What Is the Typical Payback Time for a Solar System in Nigeria?
Considering the high Electricity cost is Nigeria, doubled with the incessant power challenges ravaging Nigeria, Solar system has presented itself as a very good alternative to traditional Electricity power.
While most people want to switch to electricity, a lot of people before investing in solar energy always asks How long does it take to recover the cost of a solar system?
This recovery period is known as the payback time, this is the actual time it will take for you to recover how much you’ve invested in solar energy.
Now that we know what payback time is all about, we’ll try to break down what the payback time for Installation of solar system in Nigeria is like, we’ll also give you tips on how you can make the most out of it.
What Makes Payback Time Important?
If you decide to invest in solar system, it is going to require you to make a significant upfront payment that’s not could be a bit costly, with a better understanding of what payback period is all about.
You’ll easily know when you start enjoying a free Electricity, you’ll also be able to compare solar with other options like your generator and traditional Electricity, a good understanding of payback time means you can better decide whether investing in solar system is worth it or not.
Factors That Affect Solar Payback Time in Nigeria
Lots of factors in Nigeria can actually have a serious Influence on how quickly your solar system is able to pay for the money spent on it.
1. Initial Cost of the Solar System
Like we already know, how much you are going to pay for a solar system will hugely hinge on the solar brand you are purchasing, the quality, the size of the panels as well as components you’ll be acquiring for example the inverter, batteries, panels etc.
on an average, you’ll get
Small systems (1kW – 3kW): around N150,000 – N750,000
The Medium systems (3kW – 5kW): around N750,000 – N1,500,000
The Large systems (5kW and above): around N1,500,000 – N3,000,000+
The more money you are to spend upfront, the longer the payback period is going to be. However you should always go for a high quality system, this is because they tend to not only last longer but also require little maintenance in the long run.
2. Monthly Electricity Savings
One of the major flexes of getting solar energy is that it is going to reduce or even completely eliminate your need to pay electricity bills. If you happen to heavily rely on NEPA, or maybe you are the type that spends so much money on fuel for your generator, switching to Solar system can automatically help you to save up to N30,000 to even more than N150k monthly depending on how much energy you use from these sources.
For example:
If you are spending around N50k monthly on generator fuel, you are more likely to save about N600k every year after you have installed the solar system.
Also if you are running a business where you spend up to N100k monthly from burning diesel for your generators, you can save a whopping N1.2 Million per year with solar installation. In a nutshell, the more money you save monthly, the faster you are not going to recover from your initial investment on solar.
3. Cost of Maintenance
For those with Generator, you’re more likely to be running maintenances every now and then, but that’s not so for solar energy, they require very little maintenance, most cost that you are going to incur after installing solar panels is going to come from battery replacements, especially if you are using lead-acid batteries, which mostly lasts for 3 to 5 years, Lithium-ion batteries on the other hand are quite expensive, but they are going to last up to 8 to 15 years, which means they’re automatically going to reduce your long-term cost.
4. Sunlight Availability
It is no hidden fact that Nigeria actually enjoys an abundant of sunlight, there’s an average of around 5 to 7 hours of sunshine everyday in Nigeria, and we know for a fact that the more sunlight your solar panels receive the better their performance is going to be which means you are going to save energy quicker and the payback period is also going to be shorter too.
5. Government Incentives & Net Metering
Although Currently Nigerian government do lack a very strong solar incentives, however talks have been ongoing and tax breaks and net metering policies that is going to allow those already using solar to sell any excess power they have back to the grid.If eventually this policy comes to pass, they’re likely to help reduce payback time even the more.
READ ALSO:Can I Get a Loan for Solar Panels in Nigeria?
Payback Time for Solar in Nigeria
Based on some of our data and customer experiences from Arenahub, we’ve been able to arrange an estimated payback periods for the different types of solar
system
a.If you are going for a small home (1kW-3kW solar system) Installation is going to cost you around N150k to N750k which you are going to save around N30k to N50k monthly. So this of course is going to lead to a payback period of around 6 months to 2 years.
b.For a medium Home solar panels of (3kW-5kW system) it is going to cost around N750k to about N1.5 Million, you’ll end up saving around N50K to N100k Every month giving you a payback period of about 1 to 3 years.
c. If you plan on going for large homes or business (5kW+ solar system) it’s going to cost around N1.5 million and above, the monthly savings is going to stand around N100k to N150k plus monthly savings and the payback period is going to be around 2 to 4 years
After this payback period, you will be virtually enjoying free electricity for the entire lifespan of the solar system, that’s about 20 years plus of free Electricity especially if you are using lithium-ion batteries. .t
