A Practical guide to analyzing the financial viability of a solar solution compared to a generator
Daily, monthly and yearly fuel consumption calculation based on prices in July 2024:
A 5kva Firman generator has a 20-litre tank that could last 12 hours at 50% load. If the generator is used for 8 hours daily, we want to calculate how much fuel it will cost in a year.
If 20 litres of fuel are used for 8 hours per day, we can calculate the daily fuel consumption as follows:
The generator's tank holds 20 litres of fuel. At half power, it runs for 12 hours. We can figure out how much fuel it uses every hour.
Fuel consumption per hour = 20 liters / 12 hours = 1.67 liters/hour
To determine how much fuel is used in 8 hours, multiply the hourly fuel use by 8.
Fuel consumption for 8 hours = 1.67 liters/hour * 8 hours = 13.36 liters
Now, we can figure out the fuel cost using the right amount of fuel used.
Fuel consumption for 8 hours Price per liter = 13.36 liters ₦700/liter
Fuel cost per day = 13.36 liters * ₦700/liter = ₦9,352
Fuel cost per month = ₦9,352 * 30 = ₦280,560
Fuel cost per year = ₦280,560 * 12 = ₦3,366,720
Running the generator for 8 hours a day will cost around ₦9,352. This adds up to about ₦280,560 each month and ₦3,366,720 every year.
Cost of a 5,500-watt Solar Panel Calculation:
First, find the Cost of one solar panel (550W). Then, multiply that cost by the number of panels needed to reach 5,500W. This gives you the total cost of the system.
1 panel = 550W
10 panels = 5,500W
Price per panel = ₦168,500
Cost of 10 panels = 10* ₦168,500 = ₦1,685,000
To produce 5,500 watts of power, you'll need ten solar panels. Each panel costs ₦168,500, so the total cost is ₦1,685,000.
Cost of the 30 kWh Firman 10 wall:
Add the prices of the three units of 10 kW Firman 10 wall inverter batteries to find the Cost of the 30 kWh battery.
Total cost = 3 * ₦2,450,000
Total cost = ₦7,350,000
Cost of the 5kW Transformer Hybrid Inverter in Sumec Plaza:
A 5kw Transformerless Hybrid inverter in Sumec Plaza is sold for ₦519,500.
Total Cost of the Entire System Calculation:
To find the total cost, add up the prices of these items:
- 5kW Transformerless Hybrid inverter
- 5,500-watt solar panel
- Three units of 10 kWh Firman 10 wall
Cost of 5kW Transformerless Hybrid inverter: ₦519,500
Cost of 5,500-watt solar panel: ₦1,685,000
Cost of Firman Zero F Lithium Inverter Battery: ₦7,350,000
Total cost = ₦519,500 + ₦1,685,000 + ₦7,350,000
Total cost = 9,554,500.
The solar system, with panels, inverter, and battery, costs about ₦9,554,500. This price doesn't cover installation, delivery, or extra needed parts.
Payback Period Calculation:
Compare the generator's yearly Cost to the solar system's price. This shows how long it takes to make your money back on the solar system.
The annual Cost of using the generator = ₦3,366,720
The cost of the solar system = ₦9,554,500.
To find the payback period, we divide the Cost of the solar system by the annual Cost of using the generator:
Payback period = Cost of solar system / Annual Cost of generator
Payback period = ₦9,554,500 / ₦3,366,720
Payback period ≈ 2.83 years
Therefore, the solar system should pay for itself in about two years and ten months.
Solar looks even better than the numbers show when you think about other things.
- We assume that the decision-maker already has a generator. He's thinking about solar or a generator. A generator costs money upfront and needs fuel. This means solar will pay for itself even faster.
- We have assumed the Cost of generator maintenance is zero. This is not possible. The generator runs 8 hours daily so it will need regular maintenance. This might be monthly or even more often. Maintenance costs money.
- Assuming the decision maker has a load of about 4kwh, the generator can only provide power for 8 hours. The solar solution powers your home for 8 hours, usually from 9 a.m. to 5 p.m. A battery then provides power for another 7-8 hours. This means you have power for up to 16 hours daily, twice as long as the generator.
- Fuel costs are expected to increase as petrol prices increase. Diesel is even more expensive when you factor in fuel and maintenance costs. In contrast, solar panels last 30 years, lithium batteries last 10 to 15 years, and inverters last for seven years.
Solar power is an excellent option for backup or off-grid use. The numbers clearly show this. Before deciding, talk to an expert. This example gives you an idea based on July 2024 prices. You can always reach out to us for advice and recommendations. Solar power is good for the environment. It can also save you money in the long run. Compared to generators, solar power can pay for itself many times over.