Calculation of payback for photovoltaic panels

To calculate your solar payback period, you simply divide the cost of installing your system by the amount of money you’ll save each year.

Here's a simple way to calculate the payback period for solar power. Take the total system cost and divide it by the estimated annual savings on electricity costs.

The simplest way to model the payback period is to divide the project’s costs by the expected annual production number offered by the calculator.

Check out this example to see the calculations in action:Combined Costs: $20,000 System - $6,000 Solar Tax Credits = $14,000 Solar tax credits are subtracted to get an accurate starting number. number.Annual Benefits: $120 Monthly Electricity Bill Savings X 12 Months = $1,440 . Formula: $14,000/$1,440 = 9.7 years .

Calculation of payback for photovoltaic panels [PDF] Chat with us

6 FAQs about [Calculation of payback for photovoltaic panels]

How do I calculate my solar payback period?

Your electricity use and cost, the cost of solar, and your access to solar incentives all impact your solar payback period. To calculate your solar payback period, you simply divide the cost of installing your system by the amount of money you’ll save each year.

What is a solar panel payback period?

"Solar panel payback period" is the amount of time it’ll take you to completely pay off your solar power system through savings on your electric bill. It is calculated by taking the total cost to install the system, then subtracting solar incentives and/or rebates, and monthly electric bill savings until the total cost has been paid off.

What factors affect the payback period of a solar project?

The most accurate payback period will also take into account external factors, such as the long-term trend for electric rates to increase and the degradation of your solar panels production over time. Consider a 6.4kw solar project scheduled to be installed on a sunny site in eastern Massachusetts.

What happens if I reach my solar payback period?

Your savings can go towards paying off your system, and once you reach your payback period, those savings will go straight into your pocket for the full lifetime of the system! What factors impact your solar payback period?

How do I know if my solar payback period is accurate?

It’s important to weigh IRR carefully to ensure the most prudent decision. The best way to get an accurate assessment of your solar payback period is to connect with a solar provider near you and request an estimate. Get started below to connect with one of our preferred partners.

Does a solar panel system pay for itself?

It is at this point that you might say the solar panel system has “paid for itself.” Keep in mind that there are a number of basic determinants that go into calculating solar payback periods, including installation costs, interest rates if you’re taking out a solar loan, applicable tax credits and solar rebates, and energy bill savings.

Calculation of payback for photovoltaic panels