Blog Updated: May 2026
When considering solar energy for a home, you likely began by asking “how much does it cost to go solar?”. This is an important question that can help you find out what kind of financial resources are required and whether going solar is possible given your financial situation.
While there is a cost to buying a solar system, going solar can also be looked at as an investment. Switching to clean solar energy can generate attractive financial benefits that rival the returns of other places you can put your money – like savings accounts, money markets, or bond funds.*
So, let’s look at how you can go about evaluating residential solar energy as an investment.
Key Takeaways of Solar as an Investment
- Solar is an investment because it’s something that gives you financial gains as time goes on.
- You can assess your solar’s return on investment (ROI) by calculating the internal rate of return (IRR) or the payback period.
- As utility rates rise, your solar ROI grows. Rates rise 5% annually on average, with some years even more.
- Solar is lower risk than the stock market yet offers a significantly higher return than bonds, a similarly lower risk investment option.
- The positive environmental outcomes of solar contribute to considerably strong non-financial benefits on top of financial benefits.
Solar ROI: Payback Periods and Rate of Return
One of the ways we can look at the benefit of solar as an investment is by assessing the return on investment (ROI) from home solar. The ROI for solar panels can be looked at in several ways.No approach is perfect, so people tend to look at a few different ROI calculations to paint a broader picture.
A simple way to look at the return on investment of solar panels is to ask, “How many years will it take for my solar panels to pay me back for the cost I paid?” This is often referred to the payback period. To calculate your payback period, you simply divide your net cost of your solar electric system by the annual savings on your electricity bill. For example, if your net system cost is $26,000 and you anticipate saving $2,000 on your electricity bill each year, then your payback period will be 13 years. This is an average payback period for homeowners on the Front Range in Colorado.
To look at the ROI of solar in a different way, we can put those solar savings into context of an annual basis with a simple rate of return. So, consider that same system that cost $26,000 again. If you are saving $2,000 a year on your electricity bills, that means you are getting a return of 7.7% on your investment back each year. That’s a rate that rivals the real rate of return for the stock market!
Solar Investment Benefits
There are a few important things to remember about the ROI of solar. First, there are no taxes on the financial gains from an investment in solar, unlike gains from the stock market (assuming non-tax advantaged accounts). You can benefit financially each and every month with no taxes to deduct. Your savings are all yours to keep!
Second, solar is lower risk than the stock market yet offers a significantly higher return than bonds, a similarly lower risk investment option. Solar technology is no longer an emerging technology. It is a proven and reliable power source.
Third, when looking at payback periods or a simple rate of return, the number relates to how many years it will take for your solar panel system to pay for itself. But what happens to those solar savings after your system has paid for itself? They go straight into your pocket as you enjoy the benefits of prepaid electricity. Home solar systems are expected to last decades, often paying for themselves twice over.
And you don’t have to be in your home for decades to enjoy those savings. Selling a home with solar is offering clear value to potential home buyers. Research shows that homes with solar sell for more on average than comparable homes without solar. So even if you don’t stay in your home for the payback period, you can gain that value through your home sale.
Solar ROI and the Rising Cost of Electricity
Another factor in calculating your payback period is calculating the additional savings from future higher electricity rates. The rate of increase varies over time, but one thing we can all agree on is that electricity costs consistently go up over time. At Namaste Solar, we’ve found that the average annual rate increase is 5% and we’ve factored this rate escalation into our quotes.
However, if you switch to 100% clean solar power, you won’t be subject to increasing electric usage rates, and you’ll lock in a low rate on day one, further enhancing the potential of your solar panel investment.And remember, the more utility electric rates increase over time, like this proposed whopping nearly 10% increase, the more value you’re getting from your rooftop solar system – meaning your payback period decreases while ROI increases each year.
Solar Provides Non-Financial ROI
Last, but certainly not least, when thinking about solar energy as an investment, it’s important to consider the environmental benefits of powering your house with a clean, renewable source of energy.Electricity production by traditional means (like coal and natural gas) emits large amounts of carbon dioxide that contribute to global warming. These dirty energy sources pollute our air and water supplies, linking them with a number of health problems. By going solar, you’re benefiting your whole community and the future generations who are counting on us to leave our planet clean and safe.
Solar is A Win-Win
Clean solar energy is a stable investment that can provide an attractive financial return. Plus, solar energy offers the added benefits of protection from increased utility charges, favorable tax treatment, and very important environmental benefits. That’s why many people say that solar is a win-win: it’s good for your family’s finances and good for our planet. All together it’s easy to see why thousands of Colorado homeowners are going solar every year: because investing in solar panels for your home is often a very smart choice.
Are Solar Panels a Good Investment Opportunity for You?
Solar ROI is based on a variety of variables and therefore will be unique to each home and energy usage profile. If you’d like to know what your solar ROI would be, simply gather your most recent 12 months of electricity usage and give us a call (or complete the free quote form). One of our non-commissioned home solar consultants would be happy to create a customized solar savings ROI analysis for you. Or learn more about solar energy costs and financing options that make solar energy affordable for a variety of households.
Namaste Solar has installed thousands of systems for Colorado homeowners, and we’d love to help you start saving with solar, too.
Do you want to see how much you could save by going solar? Give us a call at 303-536-8920or click the button below.
*Please note that we are solar experts, not tax or investment advisors, and this is not intended to provide investment advice, so please consult your tax and investment advisor for guidance on all things tax and investment-related.
