How Many Years for Solar Panels to Pay Off
Estimate the payback period of a solar PV system, plus its annual savings and 20-year net benefit, from your installation cost, annual generation, self-consumption rate, electricity price, and feed-in tariff.
Input
$
kWh
%
$/kWh
$/kWh
Result
Payback period
About 12.2 years
Calculated at an average value of $20.50 per kWh
Annual savings
$123,000.00
Installation cost
$1,500,000.00
20-year net benefit
$960,000.00
How it works
- The payback period is calculated as "installation cost ÷ annual savings." When annual savings are positive, it shows roughly how many years it takes to recover the upfront cost.
- Annual savings are figured as "annual generation × (self-consumption rate × electricity purchase price + (1 − self-consumption rate) × feed-in price)." Power used at home cuts your bill, while surplus power is valued as feed-in income.
- The self-consumption rate is the share of generated power consumed at home. A typical household is around 30–40%, but this varies widely with how much you are home and whether you have a battery.
- The purchase price is the cost per kWh of electricity you buy, and the feed-in price is the rate you are paid for power you sell. The purchase price is usually higher, so a higher self-consumption rate yields greater savings.
- The 20-year net benefit is "annual savings × 20 years − installation cost," an estimate of long-term gain. It excludes generation degradation over time, inverter replacement, and maintenance costs.
- Solar prices, electricity rates, and feed-in tariffs vary widely by country and over time. This tool is a simplified estimate and ignores rate revisions, weather-driven output changes, taxes, and subsidies. Confirm any purchase decision with installer quotes and current local programs.
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How Many Years for Solar Panels to Pay Off