Submitted by Andrew on Fri, 24/07/2015 - 08:47
Solar Power And How To Calculate Your Return On Investment


Contributing less to pollution and more to sustainability are great reasons to buy a solar energy system.

And let’s face it, seeing a return on your investment is a pretty nice incentive too. But how quickly can solar panels pay themselves off and how do you work it out?

Let’s find out.

To calculate your return on investment, there’s four main things your need to know:

  1. The cost of energy
  2. How much energy your prospective solar power system produces
  3. The cost of your system
  4. How much solar energy you produce will be consumed by your home – or more specifically, how much you will be sending to the grid

Now, let’s assume that you intend to purchase a standard 3 kW system – it produces an average of 13.5 kWh of electricity each day.

We’ll also keep in mind that energy currently costs around 26 cents per kW.

Now that we know the essentials, let’s calculate your ROI using one of the following methods:

“My Home Will Consume All of The Energy We Make”

Take a look at your last few energy bills. If it looks like you’ll be using all of the 13.5 kW hours that your solar power system produces, here’s how you would calculate your savings:

“My Home Will Be Sending Energy To The Grid”

Most homes return a portion of the power their system produces to the grid. When this happens, your energy retailer will give you a credit of around 7 cents per kWh. If it looks like your home will be using less than the 13.5 kW hours your system produces, here’s how you would calculate your savings (assuming you’ll be consuming 70% of the solar energy):

The figures above are based on current pricing in Western Australia. For figures specific to your location, check out our energy savings calculator. You should also note that determining how much power you’ll return to the grid can be tricky, which is why it’s important to talk to a solar professional.

In any case though, you’ll be hard-pressed to find a home improvement investment that pays itself off, let alone in as quick a period, as solar power.

Despite this comparatively fast pay-back period, many would-be solar owners are put off by the initial purchase price of a system.

In a recent blog, we highlighted Solargain’s excellent interest free finance options, making it possible to enjoy the benefits of solar panels now, without paying the full price of the system upfront. You simply pay your system off in installments with the help of the electricity savings you make each month.

If you’d like more information about the real in-pocket savings you can make by switching to solar, get in touch with our friendly specialists today.