Solar PV payback time

On average, the payback period for a residential solar PV system in the UK is typically between 8 to 12 years. However, it’s important to note that this estimate can vary significantly based on individual circumstances and factors such as location, system size, orientation, shading, and available incentives.

Additionally, changes in energy prices, government policies, and technology advancements can influence the payback period. It’s recommended to consult with solar PV installers or energy experts who can provide more accurate assessments based on specific details and local conditions.

Some individuals might argue that a 10-year payback period is too long. However, when considering the inflation rate of energy, which has been around 7% for the past 50-60 years, the payback calculations would be inaccurate if not adjusted. By deducting 2% to account for long-term approximate Consumer Price Index (CPI) inflation, the adjusted rate becomes 5%. When adding this 5% to the initial 10% yield, the total return becomes 15%. This amounts to £900 annualized return on the initial £6000 investment, resulting in an approximate payback time of 6.66 years.

It is challenging to find a bank account that offers a comparable return. It’s important to note that these calculations represent a best-case scenario, and in reality, the rate of return should range from a minimum of around 6% to 16%. Even at the lower end of this range, solar PV investments would outperform most banks in terms of returns.

Disclaimer: Please note we accept no liability based on the above information provided. The figures have been obtained from multiple sources to the best of our ability.

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