Solar Payback Calculator

Building a solar payback estimate

Use installed cash cost before financing, then subtract incentives you reasonably expect. Annual production should come from a site-specific model. Use the actual value of offset or exported energy under your utility rules.

Formula and methodology

Net cost is installation cost − incentives. First-year savings are production × rate − maintenance. Simple payback divides net cost by first-year savings. Ten- and twenty-year net savings sum escalated annual energy value, subtract maintenance, then subtract net cost.

Worked example

A $24,000 system with $7,200 incentives costs $16,800 net. Producing 10,000 kWh at $0.18 with $100 maintenance saves $1,700 in year one. Simple payback is about 9.9 years. With no escalation, 20-year net savings are about $17,200.

Assumptions and limitations

These estimates are not investment guarantees. Production degradation, inverter replacement, financing, taxes, opportunity cost, changing export rules, outages, and incentive eligibility are excluded. Simple payback ignores the time value of money.