Buying solar panels is a long-term investment that should help cut your electricity bills and carbon footprint. But will they pay for themselves and earn you money?
People install solar panels for other primary reasons. They want to use greener energy and be less reliant on the National Grid for their energy supply. But it’s still worth knowing how soon you’ll see a financial return on your investment.
How long do solar panels take to pay for themselves?
This will depend on a range of factors.
- The location, size, angle, orientation, and shading of your roof
- The cost of your solar PV installation
- How much of the electricity generated you are able to use – are you often at home during the day
- What are you are paid if electricity is exported
- Are you using batteries to store the surplus energy
- or sell it back to the grid under SEG (Smart Export Guarantee)
What affects your solar panels’ payback time?
The amount you earn from either the SEG, the FIT or the savings you make.
- Electricity price changes The higher electricity prices go, the greater your savings.
- Solar panel installation cost A smaller upfront cost could mean that it’s quicker to break even, though if your system is also smaller then it will generate less electricity.
- SEG tariff rates These vary widely between companies.
- Solar Battery By installing a solar battery we can capture the generated energy from the Solar PV in the daytime allowing you access to free power in the evening. This will reduce the purchase of electricity from utility company, which is much higher than SEG
Paying for your solar panels
The most cost-effective way to finance the installation of solar PV panels is to pay in full using your own savings. If you’re unable to pay upfront, you could consider a loan or re-mortgaging. However, if re-mortgaging is not a practical option for you, you can take advantage of Elektra’s Smart Energy finance purchase agreement option and start saving on your utility bills straight away.
So Is solar PV a good investment? Yes, the savings made on reducing energy costs can help cover the finance agreement and pay for itself.
This is an example of one of Elektra Smart Energy Design where we demonstrated return on investment with solar panels in 7 years. This produces IRR of 15.5% . A further improvement if solar battery storage will be added to the system:
To understand Solar PV further, read our comprehensive guide to empowering your home.
