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What is the Average Return on Investment for Solar Energy?

If you’re considering investing in solar energy for your own home, there’s a lot to consider. Financially, you may be wondering if the initial cost is worth it in the long run. Will you break even in terms of energy savings or is it just a waste of money?

If it’s anything to go by, solar energy is rising in popularity here in Australia for a variety of perfectly good reasons. Many homeowners and businesses are switching partially (or even fully) to solar energy and are enjoying the benefits. What can you expect for your investment?

Factors Affecting ROI for Solar Energy Systems

Before we get into the average ROI for solar power systems, it’s worth noting the various factors that affect how much energy you stand to generate compared to how much it will cost you to install. For starters, bigger is (sometimes) better: a bigger solar power system will generally – all other things being held constant – generate more energy than a smaller one.

Size isn’t everything, however. If the panels are all covered by shade or pointed in a suboptimal way, you’ll greatly reduce their efficiency and therefore generate less energy. The tilt angle on the roof is also important for maximising the amount of sunlight. In Melbourne and Sydney, for example, a tilt of around 30-35 degrees is optimal, whereas a 20-25 degree tilt is often better for homes in northern Australia.

Moreover, you should also consider the ongoing costs of maintenance and repairs. They don’t tend to require much in either regard, but routine cleaning can keep up their efficiency while repairs or replacement of a panel or the inverter may be necessary if damaged.

Lastly, solar panels tend to have a lifespan of around 25-30 years, provided they’re well-maintained and cared for.

Average ROI for Solar Energy Systems in Australia

Since the aforementioned factors matter so much and there are so many variations on solar power systems, it is difficult to give a one-size-fits-all answer to “what is the average ROI for solar energy systems in Australia.”

A quick, rough way to estimate the ROI for your desired solar power system is to take the total upfront cost and to divide it by your average anticipated yearly energy savings. For example, a typical home might have a 5 kW system costing around $10,000. If anticipated yearly energy savings are around $1,500 (a reasonable estimate), the ROI would be a little over 6 and a half years.

You could make the calculation a little more complex and comprehensive by using variable energy costs over time, accounting for routine maintenance and repairs, and adding in various other factors to get a more accurate estimate, but the quick and dirty method should give you a fairly reasonable idea of what to expect.

In summary, a reasonable rule of thumb for an ROI on a typical home solar power system might be around 6-8 years. In other words, after that period, you’ll be essentially generating free energy and the panels themselves will have been paid off.

Cuthill Electrical Contractors

Start saving money by installing solar energy in your home today with Cuthill Electrical Contractors. Our solar installation specialists can assist with any queries around solar power installation in Sydney, energy saving and even finance options.

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