Quick Answer
To calculate the return on investment for solar arrays, multiply the annual energy savings by the system's cost and divide by the total cost of ownership, then divide by the number of years of operation.
Calculating Annual Energy Savings
To calculate the annual energy savings from a solar array, determine your current energy consumption in kilowatt-hours (kWh) and the number of hours your system will produce electricity per day. For example, a 5 kW solar array producing electricity for 6 hours per day will save approximately 18 kWh per day, or 6,570 kWh per year, assuming an average energy consumption of 1,000 kWh per month. You can use online solar panel calculators to estimate energy production based on your system’s size, location, and installation.
Accounting for System Costs
Calculate the total cost of ownership by adding the initial installation cost of the solar array to the annual maintenance and operating expenses. For a 5 kW solar array, the initial installation cost can range from $15,000 to $25,000, depending on the type of mounting system, such as a ground mount, and the quality of components. Maintenance costs, including cleaning and inspections, can be estimated at $500 to $1,000 per year.
Evaluating Return on Investment
To evaluate the return on investment, divide the annual energy savings by the total cost of ownership, then multiply by 100 to express the percentage return. For example, if a 5 kW solar array saves $2,000 per year in energy costs and has a total cost of ownership of $20,000, the return on investment would be 10% per year, assuming a 20-year system lifespan.
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