Guides / Costs, Payback & Monitoring
Working Out Solar Payback With Your Own Numbers
A simple way to estimate how long a solar system takes to pay for itself, using your own bills and quotes.
"How long until it pays for itself?" is the question everyone asks about solar. Prices, tariffs and rebates change all the time and differ by state, so the best answer comes from your own bills and quotes. Here's how to work it out.
1. Gather your numbers
- System cost: the full installed price from your quote, after any rebates or certificates.
- Expected yearly generation: your installer's estimate of how many kilowatt-hours (kWh) the system makes in a year.
- Import rate: what you pay per kWh for grid power, from your power bill.
- Feed-in tariff: what you're paid per kWh for power you send to the grid, from your retailer.
- Self-use: roughly how much of the solar power you'll use yourself as it's made. More use during the day means more savings.
2. Work out the yearly savings
- Solar power you use yourself × your import rate = money saved on your bill.
- Solar power you export × the feed-in tariff = money earned.
- Add the two together for your yearly savings.
Power you use yourself is usually worth much more than power you export, because import rates are usually higher than feed-in tariffs.
3. Work out the payback
Simple payback (years) = system cost ÷ yearly savings.
Example only, not real prices: a system costs $6,000 and saves $1,000 a year. $6,000 ÷ $1,000 = 6 years to pay back.
4. Off-grid sheds and workshops
If the shed has no power, compare the solar system's cost with the other options: the cost of running a cable from the house, or the fuel and servicing for a generator. The "savings" are the costs you avoid.
5. Things that change the answer
- Tariffs and feed-in rates change, sometimes yearly.
- Panels slowly make a little less power as they age.
- Batteries add cost, but let you use more of your own solar at night.
- Inverters usually need replacing before the panels do. Allow for it.
- Rebates and certificates differ by state and change over time. Check what applies to you when you get quotes.
6. Monitor it once it's running
Most inverters have an app or display that shows what the system is making. Check it now and then against what your installer expected for that time of year. A sudden drop can mean dirty panels, new shading, a tripped isolator or a fault. If you suspect a fault on the 240V side, call a licensed electrician or your installer.