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Solar Panel pay back period


Solar Panel pay back period will become more and more important as the world's population grows and moves toward a developed lifestyle.


Energy consumption will continue to increase, and prices rise increasing the desire for home energy generation systems and Going Green.

Recognising whether your system will save you money over the long term will be an important factor in choosing your particular system.


Population Drift.
We must recognize that large sections of the native inhabitants of many countries are leaving their ancestral farm lands and migrating to cities, seeking a better lifestyle that places an ever greater demand upon energy production.

Solar Panels are increasingly being used by house holders to produce their own energy, and you may be wondering whether they would be suitable for your situation. The difficulty is calculating their cost effectiveness.

This short article is aimed at providing you with some tips on calculating this effectiveness and therefore enabling you to decide whether to invest in this form of energy production.

Research is vital.
Check out your energy bills for the last 3 years and take an average of your annual consumption. Consider any further planned additions to your energy consumption.

The next step is to begin to evaluate the local Solar Panel companies. Whilst the focus of this article is calculating the pay back time, it is important to check out the reputation and after sales service of these companies, to reduce Solar Energy Pitfalls, and not focus totally on their prices.

Solar Panel pay back period could well be part of the information provided by these installation companies, but check these figures out with your own calculations based on the other information you can glean from them.

The first information you will need from them is an estimate of the total costs of the installation and transition to a dual system. Once you have this initial estimate of costs, move on to step two.


In the U.S there is normally some form of state or federal incentive programme to help with installation costs. In the U.K this type of grant is rare and Government incentives through pay in tariff's have recently been decreased. This caused many local authorities to challenge these changes in the courts, which delayed the decreases but did not stop them.

Energy Suppliers

You should also check with your local utility provider to see which provides the best rates for Solar energy systems. They are likely to be able to give you an estimate of Solar energy production in your local area.

Once you have determined the rebates, incentives and grants available, take this amount from the installation cost. This will leave you the over all cost for the installation.

Loan Interest

Do not forget to factor in any interest payments, if you are financing this project with a loan.


Once you know this over all total, you can begin to work out how long it will take to pay this back.

  • Take the estimate of the total energy production of the Solar Panels and use 80% of this figure to base your calculations on. To average out fluctuations of the weather. 
  • Multiply this projected energy output by kWh cost from your bill.
  • Take this figure away from the averaged annual figure to calculate your projected savings.
  • In the U.K. you will also need to multiply the energy production figure by the feed-in tariff price to calculate the amount you will be paid by the Utility company.
  • Add your Total Annual savings and income together.
  • This figure should be used to divide the Total Cost of the installation to produce the Solar Panel pay back time.

The Solar energy industry suggest that you should get a number that is between 5 and 7 years. This is the range that is generally accepted as the payback period for installation of solar panels.

This is how long before you begin to make a profit from this investment.

If this period seems too long, it could be sensible to consider Solar Power DIY and adding Solar Water Heating is another of our Quick Energy Saving Tips.




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