Generating Electricity at Home in Japan

Profiting from the Sun

Thrilled to be able to run a follow-up guest post from Leonard about how his solar installation is doing. Take it away, Leonard!

For my own ego, I would like to believe that at least six of you have been eagerly waiting for my follow-up article to the guest post I wrote for Retire Japan in June of last year regarding investing in solar panels.

In this piece, I will show you the actual numbers that I collected during the first year of having the panels and how I calculated the return on investment (ROI). I will then proceed to compare it with the numbers I received when I got the estimate, share some insights I have from the data, and finally finish it off with a
collection of other thoughts/information related to the panels.

Before going into detail, to the said six or more readers, I apologize for the delay. Due to some bureaucratic red tape, my application to sell the unused electricity generated by the panels was held back a bit. That is, the panels were installed at the end of June 2023, but they only finished processing the application in September 2023, meaning the first full month of data I had was for October, the following month. As such, I had to collect data until September of this year to get a full year’s worth, run the numbers as discussed below, and finally write this article. I hope you guys find this informative!

Conclusion

For those who do not want to go through all the nitty-gritty numbers, I am starting with the conclusion. The ROI is at least 6.95%. This value comes from the full-year savings/income of at least 87,629 yen, divided by the initial cost of the solar generation system of 1,260,000 yen (no battery).

To repeat what I mentioned in the previous article, the ROI comes from a combination of having to buy less electricity (savings), and selling unused electricity generated by the panels to a utility company (income). Also, the reason why I used “at least” will be made clear further below.

Calculating the ROI

Calculating the savings

Based on our contract with the utility company, the amount we pay for electricity increases in stages (more than 15 to 120 kWh at 20.31 yen/kWh, more than 120 kWh to 300 kWh at 24.10 yen/kWh, more than 300 kWh at 27.80 yen/kWh), with a minimum charge of 377.40 yen for up to 15 kWh. For reference, the plan is called “Nattoku Denki” and the utility provider is Kansai Electric. On their website, they provide the following calculation example for using 260 kWh in one month (machine translation using Chrome’s Google Translate plug-in).

As you can see, I need to sum up ① to ⑥ to calculate the monthly fee. However, as both ⑤ and ⑥ can change, I based the ROI calculation on only ① to ④ for simplicity. You can see this below.

The column for “Fuel cost adjustment, etc. (yen)” shows the difference with the actual amount we were billed. As you can see, for all months, the adjustment led to an increase, even though the website uses the plus-minus sign “±” for ⑤ in the lowermost row. This will be significant later on.

I then calculated how much ① to ④ would have been if we did not have the panels. The numbers for “Consumed electricity (kWh)” came from the data collected using the energy monitor we purchased together with the panels.

After this, I simply subtracted the highlighted numbers on Table 1 from Table 2 to obtain how much we saved. As you can see below, for the entire year, we saved at least 31,053 yen.

Here is the reason why I am referring to this figure as “at least.” As indicated under ⑤ and ⑥ in the screenshot of Kansai Electric’s website, both ⑤ and ⑥ are also dependent on the amount of electricity consumed. As such, if we had used more electricity, it would be safe to assume that such adjustment would only go up. Moreover, as is clear from Table 1, the amount we were billed increased due to the adjustment. Therefore, as my calculations only took into account ① to ④, it would be reasonable to conclude that the value 31,053 yen is the minimum amount we saved for the sampled 12 months.

Calculating the income

This is fairly straightforward. I simply added the amounts transferred to my bank account by the utility provider. The income for selling the electricity was 56,576 yen. For your reference, the utility company bought the electricity at 16 yen/kWh.

By adding the amount saved (at least 31,053 yen) and the income (56,576 yen), we get the full-year savings/income of at least 87,629 yen, which translates to an ROI of 6.95%.

The 16 yen/kWh is only for the first ten years. Therefore, from the eleventh year onwards, I expect the income part to decrease significantly (I read somewhere that it could go down to half: 8 yen/kWh). As a result, by multiplying the calculated savings/income of 87,629 yen above by 10 years, it means that all other things being equal, we would have paid for 876,290 yen (69.5% of the total cost) by that time, and the remaining would be paid for around 6.47 years* later.

*This is calculated by dividing the income above of 56,576 yen by two to get 28,288 yen, then adding this to the savings of 31,053 yen. This results in savings/income of 59,341 yen for year 11 onwards. Then, take the remaining unpaid amount of 383,710 yen and divide it by this value to get 6.47 years.

Comparing the actual numbers with the predicted numbers

Above, you can see the difference between the actual generated electricity and the predicted amount at the time I received the estimate. Other than March, I’d say it was quite accurate. As for the predicted savings/income for one year, they estimated 83,955 yen, as compared to the calculated amount above of at least 87,629 yen, a difference of less than 5%. I think it was pretty spot on as well.

Additional analysis of the data

Here is a photo of the energy monitor showing the data from 11 September 2023 to 5 October 2024. Below is a quick translation:

Generated electricity: 5,019 kWh               Sold electricity: 3,450 kWh

Consumed electricity: 4,178 kWh               Purchased electricity: 2,609 kWh

Self-sufficiency rate: 120%

Self-consumption rate: 38%

The self-sufficiency rate is just the amount of generated electricity divided by the amount of consumed electricity. As you can see, we generated more power than what we consumed. However, as the panels only generate electricity during the day, and our power consumption is greatest at night (heating during the cold season and cooling for the hot season), only 38% of our electricity consumption was provided by the panels.

For anyone interested, below is the monthly breakdown of the above. (Note: This is the monthly breakdown from October 2023 to September 2024, which is different from the period above. As such, the total values are different.)

Those cold months with shorter days and greater electricity consumption for keeping warm really bite!

Limitation regarding the data

The data from the energy monitor cleanly divides the months, from the first day of the month to the last day of the month. However, the utility company does not. For example, for our bill in January, it could be calculated from December 4 to January 3, whereas the bill for February could be from January 4 to February 2. For this reason, the numbers from the energy monitor do not exactly match those from the utility company. However, as this goes on for all 12 months, I think the differences should balance each other out, resulting in a pretty accurate overall picture.

Additional thoughts

Phew! That’s it for the numbers. From here, I will just share some other thoughts/information in no particular order.

If we switch to all-electric for both heating and cooking, the savings would probably increase further. We plan to do this down the road when our gas stove/water heater become older and it is time to replace them.

The panels are just a little over a year old, so I can expect that down the road, their efficiency will decrease, resulting in less generated electricity per amount of sunshine. In this regard, as I mentioned in the previous article, the solar panel service provider mentioned that they had data showing that 30-year-old panels only lost 13% of their energy making capacity. Also, if electricity costs increase (i.e., the fuel cost adjustment indicated above), then this could offset the decrease in efficiency.

In the previous post, I mentioned that the panels could offer additional insulation for the top floor. Maybe they do, but in summer, it was too hot to notice the difference anyway.

I called my insurance company to tell them about the panels being added to the roof. I did not have to pay extra, but they did tell me that in the event the entire house needs to be rebuilt, the amount they will pay out may not cover the panels.

Wow, thank you so much Leonard. It’s great to get a report with your actual numbers so people have a better idea of what installing solar panels might entail, whether as part of building a house or a later renovation.

How about you? Do you have solar panels or are you considering investing in some? Please share your thoughts or questions below.