It is one of the first questions I get asked on site, and the honest answer is it depends. Anyone who knows me knows I say that a lot about solar and air conditioning, because so much of it really does depend on you. How much electricity you use, how you use it, and the size of the system all change the sums. In this post I will walk you through three typical households, give you realistic payback figures, and explain why the second half of a solar system’s life is where it really earns its keep.
Why payback depends on you
Payback is simply how long it takes for the savings from your solar system to add up to what you paid for it. After that point, the system is effectively giving you free electricity.
The single biggest factor is how much electricity you use and when you use it. A panel only saves you money when you use what it makes, or when you store it in a battery, or when you export it for a payment. So the more of your own solar you use yourself, the faster the system pays back.
Three things shape your payback:
- How much electricity you use across the year
- How much of that you can shift into daylight hours or store in a battery
- The size of the array, which is limited by your roof and your budget
Let me put some numbers on it with three common households.
The heavy user: five to six years
If you are a heavy electrical user, payback comes quickly. By heavy user I mean a home that runs on electricity rather than gas. That might be:
- Electric heating or a heat pump
- One or two electric cars charging at home
- A busy family where the lights, screens and appliances never seem to go off
A decent array on a house like this works hard every day. You soak up most of what the panels produce, so very little is wasted. For a home like this, a good sized system will usually pay for itself in five to six years.
The average user: seven to eight years
If you use a moderate amount of electricity and you go for a solar only system with no battery, payback stretches out a little. The reason is simple. Solar produces most during the middle of the day, and if nobody is home to use it, some of that generation gets exported rather than used. Export still pays you through the Smart Export Guarantee, but you earn far more by using your own power than by selling it.
For a household like this, expect somewhere around seven to eight years. Adding a battery usually pulls that figure back in, because you store the daytime surplus and use it in the evening instead of buying expensive grid electricity.
The light user with a small array: eight to nine years
If you do not use much electricity at all, and you fit a small array of maybe four to six panels, payback is longer again, often eight to nine years.
That sounds like a long time, and I understand why it puts people off. But it is worth looking at the whole picture rather than just the first number.
Why the second half is where you win
Here is the part that matters. Solar panels are not a five or nine year product. A quality MCS installation is built to keep producing for decades, and the panels carry long performance warranties.
So take that light user with a nine year payback. After nine years the system has paid for itself in full. The following nine years then pay you back the same amount again. In effect it pays you back more than it cost, and here is why.
Electricity prices do not stand still. Over the life of a solar system the price of a unit from the grid is very likely to keep rising. The electricity you avoid buying in year fifteen is worth more than the electricity you avoided in year one. Your panels keep producing at the same rate, but every unit they make saves you more money as time goes on.
So the longer paybacks are not the bad news they first appear. They are simply the slow start of a system that keeps paying long after it has cleared its cost.
A few honest caveats
I will always give you straight figures, so a couple of points worth knowing:
- These are rough guides, not promises. Your roof, your orientation and your habits all move the numbers.
- A battery often improves payback for average and light users, because it lets you use cheap overnight electricity and store your own daytime solar.
- We use proper performance estimate software to model your specific roof before you commit. You get a figure based on your house, not a general rule.
The bottom line
How long solar takes to pay for itself depends on how much electricity you use and how you use it. As a rough guide, heavy users see five to six years, average users seven to eight, and light users with a small system eight to nine. After that the system keeps producing for decades, and rising electricity prices mean the later years are worth more than the early ones.
If you want a realistic payback figure for your own home, we cover Cambridgeshire, Bedfordshire and Northamptonshire and we will model it properly before you spend a penny. Call the office on 01480 400607 or request a survey through our website.
Jason Pope
Owner, Selec Group