Comparing energy payback and simple payback period for solar photovoltaic systems

Abstract

Installing a solar photovoltaic (PV) array is both an environmental and a financial decision. The financial arguments often take priority over the environmental because installing solar is capital-intensive. The Simple Payback period (SPB) is often assessed prior to the adoption of solar PV at a residence or a business. Although it better describes the value of solar PV electricity in terms of sustainability, the Energy Payback period (EPB) is seldom used to gauge the merits of an installation. Using published estimates of embodied energies, EPB was calculated for four solar PV plants utilizing crystalline-Si technology: three being actual commercial installations located in the northeastern U.S., and a fourth installation based on a simulated 20-kilowatt roof-mounted system, in Wrocław, Poland. Simple Payback was calculated based on initial capital cost, and on the availability of avoided electricity costs based on net-metering tariffs, which at present in the U.S. are 1:1 credit ratio, and in Poland is 1:0.7 credit ratio. For all projects, the EPB time was estimated at between 1.9 and 2.6 years. In contrast, the SPB for installed systems in the northeastern U.S. ranged from 13.3 to 14.6 years, and was estimated at 13.5 years for the example system in Lower Silesia, Poland. The comparison between SPB and EPB shows a disparity between motivational time frames, in which the wait for financial return is considerably longer than the wait for net energy harvest and the start of sustainable power production.