting at first. However, it becomes a more affordable option over time as rents increase and your mortgage payments stay the same.

The chart below shows that utility costs grew much higher than the panels over the 25-year life of the system.

When it comes to home, California is, in many ways, a completely different world from the rest of the United States – especially with NEM 3.0 in effect.

NEM 3.0 payments essentially reduced export rates by 75% for PG&E, SCE and SDG&E customers after April 15, 2023.

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With lower export rates, it will be more difficult to fully offset your monthly bill, and NEM 3.0 customers will often have to pay for residual electricity consumption. Therefore, the lifetime savings for only systems are not as great as one-to-one network metering.

Absolute! The calculator page above shows tens of thousands of dollars in savings under NEM 3.0.

However, the key to maximizing savings under NEM 3.0 is to incorporate battery storage so you export as little product as possible.

We find that understanding the average cost of panels helps homeowners make better decisions when they get serious about comparing quotes.

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Think of using a calculator like checking the Kelly Blue Book value of the car you want to buy. Just having a baseline cost can help you avoid scams, reduce sticker shock, and give you a head start on saving cash or improving your credit to secure financing.

With that in mind, there are some limitations to using a calculator that should be pointed out, such as a more detailed cost breakdown.

First, the calculator doesn’t go into detail about how the system costs are calculated. That’s largely because every project is different and it will require additional assumptions.

So how do you estimate things like the labor cost of installing a panel or the cost difference when using the best panel versus a cheaper panel?

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One way is to use the panel installation cost analysis below, based on first quarter 2022 data analyzed by the National Renewable Energy Laboratory (NREL).

NREL found that in 2022, panel installation labor costs account for about 5% of the total cost of residential projects, and the cost of panel modules accounts for about 18%.

So, if the calculator gives you a lifetime energy cost of $26,099 for a cash purchase, you can estimate that the installation labor costs will amount to about $1,300, and the modules themselves have Price is about 4,700 USD.

The notable point is that, compared to non-labor soft costs,

Solar Savings Calculator

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