We are now 75% of the way through our Solar PV install. The answer may be simple?
Payback Times are not reliable? They may be longer or shorter!
Sales reps will always tell you what they need you to hear? Have they guaranteed the payback time in the contract - no way!
Some of us can demonstrate great paybacks and returns. It might help where any of us do provide hard data if the actual feed in tariff and Retailer/State is appended as offers vary around the country.
Optional Content follows:
If you had a choice between
A) putting $5k under the bed for a rainy day
B) putting $5k into the bank for a few percent interest and paying tax on the earnings
C) spending $5k on Solar PV system and putting the savings on what the electricity bill would be each quarter under the bed (no tax payable - at present on the savings/income)
How much would you have in the bank or under the bed in five years time?
If the money from your solar PV is more than $5k you are ahead and have paid no tax on it which is even better. The past does not predict the future exactly, so it may take a little longer or a little less time.
No discounted cash flow, no need to forecast changing inputs and variables such as CPI, or guessing future electricity pricing etc etc You do need to wait five years for an answer though but it will be exact.
If you must - play with fancy mathematics with integral and differential calculus to optimise the rate of return or assess risk options with a Monte Carlo Analysis - please, not here, or at least reduce it to simpler 1/S terms I can follow?
I did have some fun with the maths and decided the simplest approach was to take what the sales rep promised as a payback and half the earnings or double the payback period. This was a simple statistical review based on the fact that no two sales rep could provide the same answer to the same problem.
The discussion of traditional accounting practices to determine a NPV to compare the Stay in Business (do nothing) options vs the investment decision is perhaps then less relevant. Other than as a caution that the estimates of payback times are not reliable and probably longer than has been suggested.