29 September 2020

How Much do Solar Panels Cost?

Posted in Blog

Clean Energy Partners, blog post - How Much do Solar Panels Cost?

Cost of Solar scrutinised

We give an insight into how to assess the cost of Solar for your home. Starting with how much you want to save lays the foundation for how much it will cost.

An illustrative example

With so many unique variables for each property, an example property was used to show a 4 kW system providing a 9.4% annual return on investment with $945 annual power bill savings ($30,600 over 25 years) at a cost of $10,600.

We work through an example appraisal

Invariably the first question we are asked by customers is “So how much do Solar panels cost”?

This question is best answered by first looking at how much you want to save on power. So we turn the question back around to you by asking “How much do you want to save”? 

Let us explain why this is the better question, and we can then give you the answer to how much Solar will cost. Quite simply, by having a goal for power bill savings, we can use your real time power consumption data to calculate your optimal sized system. 

Now let’s run through a base case example to help illustrate. You can get a feel for how your household and property might compare.

Let’s use the following assumptions for an average kiwi household:

  • Goal to save $75 / month on power bill (43% savings target);
  • 7,000 kWh of electricity consumed each year. This is the average kiwi household use;
  • An average kiwi household consumption profile throughout the day (evening peak use);
  • Average monthly power bill before solar of $178 / month;
  • Single level, north facing aspect, corrugated iron profile, average 20 degree roof slope, no objects shading roof;
  • 4 kW system installed (10 x 400 W panels);
  • $945 annual power bill savings (old bill $178 / month, new bill $100 / month - $78 monthly savings);
  • $10,600 total system cost (fully installed);
  • 11 year payback period;
  • 9.4% annual return on investment;
  • $30,600 estimated power bill savings over 25 years (20,000 net savings).

As the example shows, our model property has a very impressive 9.4% annual return on the $10,600 initial outlay. This was the chosen system size to meet the $75 monthly power bill saving, which was fit for purpose on this property.

By starting with a savings goal, we can easily work through your unique situation. From the savings goal and household power consumption and characteristics, we can then give an answer for how much solar will cost you. From the cost, we can work through the anticipated savings and payback for your chosen system.

As can be seen, there are many factors which influence what the correctly sized system is to suit your household. Notably, your roof characteristics and consumption profile will differ to this example, so changes will be made accordingly.

It is important to emphasise that this example is for illustrative purposes only. Actual costs will vary according to your individual circumstances.

To get started on your solar journey and discuss your savings goals, get a free assessment with CEP today.

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