Solar panel payback times

We've recrunched the numbers to give you the latest payback times for a 2.0kW solar panel system.
 
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02.Payback times

There are large variations between advertised payback times for panels. Some are much cheaper than others, but tend to ignore plenty of potential costs and changes. For example, no allowance is made for the decline in panels’ output over time, or the likely need to replace the system’s inverter later on.

“Some in the PV industry are far too simplistic about these calculations – they’re being misleading,” says Damien Moyse, the Alternative Technology Association’s Energy Projects and Policy Manager. “They’re experts in solar energy, but not in the calculations around feed-in tariffs, STCs or the variable export rates over time.”

Earlier this year, we asked the ATA to include a much more comprehensive set of costs to calculate payback times for a 2.0kW PV system in each state and territory. The table below includes recent changes to the schemes nation-wide. We also encourage you to do your own sums - results from such exercises depend entirely on your inputs and on certain assumptions. For the assumptions made in calculating the payback times below see How the ATA calculates.

Payback times by state / territory
State / territory

FiT rate (net /gross)

2.0 kW system
30% export 50% export
Qld 8.0 c/kWh (net) 6 to 7 years 7 to 8 years
NSW 8.0 c/kWh (net) 6 to 7 years 8 to 9 years
Vic 8.0 c/kWh (net) 6 to 8 years 8 to 10 years
WA 8.4 c/kWh (net) 6 years 7 to 8 years
SA 11.2 c/kWh (net) 6 to 7 years 7 to 8 years
ACT 1:1 (gross) 5 years
Tas 1:1 (net) 6 years
NT 27.8 c/kWh (gross) 4 years
 

How the ATA calculates

  • The calculations assume a system size of 2.0 kW, a system cost (fully installed, before payment for STCs) of $4400.
  • The STC price is $30.
  • The zones used for the purpose of STC calculation were: NT: zone 1 (Alice Springs); Qld: zones 1-3; SA: zone 3; Tas: zone 4; Vic: zone 4; WA: zone 3 (Perth); NSW: zone 3 (Sydney); ACT: zone 3.
  • The electricity export rates for net feed-in jurisdictions assume households export 30% and 50% of the electricity they produce; 100% export for NT and ACT.
  • The system degradation rate is 0.5% per annum with 20% generation losses and inverter replacement (after 15 years) costing $800.
  • The annual increase in retail electricity price is assumed to be 0.25% (equivalent to 6.4% increase over 25 years).
  • The opportunity cost of money that could have been invested instead is 5%.
  • The payback table is approximate as it depends on your inputs and assumptions. Allowances should be made for the differing decline in panels’ output over time and non-optimal placement and angle.
  • Annual generation for the two locations within each state are calculated using the following formula: Annual generation [MWh] = System Size [kW] x PSH x 365 x (100% – Generation Losses) / 1000 (Where: Generation Losses was 20%)
 

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