What is the Return on Investment (ROI) for Home Solar Systems in Nigeria?
Obviously making the switch to the solar system is gradually becoming a glaring pattern in Nigeria, Many people who own homes and Businesses in Nigeria are getting tired of the inconsistent power supply in the country.
The constant power outage as well as Rising Electricity bills means a lot of Nigerians are now looking for alternatives like the solar system.
However before finally deciding to switch to the solar system, lots of Nigerians are concerned about the return on investment (ROI) they’re curious on how long it’s going to take them to recover all the money they’re going to spend when Installing solar system and how much they are going to save in the process.
In this blog article, we’ll try our best to break down your potential ROI when you finally decide to Install a solar system in your home.
What’s ROI for Home Solar Systems?
What Return On Investment (ROI) does is to calculate how long it is going to take for any particular investment to pay for itself, this payment could be through savings or other benefits that may come from the said investment.
For a home solar system, let’s make a brief calculation on the basis of your ROI.
a.The upfront cost of Installation
b.Your savings on Electricity bills
c.The cost of maintenance
d.Lifespan of the system
e.Potential incentives and resale value.
1. Upfront Cost of Installing a Home Solar System in Nigeria
Before you purchase a solar system in Nigeria, there are lots of things that directly or indirectly affect how much you are going to pay for the solar system, things like the system size, the battery capacity as well as other components could affect how much you buy one.
For instance, on an average, you’re more likely to spend within N500,000 to even more than 5 Million, however it’s largely going to depend on the kind of solar power you are going for.
Here’s a rough breakdown of solar system sizes and how much you are likely to purchase them:
a.A small solar system (1kW – 2kW): If you are purchasing this size of solar energy, you should know that it can only be used for some basic needs at home like lights,fans and a TV. on an estimate, it’s likely to cost you within the ranges of N500,000 to about N1.5 million
b.A medium-sized system (3kW – 5kW): For a medium sized solar system, it’s likely to power even more additional appliances like the fridge and air conditioners. for you to set up this system, it is going to cost you between N1.5 million and N3 Million, while if you plan on getting a larger solar system for the full automation of your home, you should go for the large solar system (5kW – 10kW) which is ideal for full house automations, it’s going to cost you anywhere within N3 million to about N5 million or even more.
READ ALSO:Is Solar Energy Affordable for the Average Nigerian Household?
This might seem very expensive, but trust us you are going to enjoy it in the longer run, you are going to save more money from electricity bills
2. Savings on Electricity Bills
One of the biggest advantages you are ever going to get from going solar is the fact that you are going to receive absolutely free energy from the sun.
Unlike with traditional electricity where you are going to pay exorbitant bills monthly without getting enough electricity, here solar energy is very free meaning you are going to save more money on the longer run
Here’s an example of how ROI is being Calculated:
Let’s say your Current electricity bill is: ₦30,000/month
And your Annual electricity expense stands at: ₦30,000 × 12 = ₦360,000
On the other hand the Cost of a 3kW solar system is: ₦2 million
Your Annual savings is about:₦360,000 (since you rely mostly on solar)
YourROI period:₦2,000,000 ÷ ₦360,000 = 5.5 years
With our calculation Above, you will discover that within 5 to 6 years, you’ve been able to recover the money you spent on installation through the one you saved on electricity.
Now if you consider the fact that a very well maintained solar system can last for up to 20-25 years, you’ll discover that you have up to 15 years of free electricity.
3. Low Maintenance Costs
Another huge advantage of Installing solar systems is low maintenance cost. If you are able to install solar panels, you’ll discover that you need little or no maintenance over a long period of time.
All you’ll do most of the time is cleaning and dusting your solar panels. You may need to replace your battery or Inverter every 5 to 10 years,but it is still very cheap when you compare it to paying electricity bills or buying diesel regularly.
For Solar panel maintenance you can spend:₦10,000 – ₦30,000 per year
Battery replacement which could happen (every 5-10 years): will cost you around ₦300,000 – ₦1 million ( although it’s going to depend on size as well as the type)
As for the Inverter, replacement could happen (every 10 years): and it’s going to cost you about ₦200,000 – ₦600,000
Even with all these expenses that happen once in a while, you are still going to save way more money than paying constant Electricity bills and fuel.
4. Increase in Property Value
If you have a solar powered property, it’s highly likely to be more attractive to people who are looking to buy or rent the property. if you consider the fact that energy is quite high in Nigeria, a lot of people usually prefer properties that Comes with solar system, If you decide to sell such property, having a solar system installed in it can improve the market value of such property by let’s say 10-15%, so you see, installing solar system in your property shouldn’t be just for saving, it could also be for resale as well.
