What is the payback period on a renewable energy investment?
The payback period can vary widely depending on the technology, and the availability of grants and tax incentives. It also depends on the stability of utility energy prices. Most experts use a conservative 5% yearly inflation rate for utility electric rates. Actual rate increases have at times been much higher. For example, utility inflation rate in California has averaged 6.7% over the last 30 years. Ohio increases have varied widely from year to year and company to company, at times exceeding 10%. Using a 5% annual utility inflation rate, a residential solar PV system that qualifies for a state grant and the federal tax credit, would pay for itself in approximately 16 to19 years. A commercial solar PV system has a much faster payback period because the 30% federal tax credit is not capped, and MACRS accelerated depreciation can be applied to the capital investment. This can result in a payback for some commercial solar PV systems of under 7 years! A large wind generator in the right
