How is solar payback period calculated?

Solar payback periods don't need to be a black box. Calculate your own!

One of the most common questions we encounter at DIY Solar is, "How long will it take to recoup my solar investment?" This period is known as the Solar Payback Period. Let's dive into how it's calculated.

What is the Solar Payback Period?

The Solar Payback Period is the time it takes for the savings from your solar energy system to equal the initial investment cost. In simpler terms, it's when your solar panels have "paid for themselves."

Factors Influencing the Payback Period:

  1. Initial Installation Costs: This includes the price of the panels, inverters, labor, permits, and any other associated costs.
  2. Government Incentives and Tax Credits: Many governments offer incentives to promote solar energy adoption, which can significantly reduce your initial costs.
  3. Monthly Energy Savings: The amount you save on your electricity bill by using solar energy.
  4. Energy Price Inflation: As energy prices rise, your savings increase, potentially shortening your payback period.

Calculating the Payback Period:

To determine your Solar Payback Period, follow this simple formula:

Solar Payback Period = (Total Installation Costs - Government Incentives) / (Annual Energy Savings + Annual Energy Price Inflation)

Why It Matters:

Understanding your Solar Payback Period helps in making an informed decision about your solar investment. It gives a clear picture of when you can expect to start enjoying "free" energy, making the transition to solar even more appealing.

What Is a "Good" Payback Period?

Here's how we see it:

Less than 6 years = great payback period

Between 6 and 8 years = acceptable payback period

Between 8 and 10 years = not great payback period

Over 10 years = are you f*^&$# kidding me?!

Why DIY Solar?

Our average customer has a payback period of 5.5 years!

We make this possible by getting you solar for an actually affordable cost. We cut out the door-to-door solar sales bros and other middlemen that make solar expensive, passing the savings to you.

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