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For many South Africans, investing in a solar system is an exciting step toward self-sufficiency and reducing electricity bills. With Eskom tariffs set to increase by 12.7% as of 1 April 2025, more households are expected to explore solar solutions.
This upcoming tariff hike means more South Africans will consider installing solar panels to supplement their monthly electricity usage. But the big question remains: how long will it take to repay your investment?
Defining Solar ROI
Before diving into the numbers, it’s essential to understand what ROI (Return on Investment) means in the context of solar.
In simple terms, Solar ROI refers to the time it takes for the savings on your energy bill to match the upfront installation costs.
Once your savings equal your initial cost, you’ve reached your payback period, and every cent saved afterward is pure return.
Key Metrics to Measure Solar ROI:
To calculate or track your ROI effectively, here are some key metrics to consider:
Initial Investment
This term refers to the total cost of the installation, including panels, inverters, batteries, installation, and permits.
Annual Energy Savings
Comparing year-on-year electricity usage, you will get an idea of how much you’ve been able to reduce your energy bill.
Payback Period
When working out your ROI status, you need to work out the time it will take for your savings to equal your initial investment.
Net Savings Over System Life
Your home’s solar panels often come with a warranty for up to 20 years. Usually, the reason to purchase new solar panels is simply to replace an outdated unit.
However, when referring to net savings over a system’s life, take the total savings over 25–30 years minus any maintenance or replacement costs.
Example ROI in Action
Let’s say you install a solar system for R150,000.
Each year, you save R20,000 on your electricity bill. After 7.5 years, you’ve completely covered the cost of the system; everything you save after that is pure ROI.
Now that we know how to crunch the numbers to review your system’s ROI roughly, what factors will impact your ROI?
Key Factors That Impact Solar ROI
As you can imagine, several variables will affect how fact you can see a return on your investment. These factors include the following:
Installation Costs
The most significant expense with a solar system is the initial cost of purchasing the parts and installation.
As we’ve mentioned, these initial investments include:
- Solar panels,
- Inverters,
- Batteries,
- Wiring
- Conduit piping
- And labour
After installing your solar system, there are minimal upkeep and maintenance costs.
Electricity Rates
The higher your current electricity rate, the more you save each month with solar. With electricity rates being increased for the next few years, you should see an increase on your annual savings.
Government or Municipal Incentive
Currently, there are a few controversial proposals for increasing electricity rates to solar system owners.
These proposals mean that some solar owners would instead remain off-grid, avoiding this headache.
While some municipalities have started an incentive program to sell power back into the grid, we must see if it’s worth the effort.
System Size
As you can imagine, larger systems generate more power, allowing you to create more power. However, they do come with a more significant upfront cost.
Those wanting to start small can install new parts in their system when they have the capital.
Now that we’ve gone through the factors, are there other benefits of installing a solar system?
Bonus Benefits
There are multiple additional benefits of installing a solar system to your home. Which include the following:
Increased Property Value
Evidence from real estate agents and bond originators suggest that homes with solar systems can increase property value by 3-8%.
As a quick example: If your home is worth R2 million, a 5% solar premium = R100,000
That’s roughly the cost of the solar system itself.
Protection from Tariff Hikes
The National Energy Regulator of South Africa (NERSA) chairperson Thembani Bukula announced that the Energy Regulator approved increases of 5.36% and 6.19% for Eskom’s 2026/27 and 2027/28 financial years.
Solar users are less affected by rising electricity prices.
Solar system owners also protect themselves from load-shedding.
Monthly Savings
Depending on your usage, a solar system can reduce your Eskom bill by 50–90%, especially if paired with battery storage and good sunlight exposure.
If we crunch the numbers:
- Typical monthly bill (pre-solar): R2,500
- Post-solar bill: R500 – R1,250
- Monthly savings: R1,250 – R2,000
- Annual savings: R15,000 – R24,000
If you’re ready to recoup some savings from a solar investment, please contact us to speak to a consultant.