In the solar industry, you often hear the term “payback period” tossed around. But because there are 2 different types of “payback periods” in solar, many people get confused.
Very quickly, you have:
- energy payback period– the length of time required for your San Diego solar installation to generate more energy than what was used to manufacturer the system
- financial payback period – the length of time required for the electricity savings offered by your San Diego solar installation to fully cover the upfront cost of buying and installing your system
In a previous post, we covered energy payback periods. The exact figures vary depending on where you live (e.g. Chula Vista vs. San Marcos), how much electricity you consume, and what types of panels you use.
But the average energy payback period is about 4 years. It takes this long for the clean power from standard multi-crystalline silicon PV panels to exceed all the fossil fuel used to extract, manufacture, and ship these panels.
But what about financial payback periods?
San Diego Solar Installation – Financial Payback Period
Like energy payback periods, financial paybacks vary considerably.
Let’s see why:
- areas with more sunlight generate greater electricity savings – and thus shorter payback periods. San Diego is pretty sunny, so we’re lucky
- areas with high utility rates typically offer faster payback periods. This is because solar helps to shield you from high electricity prices. Again, San Diego is a great place to install solar. We have expensive electricity – and the rates keep going up
- heavy energy users will realize larger savings with time
There are also differences between commercial vs. residential installations – and Imperial Beach vs. Lemon Grove vs. Encinitas solar installations.
Suffice to say that no 2 properties (or customers) will have the exact same financial payback period. There are just too many variables involved.
But we can talk in averages.
Across all Sunline Energy residential installations – on average – the financial payback period is between 4 and 6 years. It takes this long for the electricity bill savings to fully cover your installation costs. [Quick note. With the recent price hike by SDG&E, we’ll have to revise this older payback period. Customers can recoup their costs even faster than before.]
Every sunrise after this period equals 100% free electricity for you and your family. No extra costs. No extra fuss (except for occasional cleaning – and not even this is always necessary).
Payback Periods with Solar Leases and PPAs
It’s important to remember that financial payback periods only apply if you actually own the installation – i.e. you paid for the system out of pocket or with solar loans.
If you finance your installation using solar leases or power purchase agreements (PPAs), there is no payback period. You keep paying a set fee month after month for the duration of your leasing contract.
This is an important distinction that many San Diego solar installers fail to mention during the “sales” pitch. So just be aware.
If you’re in the market for a solar installation and want the fastest financial payback period possible, contact us today to learn how we can help. All consultations and property evaluations are 100% free.