Are Solar Panels Worth It?

There are numerous benefits of using solar energy; it reduces your environmental footprint, lowers monthly energy bills, and increases your dependence on clean and green energy. But along with these benefits, there are upfront costs that come with installing a renewable energy system in one’s home. So, the question is – are solar panels worth it? Let’s go through the costs of solar panels and discuss whether or not solar power packages in NZ are worth the time and money for New Zealand homeowners.

Factors to determine when considering ROI

A residential solar energy system is a significant investment. And as with any investment, you’d want to know whether solar panels can offer a positive return in the future. In New Zealand, the average cost of installing solar panels is between $12,000 for seventeen 290W panels to $22,000 for twenty-eight 355W panels. While the upfront costs are high, utilising solar energy can help you offset these installation costs with lower electrical bills. But your total solar energy system costs will depend on a handful of factors. These include:

• The number of solar panels for your home
• The size of the system installed
• The roof angle and slope on which the solar panels are installed
• How much power is used when solar power is generated

Savings with solar panels

The money you’ll save on solar depends on your energy needs, location, and budget. The average solar panel payback period or the time it takes to make back your initial investment is between 5 to 10 years.

It’s vital to know whether your home is the right fit for solar energy use. Solar panels make for a better investment if you meet the following criteria:

• Your house receives a lot of sunlight
• You have plenty of surface area for the solar power installation
• You generate high electrical costs
• Your city or state offers solar incentives

Meeting the criteria is important because solar energy requires higher self-consumption to achieve a better ROI. Most homes aim to use 50% of their solar power while exporting the other half to a grid to get a good return on investment.

Energy retailers offer between 7¢ and 16¢ per kWh for excess solar power exported to the grid. It’s wise to get a solar power system size that matches the amount of power you use during the day rather than relying solely on good buy-back rates. Solar power buy-back rates are the price per unit at which energy retailers pay for exported solar power.

Example ROI calculation

Let’s calculate an estimated return on investment by using a buy-back plan of 8¢. If you consume 50% of your generated solar power and export the other 50%, we can determine an estimated return on investment.

Solar power system: 3kW

Energy generation: 3,741kWh/yr

The purchase price for the system size: $9,000

50% solar generation amount: 1870.5kWh

1870.5 x $0.30 = $561.15 (value gained in offsetting your normal electrical use)

1870.5 x $0.08 = $149.64 (50% exported to the grid)

Savings = $710/year

$710 / $9,000 = 7.9

The return on investment will amount to 7.9% (The calculation assumes a rate of 30 cents/kWh for electricity).

If you use all of the solar power generated, your ROI calculation will look like this:

3741 x $0.30 = $1,122.30.

$1,122.30 / $9,000 =12.47

The return on investment will amount to 12.47%.

With all costs considered, is solar worth it?

With proper assessment and skilled professionals who can design and install solar panels properly, using solar energy is indeed worth your money. The best way to evaluate whether your home is a good match for solar panels is to get an estimate from a solar energy installer near you.

Generate long-term savings using solar energy

Are you interested in using solar energy for your home? Our team at Aeon Energy Solutions can help find the best possible solution depending on your energy needs. We’re not just a trusted heating company. As solar specialists, we are also experts in solar panel installation and can install solar panels in Hamilton, Cambridge, and the surrounding Waikato region. Let us walk you through our solar installation process. Book a free home assessment today!