$25k cost, $6k incentive, $1.5k savings
- Net = $19k
- Simple payback ≈ 12.7 years
finance calculator
Solar Payback Calculator
Estimate solar net cost, payback period, and 10-year savings with degradation.
Results
- Net cost
- $19,000 USD
- Simple payback (years)
- 12.67
- Estimated payback with degradation
- 13.05
- 10-year savings
- $41,885 USD
How to use this calculator
- Enter your system cost and incentives or tax credits.
- Enter expected annual bill savings and panel degradation rate.
- Review net cost, simple payback, degradation-adjusted payback, and 10-year savings.
Inputs explained
- System cost
- Gross project cost before incentives.
- Incentives/rebates
- Upfront credits, rebates, or tax incentives that reduce net cost.
- Annual bill savings
- Year-one savings from offsetting utility usage (add SRECs/net metering if applicable).
- Panel degradation
- Annual performance loss; many panels degrade ~0.5% per year.
How it works
Net cost = system cost − incentives.
Simple payback = net cost ÷ annual savings.
Estimated payback models gradual performance loss with a yearly degradation factor.
Formula
Net cost = Cost − Incentives Payback = Net cost / Annual savings
When to use it
- Comparing installer quotes with different incentive amounts.
- Testing sensitivity to electricity price changes by adjusting annual savings.
- Communicating payback timelines to homeowners or stakeholders.
Tips & cautions
- Include any performance-based incentives (SRECs, net metering credits) in annual savings if they’re recurring.
- If utility rates are rising, increase annual savings to approximate escalation.
- Use conservative degradation (0.5–1%) to avoid overestimating long-term output.
- Simple cash model—does not include loan interest, inverter replacement, or maintenance costs.
- Assumes constant annual savings except for degradation; real bills vary seasonally and by TOU rates.
- Tax credit timing and eligibility vary; consult a tax professional for specifics.
Worked examples
$18k cost, $2k incentive, $1.4k savings
- Net = $16k
- Simple payback ≈ 11.4 years
Deep dive
This solar payback calculator shows net cost after incentives, simple payback, degradation-adjusted payback, and 10-year savings. Enter system cost, credits, annual savings, and panel degradation to see how long your array takes to pay for itself.
Use it to compare quotes, factor in incentives, and sanity-check ROI before signing a contract. Financing costs, maintenance, and utility rate changes should be layered on separately for a full pro forma.
FAQs
- Does this include net metering or SRECs?
- No. Add those to annual savings if applicable in your area.
- Can I include electricity price escalation?
- Not yet. Increase annual savings to reflect rising rates.
- What degradation rate should I use?
- Many panels degrade around 0.5%–1% per year. Use your panel spec sheet if available.
- Does this model financing or interest?
- No. It’s a cash-style view. Loan payments and interest need a financing calculator or spreadsheet.
- Are maintenance and inverter replacements included?
- They are not. Include periodic maintenance or equipment replacements separately for a full lifecycle cost.
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Solar economics depend on local rates, incentives, and hardware. Validate with a solar pro.