What's the ROI on Solar Panels in Ohio?
Solar panel return on investment (ROI) varies from one house to the next, but most Ohio residents see a very strong return. Even though we aren’t the sunniest state, our climate is still well suited for solar energy generation. That, coupled with the strong solar incentives available, make Ohio a top state for solar energy.
Understanding Solar Panel ROI
Return on investment, in the context of rooftop solar panels, refers to the savings generated over time compared to the initial investment required to install them. A key piece of this is your break-even point—the amount of time it takes for your savings to cover the cost of your installation. Once you break even on solar, every dollar you save on electricity is money earned, which means you’re making a return on your investment.
What Determines Solar Panel Return on Investment?
There are several factors that impact solar panel ROI. The most important are installation costs, monthly electric bill savings, and financial incentives.
Installation Costs
Your brea-keven point and overall return on investment depend heavily on how much your solar panel installation costs. The less you spend, the sooner you break even.
Installation costs depend heavily on the size of your system, which means you can save money and improve ROI by installing fewer solar panels. This puts you at odds with most solar companies, who want to make as much money as they can off your installation. Sustainergy Cooperative takes a different approach. We’re in business to get results for our customers, which often means installing smaller systems.
But you still have to offset your electricity costs, so we can’t just install fewer panels and call it a day. Instead, we start by reducing your energy needs with low-cost, energy-saving improvements. The small upfront investment in an energy-saving upgrade like attic insulation can significantly reduce the larger investment in solar, allowing both improvements to pay for themselves quickly.
2. Financial Incentives
Solar incentives come into play when determining your upfront costs because they can save you money–often a significant amount.
In Ohio, residential solar panels are eligible for several incentives, including the federal solar tax credit. The solar tax credit reduces your installation costs by 30%, which results in significant upfront savings and helps you see a greater return on your investment.
Ohio residents are also eligible for net metering, which is the ultimate solar incentive. Net metering is a billing arrangement that allows you to earn credit with your utility by exporting the solar electricity you don’t use to the grid. Your credits roll forward month to month, so you can bank credits in the summer when the days are long and use them in the winter when solar generation is lower. Net metering evens out your savings over the year, increasing your return on investment.
3. Electric Bill Savings
Solar ROI depends almost entirely on how much money you save on your electric bills. The faster your savings pile up, the sooner you’ll break even the longer you’ll have to make money off your investment before your solar panels need to be replaced. If you have a lot of power-hungry appliances, like a pool or hot tub, heat pump, central air conditioning, or an EV charger, you will see a greater return with solar panels.
Average Solar ROI in Ohio
Solar panel pricing, savings, and ROI are impacted by a number of factors, which makes it hard to provide general estimates. But, to give an idea, let’s calculate the annual savings provided by an average-sized solar panel system for a typical home in Ohio.
According to the Solar Energy Industries Association, an average-sized residential solar installation costs roughly $25,000 before taking incentives into account. The solar tax credit will bring that number down to $17,500.
In Ohio, electricity costs 16.75 cents per kWh, and the typical US home consumes about 899 kWh per month. That means you can save roughly $150 a month or $1,800 a year with solar panels, if you offset your consumption entirely. In that case, it would take you just under 10 years to break even on solar panels. If your system continued to generate electricity at its maximum output for the entire warranty period (15 more years) you would see a return of $27,000.
It’s important to remember that these numbers are estimates and should be taken with a grain of salt. Your actual installation costs and overall savings may vary significantly depending on your specific situation. The best way to find out how much you can save with solar panels and whether they’re worth it for your home is with a personalized assessment.
Sustainergy Cooperative offers free solar assessments for homeowners in the Greater Cincinnati area. We can calculate your installation costs, lifetime savings, and overall return on investment so you can make an informed decision about whether or not to install solar panels.
