What Does Solar Panel Payback Period Mean Exactly?
Solar panel payback period is a confusing term.  It’s confusing because there are 2 very different types of payback periods when talking about renewable energy:

  • There’s the financial payback period.  This is what most solar customers are interested in when shopping around for installers and panels.

This post explores the main differences between these 2 types of payback periods.

Solar Panel Payback Period – Following the Money

Most of us are already familiar with financial payback periods.  This term describes how long it takes to recoup (i.e. make back) all of the costs for a given purchase.

For example, if you spend $200K on a college education, it might take you a decade to earn that money back with your new degree.  And thus, the payback period of your diploma is 10 years.

The same principle applies to solar energy.

You want to reduce your electricity bill so you buy a new solar PV installation for $10K.  Every year you manage to offset your utility bill by $1,000 (i.e. you save $1,000 a year thanks to your installation).  And thus, the financial payback period of your solar installation would be 10 years total.

In San Diego, average payback periods range from 4 to 6 years.  At Sunline Energy, we use high quality parts installed by expert professionals to ensure you enjoy the shortest payback period possible.

Solar Power Payback Period – Following the Energy

Less common is the “energy” payback period.  This term describes how long it takes for the clean energy from your panels to equal the total energy used to create and ship those panels.

Even though solar is a “green” technology, you still need petrol to manufacture the components.  And you also have to factor in the extraction and mining – both of which are relatively dirty processes.

There was a time when the energy used to create solar panels far exceeded the clean power that these panels produced over their lifetimes.

Thankfully, efficiency rates have improved dramatically over the past few decades.  And for today’s standard multi-crystalline silicon PV panels, the energy payback period is about 4 years.  In sunny San Diego, it’s possible to reach this CO2 breakeven point even faster.

Again, we’re committed to using the best parts and experts to ensure that you reduce your carbon footprint as much as possible – as quickly as possible.

1 Final Thought about Solar Energy Payback Periods

As you can see, both the financial and energy payback periods of today’s solar panels are relatively short.  That’s the good news.

The bad news?  There isn’t any.  But we do have really really good news.

Payback periods are becoming shorter and shorter.  Here’s why:

1.  Efficiency rates keep going up.  This means that solar installations are able to produce more energy per square meter with every passing year.  This is great news – whether you’re installing panels for financial reasons or environmental ones.

2.  Utility prices are on the rise nationwide.  But they’re going up especially quickly in San Diego.  In 2013 alone, some customers were hit with 40% price hikes.  Yikes.  As grid electricity becomes more expensive, this makes the relative cost of solar go down.  And it also shortens the payback period of your green investment.

Hope this article helps to explain solar PV payback periods.

If you have any additional questions or if you’re interested in installing solar on your property, contact us today.  All consultations are 100% free.

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