How long does it take for solar panels to pay for themselves?
As the cost of electricity rises and solar panel prices fall, it may take less time than you think to recoup the cost of a solar system.
Recent analysis from comparison site Finder.com.au shows solar panels can pay for themselves within six to 10 years of installation, with potential savings of up to $94,273 over 25 years.
On average, a typical solar system should wind up costing about $20,000 over its 25-year lifespan, which includes the cost of inverters and a battery.
Adelaide residents had the best annual savings – looking at around $3771 per year over the quarter-of-a-century, followed by Sydney at $3150, Brisbane at $2683 and Melbourne at $1988.
That would see an Adelaide system paying itself off in six years. In Sydney, it would take seven years, eight in Brisbane and nine in Melbourne.
The analysis was based on assumption that a quarter of home energy use would still come from the grid, and that prices would continue to increase at a rate of 5.01 per cent for each year.
ACCC figures reveal there has been a 63 per cent increase in electricity prices over the past 10 years.
Meanwhile, a March 2017 report from the Energy Council of Australia stated there had been an 35 per cent price drop for 4kW and 5kW systems between August 2012 and 2016. Over the same period, the average system size has doubled to 6kW.
The Energy Council has generated its own payback periods for solar systems, suggesting in its January 2018 report a five-year payback period for a 2kW system in Adelaide, between five and 10 years for Sydney and Brisbane, and between 10 to 15 years for Melbourne.
Cost is the biggest barrier, but the price is falling
Surprisingly, a Finder survey also found 75 per cent of respondents had not thought about the solar option, with cost being the biggest deterrent.
Finder editor-in-chief, Angus Kidman, said the results – which drew from the general population, not just homeowners – did not surprise him.
“The overriding impression is that its really expensive”, he said. “The technology is a lot more widespread now, it’s a lot cheaper, but I don’t think that part of it has sunk in for people,” he said.
“And while it can be very economically viable, it is a long-term commitment. It’s between six and 10 years, that does rather presume that you’re in a house and you’ll be living there for that long.”
Wilf Johnston, managing director at Flex Australia and Energy Matters, said solar installation and sales are up 30 per cent on the previous year.
“Last year is probably the biggest year ever,” he said. This is backed up by figures from industry analysts SunWiz.
Mr Johnston identified NSW as the leading market, followed by Queensland and Victoria, and said a particular growth area to watch was energy storage.
“Previously customers had a mismatch between solar generation time and their usage – energy was going out to the grid, and there were getting very little return.”
“The cost of the equipment is so low now. Before the panels were like gold dust, but now they’re almost commodity products,” he said.
“It definitely puzzles me that something that people are enthusiastically retro-fitting on their houses, such as solar, isn’t being installed by default with every new house,” he said. “You can pre-wire everything. They’d be the cheapest solar systems to install by a mile.”
“It’s almost getting to the point where if you’re not installing solar, it’s like you’re not installing a hot-water system.”
Peer-to-peer power trading could cut costs
Direct trading between neighbours could be another area of growth.
David Martin, from Power Ledger – which has developed a platform that harnesses blockchain technology to trade surplus renewable energy – said the key to increased uptake was demonstrating the value to consumers, something he thought was already happening.
Presenting at the Schneider Electric’s Innovation Summit Sydney 2018,he said consumers would soon realise they could sell and buy electricity for better rates to each other, rather than dealing with an electricity retailers.
“The energy industry moves at a glacial pace,” he said. “But the market has to reposition itself to maintain its relevance.
“As the price of energy goes up, the incentive to get off the grid increases,” he explained. “Batteries will be a tenth of a price they are now in the next decade.
“Consumers are leading the way – everything is coalescing in favour of the consumer, for once.”