Solar Return on Investment at an All-Time High

March 27, 2024 | Reading Time: 8 minutes

The solar industry, like every other industry, has been deeply impacted by the government’s attempts to mitigate inflation. As a result, solar products have increased in cost, interest rates for solar loans have risen, and companies have been forced to make cutbacks. Given these circumstances, solar’s return on investment has never been higher if you’re purchasing your system outright.

Why is Solar ROI So High?

Solar’s return on investment is reaching its peak for adopters who purchase their system in full. A combination of rising electricity rates and high interest loans are letting solar systems pay for themselves in less than four years.

Is the Solar Industry Still Growing?

The solar industry continues to advance technologically. Panels are becoming more efficient and supplemental equipment is gaining more capabilities. Contrastingly, the amount of solar companies including installers and manufacturers, have remained the same or decreased due to increasing costs of operation and unstable business models.

The main, and most crucial proponent of the solar industry that will always remain constant is the sun’s power. Did you know, if we could somehow capture all of the solar energy that shines on our planet’s surface for 90 minutes, it would be enough to meet the world’s energy demands for a year? This scenario would require solar panels that are 100% efficient, which we have not developed yet, but it still highlights the potential of solar energy as a sustainable resource.

The sun is an unwavering source of power. We believe as more people realize this, our society will build off our innate human dependence on solar energy and embrace this relationship to power our homes, businesses, and communities. As attitudes shift and solar becomes more accessible, the industry’s assets will continue to grow once again.

What Are Solar Interest Rates Now?

The efforts to decrease inflation over the past three years have led to higher prices and higher inflation rates. In 2024, inflation rates for solar loans fluctuate between eight and nine percent.

Solar Loan Payback Example

In this example, a $40,000 solar system paid for with a monthly solar loan at a 9% interest rate over a 25-year period would cost the borrower over $100,000 in total.

The best way to combat these high interest rates is by using your federal tax credit to pay down the principal balance of the loan. Doing so will reduce the overall repayment amount by shortening the loan term and decreasing the total interest paid.

Is This a Good Time to Invest in Solar?

If you can purchase your system outright, this is an ideal time to invest in solar. Your return on investment will be maximized and you’ll be equipping your home with the most advanced solar technology the industry has ever seen.

If you are anticipating taking out a solar loan, the high interest rates right now will increase your total repayment amount. The most effective strategy for dealing with these interest rates is by depositing your federal tax credit into the principal balance.

The Future of the Solar Industry

While we can’t know for sure what the future of the solar industry holds, we expect a continuing push for solar and other renewable energy technologies from the government and a growing acceptance of these practices amongst communities.

As the technology continues to advance and panels become more efficient, more sustainable, and more affordable, we hope to guide as many people as possible to control their power usage and capitalize on every benefit renewable energy can offer.