China is manufacturing solar panels at a scale that has transformed the economics of the global market. High-efficiency panels leaving China are currently priced at roughly eleven cents per watt. Some domestic Chinese prices are even lower.

That sounds extraordinarily cheap. But the panel is only one component of a solar installation.

The proper analysis begins with the building’s hourly electrical load, not its annual utility bill.

Two buildings can consume the same amount of electricity annually and have very different solar economics. A warehouse operating primarily during daylight hours may consume solar power as it is generated. An apartment building may experience its highest common-area loads during the evening, after solar production has declined.

Electricity consumed directly inside the building is usually more valuable than electricity exported to the grid. Export compensation can be materially lower than the retail price, depending on the utility tariff.

So, is a ten-year break-even compelling?

Usually, not by itself.

A ten-year payback represents an approximate unlevered return of ten percent before degradation, maintenance, equipment replacement and execution risk. It may still make sense for an owner with a long holding period, a newly replaced roof, strong tax benefits and confidence that the building will remain occupied.

A five-year break-even is different. That implies roughly a twenty-percent simple return before considering residual value. For a durable system producing predictable savings, that can be highly attractive.

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