Solar Energy PV Payback Period

Field Day solar energy “alt-power” bonus

Many amateur radio operators take advantage of the bonus points available during the annual ARRL Field Day operating event in June. One of the more interesting bonuses is the Alternate Power demonstration. Many hams use generators powered by wind, hydro and even human. Others derive solar energy from photo-voltaic panels to power a QRP rig to gain the necessary QSOs for the bonus.

As a demonstration of how solar energy can work, this is a terrific Field Day activity.

Show me the ‘solar’ money

During the solar energy demonstration, visitors and participants often ask about the viability of using PV Solar Panels as an offset to their electric bill. The motive is obvious… save money.

I have known for some time PV solar energy is very expensive and has Return on Investment (ROI) periods of decades. That was some time ago though. I decided to check out the latest solar energy calculators to see if PV solar was still a hopeless financial investment.

Money vs. energy payback

Before I do I want to emphasize two different payback systems: Financial and Energy.

  • Financial is the real-world desire to save money harvesting free energy from renewable sources.
  • Energy Payback is the measurement of how long it takes for such a system to produce more energy from renewable resources than it took to manufacture.

The Energy Payback of PV Solar cell systems has various opinions. Some say these systems can never generate the energy used to manufacture them while others say they can. The answer appears to be somewhere between one and four years depending on the type of PV Solar material used. That’s not too bad, but needs to be taken into account for those who purchase these systems for philanthropic, energy displacement, purposes.

Moving back to the topic of financial benefits I turned to the Internet to find the latest thoughts on the payback (financial) of PV Solar Systems…

Solar energy ROI pipe dream

Many PV solar energy equipment manufacturers are eager for you to calculate the financial benefits of going Solar Electric. I plugged in the figures from my electric bill in one of the calculators above and came up with an install cost of about $86,000 and an ROI of 25.5 years. Whoa there…

It’s true PV Solar systems can have lifetimes of about 30 years. However, there is no excuse for a system to take nearly that long to pay for itself – IF saving money is your goal.

I live in Fauquier County, Virginia and receive a free magazine called Warrenton Lifestyle. There is a regular column called “Ask the Builder” where folks send in questions. In the May 2009 issue a reader named Mary asks and I summarize – “I have heard a lot about solar and wonder if I can supplement my electric energy needs with it.” The column writer responds “…adding solar to your home is a great way to save on energy costs…”

Really?

No matter how much or little PV solar energy electric panels you add to your home the payback period appears to be on the order of 20 or more years. It is true this payback period can be shortened if energy prices continue to rise; This is likely to be the case. However, as folks who have budgets, we need to be very pragmatic in our choice of investments.

Financial realities rule

All of us are businesses whether we think we are or not. We have income, expenses, property, liabilities and investments. No business will purchase a piece of equipment with a return on investment longer than three to five years. Why should you?

Think of it another way. PV Solar systems have an impressive lifetime of about 30 years. Great! Why should your PV Solar manufacturer and installer receive all the benefit from the system on your house? That’s right! If the PV Solar installer sells you a system that takes most of its life to generate a benefit (profit) for you, then only he is profiting… at your expense. Why would you do that?

There is a general trend in the industry to price its products with ROI far longer than the common sense limit of 3 to 5 years. I realize there are exceptions to this rule, but we are not purchasing a Boeing 787, a Cruise Ship or a Hydro Electric dam.

Stay away from any Alternative Energy installer that uses any kind of ROI calculations longer than five years. Bogus! There is no reason for you to pay $1/kWh if you can buy it for 13 cents.

Also, do not include any tax credits or other government benefits in your calculations. Just because we all are taxed to benefit your solar installation does not make it a good business decision.

This, of course, does not apply to the following folks:

  • The Green Energy Philanthropist (GEP) who is willing to make the investment as a statement of their desire to not use conventional energy sources – All should applaud these folks as they put their money where their mouth is.
  • The person who’s home is not on the electric grid for whatever reason.
  • The amateur radio operator who just thinks this is cool and, like the GEP, just wants to do it

Compare investments

If you are trying to save money with PV Solar you are well advised to invest your money in a money market fund instead. You will come out ahead after 30 years.

If you agree PV Solar is too expensive to be practical, you should still keep an eye on the industry. If PV Solar becomes just one order of magnitude less expensive to install it will suddenly become practical to install for financial benefit.

One last thing to try… Ask your energy provider if they are interested in renting your rooftop for “their” solar panels and related equipment. As reported in Uncle John’s Certified Organic Bathroom Reader, page 39, the payback to the homeowner is no cost electricity. Now that’s an ROI that’s pretty amazing.

Conclusion

PV Solar is very expensive, but getting cheaper as the technology continues to mature. Eventually it will pay to install your own equipment, however, if you can rent your roof to your utility, your payback is instant.

2 thoughts on “Solar Energy PV Payback Period

  1. Even though residential solar sections may seem a little expensive at first, they can actually help you economically. This happens in a few ways:

    1. You can appreciate considerable benefits on your per month power expenses.

    2. Your home or home value increases

    3. You may be certified for funds and discounts when you use alternative energy

    • "1. You can appreciate considerable benefits on your per month power expenses."

      Yes you can, but is it enough to justify the cost? There are pretty simple ways anyone with accounting experience can calculate this. The point is to calculate it and approach your solar installation as you would any investment. Anything with an ROI approaching the lifetime of the system is simply not a good investment.

      "2. Your home or home value increases"

      As we have so very harshly learned these last few years, nothing we do to our homes guarantees a return on our investment anymore… including solar. This may change with new leadership in government, but for now home value collapse rules the roost, and, quite frankly, it is the government's fault.

      "3. You may be certified for funds and discounts when you use alternative energy."

      Yes, indeed you might, but these tax payer funded benefits should never ever be used to calculate the ROI of solar. The only figures to use are the total cost before any benefits. Otherwise you are simply asking your neighbor to fund your solar for your benefit. Don't get me wrong, tax incentives should be taken when available. However, the very instant you do, you are now officially on welfare and you owe the tax payers partially funding your solar installation the very best value for "their money." This means the solar installers need to compete on total cost without factoring in incentives. To do otherwise simply makes you a leech on society.

      Harsh? Not really. For some reason the solar industry leans hard on tax incentives to artificially prop up their prices so they receive the benefit. This is crony capitalism. Thankfully, the recent infusion of Chinese solar panels may pull the rug out from under some of them leaving, I hope, the honest installers who work "for you" not "on you." These new price points for solar panels are a game changer. Hopefully, ROI is now possible.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.