We installed our first solar photovoltaic system in 2011. Installation + system costs were around $4,400 per kilowatt. With rebates and ‘feed-in’ prices (selling excess power back to the grid), the payback period was forecast to be around 8 years.
The downside was that the above rebates were only available on systems capable of producing less than 2.5kW per hour. Above that, rebates and incentives stopped and costs sky-rocketed.
Many things have changed since, particularly a growing urgency to mitigate global warming. As more people installed solar, economies of scale in both production and installation have resulted in massive falls in the price of installed systems.
Today, here in Australia, installed costs are less than $800 per kW. That cost is generating a payback period of as little as 2.5 years. That’s an IRR (Internal Rate of Return) exceeding 40%. With borrowing costs way under a quarter of that, demand is strong.
While price falls are slowing, it’s expected that there are still reductions to come, making roof solar and solar farms by far, the lowest costs source of power.
The next step will obviously be energy storage systems. These are still too expensive to justify for most home-owners. But prices will fall as scale picks up.
It’s also highly likely that we will be using EV’s (electric vehicles) as home storage systems… charging when the sun shines and drawing back at night.
Right now, Australia leads the world in domestic solar installations with close to 22% of all homes sporting a system. Many other countries are now also seeing tremendous growth in installations. The future looks brighter and cheaper every time a roof gets covered.
What’s happening in your locale?