I regularly get asked “how many solar panels should I install?”
The answer is simple:
As many as you possibly can.
Solar panels are now incredibility cheap, costing about $1 per Watt or $5,000 for a 5kW system. Over the warranted 25 year life of the system, the electricity generated costs only about 3c per kWh which is 10 times less than what it costs to buy it from the grid. There’s more to it than that though and I’d like to provide a few examples of just how good an investment solar energy can be.
Let’s first compare it to property investing. In my experience, the income from property covers loans and holding costs, while the value goes up over time, doubling about every 10 years. I won’t delve too much into the numbers, but if you were to invest $100,000 into a $500,000 property with a $400,000 loan over a 25 year period, then at the end of the period you’d expect to have turned your initial $100,000 into $850,000. If however, you were to take that same $100,000 and invest in $500,000 of solar panels, after 25 years your $100,000 would turn into $1.3 million! With property you could have issues with tenants, price fluctuations and all kinds of other hassles, but solar panels are simple and electricity isn’t getting any cheaper over time.
Another example would be to compare to bank term deposits. At the current rate of around 2.5%, your $100,000 would turn into $185,000 over 25 years, which is far short of the $340,000 you would make from investing in solar with just the initial $100,000. As a matter of fact, the equivalent term deposit interest rate of a solar system, no matter what size is about 11% per annum.
So when trying to work out where best to spend money, unless you can get a safe and secure, guaranteed return greater than 11% per year, then I’d say spend as much as you can on your solar system as it’ll return or save more money, especially the electricity use you’re offsetting at 30c/kWh. Don’t just believe me though, I encourage anyone reading to spend some time doing their own research and numbers suited to their own situations, looking at both solar and energy storage.