The short answer is that it depends. Some of the determining factors include the size of the system (based on the number, type, and power rating of the installed solar panels), whether you include Enphase IQ Batteries to store excess solar energy production or an Enphase EV Charger to power plug-in vehicles, and if other system components like an Enphase IQ System Controller or IQ Load Controller are required. It also depends on how easy the solar panels are to install on your roof and whether you need a main electrical panel upgrade.

The good news is that the cost of panels and batteries has dropped significantly in the past 5 to 10 years, and many federal, state, and local incentives can make your system more affordable.

The payback time also depends on several factors, starting with the final cost of your Enphase system after incentives. As noted above, system size and configuration will determine your overall system cost and payback. Typically, payback for systems paid upfront is between 5 and 10 years, and depends greatly on the cost of energy you’re offsetting and incentives you receive upfront or ongoing, like net metering.  

Let’s explore some factors that determine payback time. 

Electricity rates : These vary widely across the country. States like Washington and Arkansas have the lowest rates, around 12 cents per kilowatt hour. Hawaii has the highest rates at over 40 cents per kilowatt hour. California and New York come in around 32 and 25 cents, respectively, but vary by utility. Generally, the higher the electricity rate, the faster your payback. How much faster depends on your energy consumption and solar incentives. 

Your energy consumption : If you use a lot of electricity, offsetting some or all that grid power with solar energy will accelerate your payback. If you also pay high rates, those two factors will combine to accelerate your payback. 

Solar incentives: Federal, state, and local or utility incentives can significantly reduce your upfront and overall system costs, shortening your payback time. Most homeowners are eligible for the 30% federal solar investment tax credit (ITC) in the 2022 Inflation Reduction Act (IRA). When you file your taxes, the credit is typically provided as an offset to any federal taxes you owe the year your system is installed. If the credit exceeds what you owe in federal taxes for the year, the balance can carry over to the next year. This credit reduces the cost of your system by 30%.

So, if your system costs $20,000, you’d save $6,000 on the cost if you purchase your system outright or get a solar loan to pay for it. Batteries are also eligible for the 30% tax credit. Basically, anything that’s part of your solar energy system comes under the 30% tax credit.

You can make further electrification and energy efficiency improvements to your home that also fall under the 30% credit or other incentives. Check with a tax expert for details to see what’s included.

In addition to the 30% federal tax credit, many states and utilities offer incentives specifically for adding batteries, further lowering your system cost. You can search here for incentives in your area. 

SRECs: States that require utilities to produce a specific percentage of their electricity from renewable energy sources will offer something called solar renewable energy certificates, or SRECs. They can earn additional income for home system owners. We’ll go into more details on SRECs a bit later. 

Net energy metering (NEM): We’ll go into this and other incentives a bit more in the Incentives section below, but your electric utility may offer a net energy metering (NEM) program that pays you to export excess energy from your solar system back into the grid. NEM isn't a new concept. Minnesota is considered the first state to have NEM, starting back in 1983. California’s NEM programs started in 1995. NEM has evolved over the years as solar technology and solar adoption have evolved, but if your utility offers NEM, it can be a major factor in shortening your system payback time. Enphase Energy Systems include smart software and AI optimization that can help adjust import and export timing to make the best use of NEM rates to help you pay your system off even faster. 

Grid services and Virtual Power Plant programs: Even though you’re probably considering adding solar to your home for personal household reasons, there’s also a community reason for going solar: helping to create a cleaner, more stable grid for everyone in your area. It’s done through grid services like Demand Response and Virtual Power Plant programs that send power from your batteries back into the grid during higher-demand periods, such as summer afternoons and evenings, when families get home and use more power for things like air conditioning.

Programs like these pay you for your stored excess energy. That energy helps meet community demand by stabilizing the grid and reducing the potential for blackouts. It can also actually help create a cleaner grid. In many states, utilities rely on what are called “peaker plants” to produce more energy to accommodate peak demand. Often, these peakers are powered by fossil fuels and are expensive to operate. This makes for more expensive power during these peak periods. So, the more people who put their stored excess solar power back into the grid, the cleaner a state’s grid can get.

This is the concept behind VPPs. You and your solar batteries become part of a large network of small solar energy producers (sometimes called distributed energy resources or DERs). Utilities, using planning and analytics software, can access and aggregate power from thousands of batteries simultaneously to, essentially, create a clean virtual peaker plant during times of high demand or grid instability. This lets the utility protect against blackouts and brownouts using clean energy. It also helps reduce the need to build more peaker plants to handle the increasing demand for grid energy as populations grow and more people electrify their homes and transportation. 

The best part is that participating homeowners can receive hundreds or thousands of dollars each year in incentives toward home battery purchases or in annual incentive payments to participate in VPPs. 

Grid services and VPPs differ in participation periods and compensation levels based on your region, utility, and local or regional grid needs. Enphase Energy Systems with IQ Batteries make it easy to enroll in grid services, and you can still use your stored battery energy for backup if the grid goes down. Just enable Enphase Storm Guard to prioritize a full charge for your backup battery when severe weather is approaching. 

While people are often most interested in the payback time of their Enphase solar system, remember that these systems are designed to work for 25 years or more. So, once you hit your payback point—sometimes in as few as 6 to 8 years—you still have nearly two more decades to reap the financial benefits of your investment in solar.

How much return that translates into depends on some of the same factors that determine your payback period. For instance, your electricity rates (which, in most places, are expected to keep rising) and any ongoing incentives such as net metering or participation in grid services or VPP programs that pay you for allowing your utility to discharge your battery back to the grid during peak demand periods.

One other consideration is your own energy consumption over time. Many expect to further electrify their lives once their solar systems are installed. If your system was designed to accommodate increased electricity use over time (adding an EV or electric heat pump, for instance), then you’ll save even more money over the life of your system, especially when factoring in rising electricity rates over the 25 or more years your system keeps producing clean, free energy.

One last factor to consider is system maintenance. If issues pop up, there may be costs associated with addressing them if they’re outside of warranty coverage—which is another reason to choose Enphase technology, which is protected by long-term, industry-leading warranties. Basics like cleaning your panels once a year to help keep them at peak production may also have a minor cost if you can’t do it yourself. 

How much you’ll save over the lifetime of your system will vary based on your location, as it does for system payback time. But let’s say you have an 8-year payback, and you’re saving (conservatively) $1,500 per year. That means for the 17 years after your payback period, you’re looking at—again, conservatively—over $25,500 in return on your solar investment (that's not even accounting for rate increases). The bigger your system and the higher your electricity rates, the greater the return. Plus, you’re protected against rate increases on the grid energy you would’ve used without solar over your system’s lifetime.