Solar Payback Calculator
Find how long a solar system takes to pay for itself.
Please note: Estimates for planning only. Actual solar output depends on your latitude, roof orientation, shading, weather and equipment. Get a site-specific assessment and quotes before committing.
What the Solar Payback Calculator does
Payback is the point where accumulated savings equal the net cost after incentives. It is not a simple division, because electricity prices rise while panel output slowly falls — so each year saves a different amount and the crossing point has to be walked year by year.
Formula
Net cost = System cost − IncentivesBlended rate = Import × Self-consumption + Export × (1 − Self-consumption)Year n saving = Generation × (1 − Degradation)^(n−1) × Blended rate × (1 + Inflation)^(n−1) − MaintenancePayback = the year cumulative savings first exceed net cost
Inputs explained
| Input | Unit | Required | Notes |
|---|---|---|---|
| Total system cost | selected currency | Yes | Accepts more than 0. |
| Rebates and tax credits | selected currency | Optional | Accepts 0 or more. |
| Annual generation | kWh | Yes | Accepts more than 0. |
| Import rate per kWh | selected currency | Yes | Accepts more than 0. |
| Export rate per kWh | selected currency | Yes | Accepts 0 or more. |
| Self-consumption share | % | Yes | — |
| Annual electricity price rise | % | Yes | — |
| Annual panel degradation | % | Yes | — |
| Annual maintenance | selected currency | Optional | Accepts 0 or more. |
| Currency | one of 10 options | Optional | — |
How to use it
- Choose Currency.
- Enter Total system cost, Annual generation, Import rate per kWh and Export rate per kWh and 3 more.
- Optionally add Rebates and tax credits and Annual maintenance.
- Select Calculate.
Worked example
A $14,000 system with $4,000 incentives generating 7,884 kWh, 0.28 import, 0.08 export, 40% self-use, 4% inflation.
- Cost
- 14000
- Incentives
- 4000
- Generation
- 7884
- Self-use
- 40
Net cost $10,000, blended rate $0.16/kWh, year 1 saving $1,261 — payback in about 7 years.
Reading the result
- Payback measures when you get your money back, not how good the investment was — that is what the 25-year IRR is for. A 7-year payback with 18 more years of panel life behind it is a materially better investment than the payback figure alone suggests.
- "Cost per kW" strips out your own usage and rates, so it is the one figure here worth comparing against other quoted system prices — the payback period itself is not, since it depends heavily on your specific tariffs and self-consumption.
Assumptions and limitations
- Electricity price inflation and panel degradation are both modelled as smooth, constant annual rates for up to 40 years — real utility pricing and panel output do not move in a straight line.
- Self-consumption share is held constant for the entire period, though it commonly changes over a system's life — adding an EV, a battery, or a change in occupancy all shift how much generated power is used directly versus exported.
Common mistakes
- Comparing payback periods between two systems that assume different self-consumption shares. A system credited with high self-consumption (valued at the import rate) shows a much shorter payback than one exporting most of its output at the lower export rate, even with identical hardware — the assumption is often driving the difference, not the panels.
- Treating the 25-year IRR as guaranteed rather than conditional on the entered inflation rate. If electricity prices stay flat instead of rising at the assumed rate, both payback and IRR are meaningfully worse than shown.
Frequently asked questions
What counts as a good payback period?
Under 10 years is strong given a 25-year panel life. Beyond 15 years the case depends heavily on assumptions about future price rises.
Should I include inverter replacement?
Yes, for a realistic figure. Add an annualised allowance to maintenance — a $1,500 inverter at year 13 is roughly $115 a year.