How quickly does the investment in photovoltaics pay off?

Generating electricity using photovoltaic panels is gaining increasing popularity. This solution is not only very beneficial for the environment but also attractive due to low operating costs and the possibility of powering a household or any other facility with completely free energy. However, one must remember the expenses for the modules and their installation. For this reason, many people wonder how quickly the investment in solar power will pay off and whether this solution is even profitable. Many factors influence this, which are worth knowing before making a decision about installing solar panels.

Is photovoltaics profitable?

Photovoltaics allows for the acquisition of free electricity from the sun. Just a few years ago, only a few entrepreneurs opted for this technology. Today, systems not only represent an increasingly common solution in companies but are also gaining more interest among private individuals who have the appropriate space to install the modules. However, there are still skeptics who doubt whether photovoltaics is profitable. The prospect of acquiring free electricity seems tempting, but at the same time, the need for an initial investment in solar panels and their installation discourages some right from the start. A home solar power plant represents a significant expense, which increases with the size of the entire installation. And it should be as large as possible to ensure a sufficient and constant supply of electricity. Otherwise, it will only turn out to be an additional source of energy, which means the need to continue paying for electricity and delaying the moment when photovoltaics will pay off. The average cost of installation for residential homes is around 20 thousand zł. However, one should be aware of the possibility of taking advantage of preferential loans or even subsidies. The European Union and other pro-ecological organizations actively support those willing to use this solution. If we want to bring closer the moment when photovoltaics will pay off, it is worth finding out what local, governmental, or European programs are currently available in our area.

When discussing photovoltaics and its profitability, one cannot fail to mention net billing. This is a new settlement system introduced in 2022. It has replaced net metering. The new system differs significantly from the old one and may be difficult for many people to understand.

In net metering, the entire Polish electricity system was used as a huge energy storage. The owner of a photovoltaic installation that produced electricity sent it to the grid. When the yields were lower (usually in winter), the power plant "returned" electricity to him. However, for the possibility of storing it, it deducted 20 percent. After some time, it became clear that this could not function in the long term. The energy system is adapted to the flow of energy towards the customer, not its reception. Therefore, it was decided to introduce the concept of distributed energy and encourage self-consumption of electricity.

For this reason, net billing was invented. Although before its introduction, many experts predicted the imminent end of the entire photovoltaic industry, time has shown that nothing of the sort occurred. Currently, every new installation operates under the new settlement system. What does net billing entail?

Every person installing photovoltaics automatically has a virtual prosumer account set up. Funds from the sale of electricity to the power plant go to this account. The accumulated funds are used to pay current electricity bills. The value of the energy sold to the grid is priced based on the market price. In summary, a prosumer will sell electricity to the grid when its price is high and will take it when the price is low.

Net billing also provides new opportunities for people who previously could not use photovoltaics. It introduces the concept of a virtual prosumer. Until now, people living in city centers obviously did not have the opportunity to invest in sunless electricity. In net billing, this is possible. Anyone who owns land outside the city can invest in photovoltaics that will work for their electricity bills in their apartment. In net billing, it does not matter where the installation is physically located. As a result, millions of people gain access to cheap energy from the sun.

After how many years do photovoltaic panels pay off?

The efficiency of a photovoltaic installation depends not only on the size of the system but also on its proper location. The level of daily sunlight varies depending on the region inhabited. Therefore, how quickly the investment in photovoltaics pays off also depends on the orientation of the modules in the right direction and placing them in a location that receives as little shade as possible during the day. Those who have their own piece of land have greater possibilities. Those who can only install panels on the roof or wall of an already built structure are in a slightly worse situation. Of course, photovoltaic panels oriented in a direction other than south still collect energy, but their efficiency may be slightly lower, which extends the time it takes for photovoltaic panels to pay off. However, even in such a situation, a well-thought-out investment will still be profitable, although in the longer term.

The payback period has also been influenced by net billing. Although a group of experts predicted the imminent collapse of the entire industry, pointing to the unprofitability of investments in the new system, nothing of the sort occurred. It is a fact that the return on investment may be slightly longer than before, but we are talking about a period longer by 1-2 years. In the long-term scale of investments, this is not particularly long.

How quickly will the investment in solar power pay off?

Another very important issue is the electricity demand of a given household. Year by year, this parameter increases due to the growing number of devices we use. This includes lighting, household appliances, computers, and portable devices that require regular charging. The annual electricity consumption is currently about 2500 kWh for a household consisting of two adults and two children. For single individuals, it is below 1000 kWh. How quickly the investment in photovoltaics pays off depends on how much electricity is consumed daily. The more energy consumed, the faster the payback occurs. This happens because the electricity bills are higher, and it is precisely their equivalent that we save by using free electricity.

When will photovoltaics pay off?

Knowing our annual electricity bills and the cost of solar modules that provide sufficient energy for our needs — preferably with a surplus — one can easily calculate how quickly the investment in solar power will pay off. Currently, the average payback time for a photovoltaic installation without using subsidies is between 6-8 years. From that moment on, one can enjoy completely free electricity. If we take advantage of subsidies, the time it takes for photovoltaic panels to pay off is further reduced. Moreover, according to Polish law, one can freely dispose of the surplus electricity.
In summary, various factors influence how quickly the investment in photovoltaics pays off. Generally, this period is around 6-8 years. The answer to the question of whether photovoltaics is profitable will therefore be affirmative in most cases. A solar power plant will certainly bring profits. It only requires time and patience.