A recent article by the Associated Press got me re-thinking about the ROI (Return On Investment) of solar power. Solar power is at a turning point and becoming main stream. Here is an interesting quote from the article. “Solar power installations doubled in the United States last year and are expected to double again this year. More solar energy is being planned than any other power source, including nuclear, coal, natural gas and wind.”
So what is the current ROI for solar in Michigan, one of the cloudiest places in the nation. Solarbuzz ran an article a couple of weeks ago about global solar panel prices, and shows that today there are many panels for under $3.00/watt and you can buy some panels for as low as $2.50/watt.
Michigan gets about 4 hours of peak sun per day. A theoretical 1-watt panel would generate 4 watt-hours per day, or 0.004 KWH per day. If I could sell or offset buying traditional power at $0.12 per KWH, that 1-watt panels would make (0.004*0.12) $0.0005 per day. A solar panel that cost $3.00/watt would take (3.00/0.0005/365) ~17 years to break even. For $2.50/watt the payback period is ~14 years.
These numbers get even better if you add inflation to the cost of traditional power for the 30 year life time of the typical solar installation. You can also add in the current 30% federal tax credit which is still in effect. This gets the payback period to about 10 years or better. While still longer then most people want, it is a positive ROI and if it pays for itself in 10 years, that’s 20 years of free power. Sounds like a good deal to me.