So, you’re planning to invest in a solar power system, but you find the cost prohibitively high. Or maybe you’re having a hard time accepting the fact that that solar power systems can save you a lot of money? Are they really worth the hype? Do solar power systems really give a return on their investments? Is the return worth the apparently steep price of admission? Will the return on your investment take too long to justify the initial cost? These are some of the most basic questions that a customer asks when considering whether or not to invest their hard-earned income on solar power systems. If you’re having similar qualms, stay with us and let us help put your mind at ease.
Saving Money with Solar Power Systems
Is it possible to save money with a solar power system? Yes! It most certainly is! The key is to remember that solar power is mostly meant to supplement your electricity generation, not downright replace your connection to the power grid, not to say that this cannot be done (more on that later). For most people, this is good enough. If you’re having trouble wrapping your head around it, look at it from a different perspective. What will you bill be like with no solar power? If a customer has a 5kW+ system installed, and if this system is working as intended, the system will provide a return on its investment whether the customer’s monthly bill is $80 or $800 per quarter. Electricity bills depend on consumer usage habits. A frugal consumer can eek out a $71 bill using solar power, even with a substandard 8C Net Feed-in Tariff. Now, obviously this is a somewhat idealistic example, where the bill is clearly for the summer months, a time when solar power systems are operating at optimal capacity. Nonetheless, the point of an extreme example is to show that it can be done, not that it should be. Whether you install a 5kW solar power system, or a 500kW system, it will invariably reduce your bill. The only real question you have to ask yourself is, how much can you comfortably invest in this system? The answer to this will depend on how much money you want to save on your bills.
How Long Do Solar Power Systems Take to Pay Themselves Off?
The amount of time a solar power system will take to pay itself off is referred to as a payback period. This period differs from customer to customer depending on a few variables. These are as follows:
- The cost of electricity
- Type of system
- Number of rebates available
- Price of the solar power system
- Installation of a battery-pack
All things considered, on an average, a solar power system will take five years to return on its investment. Again, this may vary based on the above variables, but barring the ability to calculate for each of those quantities, an average should give most consumers a decent ballpark figure to work with. The one variable that should be taken into account is the addition (or not) of a battery storage. Battery storages can double or triple the cost of a solar power system, but they enable customers to use solar energy even at night. This is entirely the customer’s own prerogative, whether they need this feature or not. With a battery storage, the payback period also doubles. Instead of five years, the solar power system will take ten years to pay for itself. However, it will also see more usage and increase savings by a proportionate amount. One thing to take into consideration is that a five-year payback period for a system that will last twenty-five years is an easy bargain. This is a significant return on any investment. A solar power system with a ten-year return on investment may seem considerably longer, but one must take into account that it provides protection against blackouts and affords one a great degree of independence from the national grid. Of course, going completely off the grid may not be possible, but then again, that is not a realistic goal for most Australian households.
Payback Period Over Time
Location makes a difference. Depending on where a consumer chooses to install a solar power system, their payback period will lengthen or shorten accordingly. It is vital that consumers choose the correct sized panel for their homes. Ideally, they would be using at least half the energy it produces directly. With this taken into account, for most cities, solar power systems will pay for themselves within seven years. A $4,500 solar power system Melbourne consuming 25kWh per day will result in a payback period of seven years, assuming it has a 50% self-consumption rate. If the solar power Melbourne system has a 70% self-consumption rate, it will have a six-year payback period. Let us consider some further examples.
- A $4,000 solar power system Perth consuming 20kWh per day will result in a payback period of 3.2 years, assuming it has a 50% self-consumption rate. If the solar power Perth system has a 70% self-consumption rate, it will have a 2.5-year payback period.
- A $5,900 solar power system Canberra consuming 26kWh per day will result in a payback period of 7.9 years, assuming it has a 50% self-consumption rate. If the solar power Canberra system has a 70% self-consumption rate, it will have a 6.8-year payback period.
- A $4,400 solar power system Sydney consuming 19kWh per day will result in a payback period of 5.9 years, assuming it has a 50% self-consumption rate. If the solar power Sydney system has a 70% self-consumption rate, it will have a 4.4-year payback period.
- A $4,000 solar power system Brisbane consuming 15kWh per day will result in a payback period of 4.3 years, assuming it has a 50% self-consumption rate. If the solar power Canberra system has a 70% self-consumption rate, it will have a 3.4-year payback period.
As is evident, location, price, self-consumption rate and system wattage play an important role in the payback period of a solar power system. But regardless, the system will pay for itself over time and it is well worth an investment.