How Are Solar Panels Paid For?

You can get the financial benefits of solar energy without having to buy a home solar system if you lease solar equipment. The installation is handled by a solar supplier, who subsequently leases the equipment to you for a set monthly fee or sells you the electricity generated by the panels at a defined price per kilowatt-hour. 1 The average electric bill savings over two to three decades can be thousands of dollars. 3

Solar leases usually run between 20 and 25 years. During that time, your solar provider will closely check the hardware and performance of your system until the term finishes. 2 You can then choose to renew your agreement or buy the system, much like when you lease a car. If you don’t renew, the solar company will usually remove the panels and restore your roof to its previous state at no cost to you.

What is the payment method for solar panels?

If you’ve arrived here, it’s likely that you’ve made the decision to switch to solar energy. Give yourself a slap on the back for a job well done! You’re a part of an environmental movement that’s fighting to make the world a better place. Many homeowners, building owners, and even tenants who want to save money on power are turning to solar energy. Those first solar invoices will make the corners of your lips curve up in delight…hello savings! However, solar bills might be perplexing, which is why you should take the time to learn how solar billing works. Let’s get this party started.

First and foremost, you must comprehend your solar financing alternatives. Many homeowners opt to own their solar system and pay cash for it up front or finance it with a solar loan. Solar loans are similar to home renovation loans in that you borrow money from a lender and repay it over time in monthly installments plus interest.

While some people can afford to buy their own system, others must rely on leasing or Power Purchase Agreements (PPAs).

If you lease your solar panels or sign a PPA, a third party will own the system that is put on your roof or property, and you will pay the third party a monthly fee. Depending on the type of lease or PPA you choose, payment structures may differ. The purpose of solar leasing is to keep your solar bills regular. You pay a set monthly fee to the solar supplier. The expected amount of power your panels will generate over their lifespan is used to compute this rate. Solar PPAs base your solar costs on the actual electricity provided by your solar system, therefore your monthly solar bill may fluctuate.

You’ll use the power created when you’ve installed a system. What happens if your system generates more power than you require during a particularly sunny month? Net energy metering allows you to use the energy generated by your solar panel system and exported to the grid to offset future utility expenditures. Energy produced but not utilized on-site is transmitted to the electric grid in exchange for credits that can be applied to future utility bills for owners and lessors of residential solar systems. It’s crucial to remember that net metering laws differ by state and utility, so double-check how it works in your area.

There are opportunities to subscribe to renewable energy projects, such as community solar farms, to obtain virtual net metering credits for those who don’t have the correct roof for solar panels, find installation fees too exorbitant, don’t own a home, or simply don’t like the look of solar on their property. Customers can use the energy generated by a renewable energy plant to reduce or offset their power costs through virtual net metering.

Unfortunately, the answer is yes. A local utility grid is connected to the majority of solar panel systems and renewable energy initiatives. Even if your home has a solar system, you’ll still get a utility bill because your solar panels may not be able to meet all of your energy needs. You’ll receive a separate charge from the firm that owns your system whether you lease or have a PPA.

What’s the good news? You’re still saving money on your energy bills. Your utility statement will show you how much energy you produced vs. how much energy you consumed over the course of a month. The cost of your utility bill is usually divided into three parts:

  • Your service fee/charge is essentially what your utility company charges you simply for being connected to its grid. This is normally a one-time fee.
  • Taxes – taxes and surcharges are imposed and collected by the state and local governments in where you live.
  • Kilowatt hour usage (kWh) – Your kilowatt hour usage is the sum of your power consumption and the cost of that consumption. Your electricity statement will only charge you for the kWhs you consumed from the power grid if you have solar.

You’re ready for the environmental benefits and financial savings that come with solar billing now that you know how it works. Would you like to learn more about our community solar program? Visit learn more, go to our community solar page or contact 800-965-5124.

Is it possible for a solar panel to pay for itself?

The payback period for solar panels is a computation that determines how long it will take your solar system to pay for itself. In other words, the payback period for solar panels is the time it takes for your solar system to “break-even” and return your initial investment cost.

What is the cost of paying off solar panels?

Lower power bills, a considerable return on investment, tax savings, and a decreased carbon footprint are just a few of the benefits of installing solar panels on your home. But what is the cost of the investment? Solar panels cost between $17,161 and $31,814, according to HomeAdvisor, with a national average of $24,187. This equates to $2.50 to $3.50 per watt, with the majority of solar power systems ranging from 3kW to 10kW on average.

Solar panels for household usage can cost anything from $.70 to $1.50 per watt. Labor expenditures, which account for around 15% of the total cost, can range from $.50 per watt to $.80 per watt, depending on system size. Solar roof panel prices are determined by several factors, including your location, the labor involved, permit and inspection fees, and the type of solar panel system installed, all of which will be discussed further down. Many homeowners believe that the expense of solar panels is justified considering the savings and benefits of using the sun to power their homes, but read on to make your own decision.

How much does it cost to pay off solar panels and how long does it take?

It takes about eight years for most homeowners in the United States to break even on a solar panel investment. If your solar installation costs $16,000 and the system saves you $2,000 a year on energy expenses, your payback period will be around eight years (16,000/2,000 = 8).

To put it another way, the solar payback period is the amount of time it will take for your utility savings to exceed the cost of your initial investment. You could say that the solar panel system has “paid for itself” at this point.

Keep in mind that solar payback times are determined by a number of factors, including installation costs, interest rates if you’re taking out a solar loan, any tax credits and solar rebates, and energy bill savings. The latter is always going to be relative to your region’s power rates, therefore places with greater utility costs have slightly shorter payback times.


The cost of purchasing a solar system is relatively expensive at first. Solar panels, inverters, batteries, wiring, and installation are all included in this cost. Nonetheless, because solar technology is continually improving, it’s realistic to predict that prices will continue to fall in the future.


Although solar energy can be collected during overcast and rainy days, the solar system’s efficiency is reduced. Solar panels must be exposed to sunlight in order to collect solar energy. As a result, a couple of overcast, rainy days can have a significant impact on the energy system. It’s also important to remember that solar energy cannot be collected at night.

Thermodynamic panels, on the other hand, are an option to consider if you need your water heating solution to work at night or during the winter.

Check out our video for a breakdown of how effective solar panels are in the winter:

How does solar help you save money on your electricity bill?

If your solar panels are properly installed, your system should easily transition from using the electricity provided by the panels to using energy from the National Grid when the panels are not producing enough. There will be no noticeable impact in your electrical supply.

You don’t have to tell your energy supplier that you’re using solar panels in addition to a regular electricity tariff. You’ll just use less electricity from the grid and pay lower costs as a result. However, you should check about to ensure that your rate is competitive (along with your gas tariff).

Why are solar panels a waste of money?

Several issues, some of which have already been mentioned, can have a detrimental impact on solar’s economics. If any of these criteria apply to you, you may discover that going solar saves you little or no money.

The following are some of the reasons that will reduce your financial return from solar panels:

  • Solar energy systems have high upfront expenses. This is mainly due to the high cost of solar equipment and/or installation in your area.
  • Due to space constraints, you won’t be able to install a solar panel system large enough to save enough money on your electric bill.
  • Issues with your roof, such as shade or a non-ideal orientation or angle, reduce your home’s solar potential.
  • Low energy costs, whether as a result of minimal electric rates or low usage, indicate that you don’t spend much on electricity in the first place.
  • Unfavorable financing: Your solar loan has a high interest rate or onerous terms, such as a first-priority lien, because of your bad credit history.
  • You’re not eligible for solar incentives like the solar tax credit or SRECs, which might help you save money on your system (Solar Renewable Energy Credits).

Combining one or more of the above will reduce your monthly savings while also lengthening the time it takes for your solar investment to pay off (which you don’t want).

Now, despite these considerations, it’s completely feasible that you’ll save thousands, if not tens of thousands of dollars over the life of your solar panels but make sure this is the case before you go ahead and buy them.

How long does a solar panel last?

Photovoltaic (PV) panels, commonly known as solar panels, are designed to last for more than 25 years. Many solar panels that were placed as early as the 1980s are still operating at full power. 1 Solar panels are not only incredibly dependable, but their lifespan has risen substantially in the previous 20 years. 2 Many solar manufacturers back their equipment with performance guarantees in their warranties, in addition to decades of successful performance. 1

Keep in mind that just because your solar panels are predicted to last a couple of decades doesn’t imply they’ll stop producing electricity. It simply implies that their energy production will be reduced by the amount that solar panel manufacturers believe is necessary to meet the energy needs of the ordinary American family.

Is it worthwhile to invest in solar?

Is solar energy in California worthwhile? Yes, look at how many solar panels are installed on Californian homes! However, you must decide for yourself. Solar energy has a minimal carbon footprint, is clean and reliable, and can provide power even if the grid goes down. It also saves money for any budget. Solar is no longer a pipe dream, whether you’re a homeowner or a renter. It’s possible that this is your future!

Fortunately, we provide experienced solar panel installation services throughout California, including Los Angeles, San Diego, and San Bernardino.

For a free solar energy consultation, contact one of our Solar Energy Specialists now. It’s time to put some money down and see what all the fuss is about with solar power.

What are the advantages and disadvantages of solar panels?

We hope that by publishing this essay, we will be able to put an end to this debate and ultimately clear the air on solar energy. Yes, solar power has numerous benefits, including the capacity to reduce your carbon footprint and reduce the pressure on the electricity grid. Solar does, however, have drawbacks, including the inability to generate electricity at night and the difficulty of shifting solar panels once they’ve been placed.