At Maine Solar Solutions, our goal is to help Maine homeowners and commercial business owners save money and make the most of their solar investment. One of the most frequently asked questions we hear is, “What’s the payback on solar?”
What most people mean when they ask about payback is, “how long will my savings on my electric bill take to pay for the cost of the solar system?” Calculating payback is a matter of projecting how long the avoided cost of electricity will take to pay for the initial investment in the solar system. To determine this we need to make an educated guess on the future price of electricity. Assuming a 2.5% annual increase in electricity cost, many of our customers can expect to see a payback in 8 to 10 years. If electricity prices rise faster, the payback period will be less.
Fix your cost of electricity for 25 year or more
Another way to think about payback is to consider that an investment in a solar electric system is a way to fix the cost of electricity over the lifetime of the solar electric system. With solar panel warranties at 25 years, you can reasonably expect your solar electric system to last 30 or 40 years.
Typical solar customers in Maine can expect to see their cost per kilowatt hour fixed at 8 to 10 cents for 25 years — a significant savings over an ever increasing cost of electricity that is currently averaging 14 cents per kilowatt hour.
Save with a 30% Federal Tax Credit
Solar electric systems installed through 2019 qualify for a 30% federal tax credit. Commercial solar electric systems qualify for the 30% tax credit plus accelerated and bonus depreciation. The tax credit is a credit that you can apply to your federal income tax bill. The tax credit applies to the total system installed cost. This means you can deduct 30% of the cost of installation of a solar PV system from your federal taxes. This tax incentive applies to both residential and commercial systems. The solar electric tax credit steps down to 26 percent in 2020 and 22 percent in 2021. After 2021, the residential credit will drop to zero while the commercial and utility credit will drop to a permanent 10 percent.
(Maine Solar Solutions, LLC does not provide financial, tax, legal or regulatory advice. Please consult with a professional for details.)
Financing your solar investment is a great way to use your solar savings to cover the cost of your new system over time. We offer low-interest financing through our Power Now loan program, which gives homeowners flexibility by providing monthly loan payments that are comparable to their monthly electricity bills. As a Residential Registered Vendor with Efficiency Maine, we can also offer Efficiency Maine Home Energy Loans for qualifying projects, including PowerSaver loans.