You often hear people talk about how solar panels are a great investment and will save you money on your electricity bill, but what does that actually mean? How long until I’m getting free electricity. Solar panels can pay for themselves in as little as 3 – 5 years. This means that after the initial investment, you will be saving money every year for the next 10 – 15 years.
If you are adding a battery, this will increase to a 10 year payback period, which is as long as a battery is good for… so what’s the point?
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How is the payback period measured?
The payback period or ROI is the amount of time it will take for your solar panels to “pay for themselves” by generating enough savings on electricity to offset the cost of the initial investment. In other words, if your payback period is 5 years, then after 5 years of owning solar panels, you will have saved enough money on your electricity bills to cover the cost of the initial investment.
How does this work in practice?
Let’s say you buy and install a 5kW solar system for your home. This size solar system might cost you around $4,633 after rebates.
With the system producing about 20kW a day, one can expect to save around $1,325 per year. Going by that, a 5kW system will have paid for itself in just 3.5 years.
It’s important to remember that the payback period is different for everyone, as it depends on a number of factors such as:
- How much did you pay for the system?
- How much electricity do you use?
- The cost of electricity in your area
- The amount of sunlight you get
- Whether you receive any solar rebates or incentives
The payback period is a great way to measure whether solar is a good investment for you. If you’re looking to save money, then a shorter payback period is better.
How to maximize the use of solar power
Solar energy is a great way to save money and reduce your carbon footprint. Here are some tips on how to get the most out of your solar panels:
1. Use energy-efficient appliances
If you have solar panels, it’s important to use energy-efficient appliances to make the most of the electricity they generate. Energy-efficient appliances use less electricity, which means they put less strain on the solar panels and allow them to generate more electricity.
2. Use natural light
When it comes to lighting your home, it’s best to take advantage of natural light as much as possible. This means opening blinds and curtains during the day and using task lighting rather than overhead lighting.
3. Use solar power during the daytime
Solar panels generate the most electricity during the daytime, so it’s best to use appliances that require a lot of electricity during this time. This includes things like washing machines, dishwashers, and dryers.
4. Invest in batteries
Investing in batteries is a great way to store solar power for use at night or during a power outage. batteries allow you to use solar power even when the sun isn’t shining, which is a great way to get the most out of your investment.
5. Use a solar calculator
A solar calculator can help you determine how much money you can save by switching to solar. Solar calculators take into account the cost of the system, the amount of sunlight you get, and the cost of electricity in your area to give you an estimate of the savings you can expect.
What can prolong the payback period of your solar system
When the payback period is longer, it means that it will take you more time to recoup the cost of your investment. There are a few things that can prolong the payback period of your solar system, such as:
1. The cost of the system
The most obvious factor is the cost of the system. If you have a more expensive system, it will take you longer to recoup the cost of your investment. But this does necessarily mean that every expensive system has a longer payback period. In fact, many high-end systems have shorter payback periods because they are more efficient and generate more electricity.
2. The amount of sunlight you get
The amount of sunlight you get also plays a role in the payback period. If you live in an area with less sunlight, it will take longer for the solar panels to generate enough electricity to cover the cost of your investment.
3. The cost of electricity
The cost of electricity is another important factor. If electricity is cheaper in your area, then it will take longer for the solar panels to generate enough savings to cover the initial investment.
But with the rising costs of fossil fuels, solar is becoming increasingly more cost-effective, even in areas with low sunlight and cheap electricity.
4. Incentives and rebates
Incentives and rebates can also affect the payback period. If you live in an area with generous solar incentives, then the payback period will be shorter. In Australia, the federal government offers rebates in thousands of dollars for solar systems, while state governments offer additional rebates. This means that the payback period in Australia can be as short as 2-3 years.
5. The size of the system
A larger system will generate more electricity and save you more money on your electricity bills. However, it will also cost more upfront. As a result, the size of the system also plays a role in the payback period.
6. The efficiency of the system
A more efficient system will generate more electricity per square meter, which means it will have a shorter payback period. Solar panels have come a long way in recent years and are now more efficient than ever before. Even though the overall cost of a solar system has come down, the efficiency of the panels has increased, which has shortened the payback period.
Also read: 4 of the Latest Trends in Solar Power
