How Long Does It Take for Solar Panels to Pay for Themselves?

the solar buyback period

Solar Energy ROI Explained

You're thinking about getting solar panels for your home in central Iowa. You've probably heard about the savings and the environmental benefits, but there’s one big question on your mind: When will this investment pay off? Let’s break it down in simple terms so you can see if solar energy fits your budget and goals.

Solar Payback Period 101: What Are We Talking About?

The solar panel payback period is the time it takes for your energy savings to cover the cost of your solar system. Think of it like planting a tree. At first, it’s all about the upfront effort—choosing the right spot, getting it in the ground—but eventually, it grows tall and starts giving back.

So how long does it take for solar panels to pay for themselves? In Iowa, the payback period for residential solar panels usually falls between 7 and 12 years. After that, it’s all savings. Considering that most systems last 25–30 years, you’re looking at decades of energy that’s essentially free. This doesn’t account for future rate increases, however. Electricity rates have increased nearly 29% from 2014 to 2024 in the US on average. Creating your own energy hedges you against these rate increases - the value of the energy you create stays in line with the cost to purchase that energy from your utility company. In other words, the payback period gets shorter with every rate increase.

What Factors Affect the Payback Period?

Your payback period depends on a few key things:

• Solar System Performance
  How well your solar energy system performs plays a major role in how long it takes to see a return on investment. The system size, the roof’s orientation and tilt, how shaded the system is, the season, and your system’s location (latitude and longitude) have impacts on performance. The quality of the panels can also make a significant difference. At Stateside Solar Energy, we use tier 1 solar panels - established brands with quality warranties.  

• Initial Investment
  A typical home solar system in Iowa costs around $15,000 to $35,000 before incentives. The investment cost varies depending on the size of the home or business, energy consumption, and utility rates. If that sounds steep, don’t worry—there’s help. Incentives, rebates, and financing are available to make the switch much easier. 

• Incentives and Rebates
  Federal and state programs can take a big chunk out of that price. The federal solar tax credit alone offers 30% back, and businesses are able to qualify for solar depreciation at the federal and state level. Not to mention, some utilities even provide rebates for going solar.

• Current and future electricity rates
  Ever notice how your electric bill seems to creep up every year? Iowa’s electricity rates, while lower than some states, have steadily increased. In fact, one of Iowa’s major electricity providers received approval for a rate increase in late 2024. Solar lets you lock in your energy costs, giving you a hedge against inflation.

• Energy Usage
  Got a big family, lots of gadgets, or an electric vehicle? The more energy you use, the faster your system pays for itself. Higher electricity use paired with solar energy also means you’ll de-risk your electric bills as rates increase over time. In short: The more energy you consume means the more at risk you are to inflation. When you go solar you de-risk your liability to rate increases due to inflation.

How Does Solar Save You Money?

Here’s the fun part: once your panels are up and running, they start producing energy immediately. Every kilowatt-hour (kWh) your system generates means one less kWh you’re buying from the utility. Over time, that adds up fast.

For example, let’s say your household uses 10,000 kWh per year, and your solar system offsets 80% of that. At Iowa’s average electricity rate of $0.13 per kWh, you’re saving about $1,040 annually that you would have otherwise paid your utility company. In addition, this assumes that rates will stay the same year over year. As we discussed earlier, your rate is likely to increase. This means your annual savings is going to increase with it.

Net Metering

But wait, there’s more. Iowa homeowners benefit from net metering, which means you can earn credits for any extra energy your system produces and sends back to the grid. When you use electricity from the grid when the solar array isn’t producing electricity, at night for example, you can use those credits you earned from sending electricity into the grid. 

Iowa has legal standards regarding net metering after governor Kim Reynolds signed Iowa SF 583 in March of 2020. The bill ensures that Alliant and MidAmerican customers will receive retail rates (the cost the energy company charges per KwH) for any electricity produced by solar power and sent back to the grid. Customers can also cash out 50% of their credits if they produced more energy than they used in a given year.

Is Solar Really Worth It in Iowa?

Iowa gets plenty of sunshine to make solar worthwhile. Even though it’s not Arizona, we average about 200 sunny days a year. And because Iowa’s energy costs are relatively low, installing solar now can help you stay ahead of future rate hikes.

Plus, it’s not just about money. There’s a certain freedom in knowing you’re generating your own power that is inflation proof. Not only is it good for your checkbook but also your peace of mind.

Beyond the Payback: Long-Term Benefits

Even after your system pays for itself, the benefits keep rolling in:

• Increased Home Value
  Even if you plan on selling your home, one with a well functioning solar system can sell for more than one without.  

• Low Maintenance Costs
  Solar systems are incredibly low-maintenance. Routine cleaning of the solar panels to remove dust, debris, and snow is generally the only upkeep you’ll need to do to maintain the systems efficiency.   

• Equipment Warranties
  The solar inverters that we use at Stateside Solar Energy are from top established inverter brands. They are either micro-inverters like Enphase which have a 25 year warranty, or string inverters such as SolarEdge which typically have a 10-12 year warranty. The tier 1 solar panels we use, ie. those from VSUN, typically have a 12-year warranty.  

• Peace of Mind
  Installing a solar system through Stateside Solar Energy allows you the peace of mind to know that your solar system will operate properly over its operational lifetime. We take care of all aspects of the solar installation process from consultation, engineering, surveys, permitting, interconnection, coordination, installation, activation, and operations and maintenance.

So, Is Solar Right for You?

The math tells us that installing solar in Iowa makes a lot of sense. Homeowners can see a return on their investment in a short amount of time especially when factoring in rate hikes. Even those thinking of selling their home can potentially see an increase in their home value. And if that’s not enough to convince you, remember that installing solar today locks in savings that can protect you from rising costs tomorrow.

Curious about your home’s solar potential? Reach out to a local professional (like us at Stateside Solar Energy) to get a customized quote.