What is the Projected Payback period of my solar PV system in Singapore?

What is the Projected Payback period of my solar PV system in Singapore?

Calculating the payback period for a potential solar project is not a straightforward task. In this post, we will share on the factors to be considered,

There are many variables which come into play such as the following:

1) Solar Generation
a. Projected sunhours

2) Household consumption:
a. Average Energy Consumption (in kWh)
b. Energy consumption between day and night; it ranges from 20%-60% in the day, and 40%-80% in the evening, pending on the household consumption pattern

3) Energy/Electricity Tariff:
a. Consumption Rate/Tariff ($/kWh)
b. Export Rate, also known as Sell-back Rate ($/kWh)
c. Check with your Energy Retailer on this as it differs between different retailers.

These are some of the factors that will determine the payback period of the solar PV system and clients are advised to also do their own due diligence before embarking on a solar PV system.

Note: The above variables will change over time, and therefore in order to project the payback period for your house, you will need to make certain assumptions and these assumptions may differ, pending on which research material you are making those assumptions on.

The electricity tariff in Singapore will change every quarter; your energy consumption patterns will also change at different stages of your life; climate change will also affect the projected annual sun hours, etc...

e.g. During this pandemic period, people have been spending more time indoors and hence overall energy consumption increases and so does your daytime energy consumption as well and this will impact your payback period. Next due to inflation, cost of energy will usually go up and this also impacts your payback period. It is therefore important to take note of such considerations, before you come to any conclusion.

Mr Lee is 60 years old. He lives in a semi-detached house and there are a total of 5 people living in his household (Himself, his wife, 2 children and a helper). Mr Lee plans to retire at age 65 and by that time, he expects his 2 children to move out after getting married.

Assumptions:
1. Mr Lee's monthly energy consumption is 1,800 kWh, or 21,600 kWh annually.
2. His electricity tariff is $0.228/kWh (note: Singapore Power tariff changes every quarter and differs between different retailers so clients are advised to check with their retailer to do their calculations).
3. His maximum solar system capacity is at 21.315 kilo-watt peak (kWp).

System Size (kWp)	21.315
Project Annual Generation (kWh)	27,230
Projected System Cost	$37,000.00*
Projected Consumed Solar (kWh) (Assume 24% of Generation)	6,535
Projected Exported Solar to the Grid (kWh) (Assume 76% of Generation)	28,120
Projected Consumption Rate (per kWh)	$0.2280
Projected Export Rate (per kWh) (Sell-back to Grid)	$0.1736
Projected Annual Savings from Consumption	$1,490.02
Projected Annual Savings from Export (Rebate Credit from exported energy)	$4,881.63
Projected Annual Cost savings	$6,371.65
Projected Payback Period (years)	5.81*

*For illustrative purposes only.

1) Energy Consumption patterns, consumption and export tariffs greatly affect the payback period.
2) When you ask for the payback period, understand what the basis of calculation is. It is easy for installers to give you an attractive figure to entice you into buying.

However that being said, clients are advised to do their due diligence before embarking on a solar PV system as this is a long term investment and one should only engage a professional solar installer with good track records to do so.

Lastly, when comparing prices between different installers, one should always try to use the cost per Watt peak (Wp) of the system. This can be easily calculated by taking the total cost of the system (before or after GST, just make sure you are comparing using the same costs structure with different installers) and dividing it by size of the solar PV system (denoted in kWp) and further dividing by 1000 to get the Cost per Wp.

e.g. if your system is 20kWp and the total cost (before GST) is S$32,000/-
Your cost per Wp is S$32,000/- (before GST) divide by 20 and further divide by 1000 is S$1.60/Wp

This should be the basis of comparison.

Hope this helps.

Contact us enquiries@solarpvex.com if you'd like to get a preliminary quote for your building or house.