Determining the payback period for a 5 kW solar system involves various factors, including installation costs, local electricity rates, and solar incentives.

Factors Affecting Payback Period

• Installation Costs
• Energy Savings
• Government Incentives
• Electricity Rate
• System Efficiency
• Maintenance Costs

Cost Breakdown

Annual Energy Savings

• Average Solar Energy Production: 7,000 kWh/year
• Local Electricity Rate: $0.15/kWh
• Annual Savings: 7,000 kWh * $0.15 = $1,050

Payback Period Calculation

To find the payback period, we can divide the total initial cost by the annual energy savings:

Visual Representation

Here’s a simple mind map showing the payback period calculation:

• Payback Period Calculation
  • Total Cost: 13,500
    • Panel Cost: 10,000
    • Installation: 2,000
    • Inverter: 1,000
  • Annual Savings: 1,050
    • Energy Produced: 7,000 kWh
    • Electricity Rate: $0.15/kWh
  • Payback Period: 13 years

Government Incentives

• Federal Tax Credit (26%) – $3,510
• State Incentives (Varies)
• Local Rebates (Check Local Programs)

Final Payback Period After Incentives

With federal tax credits, the new total cost becomes:

Now dividing the adjusted cost by annual savings:

Conclusion

The payback period for a 5 kW solar system typically ranges from 10 to 13 years, depending on several factors including installation costs, energy savings, and government incentives. By considering these variables, potential solar system buyers can better assess the financial benefits of their investment.