Solar Payback and ROI Calculator
When will solar panels pay for themselves? This calculator builds a 25-year cash flow from your system price, incentives, and savings. It shows your break-even year, return on investment, net present value, and internal rate of return, including loans and inverter replacement.
Your payback
Your system could pay for itself in about 9.4 years, then gain about $28,390 by year 25.
| Point | Cash position |
|---|---|
| Year 0 | -$13,000 |
| Year 1 | -$11,760 |
| Year 2 | -$10,500 |
| Year 3 | -$9,200 |
| Year 4 | -$7,860 |
| Year 5 | -$6,490 |
| Year 6 | -$5,090 |
| Year 7 | -$3,650 |
| Year 8 | -$2,170 |
| Year 9 | -$650 |
| Year 10 | $900 |
| Year 11 | $2,500 |
| Year 12 | $4,140 |
| Year 13 | $4,520 |
| Year 14 | $6,240 |
| Year 15 | $8,010 |
| Year 16 | $9,820 |
| Year 17 | $11,690 |
| Year 18 | $13,590 |
| Year 19 | $15,550 |
| Year 20 | $17,560 |
| Year 21 | $19,620 |
| Year 22 | $21,730 |
| Year 23 | $23,890 |
| Year 24 | $26,120 |
| Year 25 | $28,390 |
| If savings are | Payback (years) | Return | 25-year gain |
|---|---|---|---|
| 20% lower | 11.6 | 7.7% | $19,530 |
| As entered | 9.4 | 10.3% | $28,390 |
| 20% higher | 7.9 | 12.8% | $37,260 |
Assumptions used
- Price after incentives
- $13,000
- Panel ageing
- 0.5% a year
- Inverter replacement
- Year 13
- Starting price basis
- Before incentives, from quotes on EnergySage. Other surveys report higher prices
What if?
Save this result, change any setting, and compare.
How this is calculated
Yearly cash flow
Each year, savings rise with electricity prices and fall a little as panels age. We then remove upkeep, any loan repayments, and one inverter replacement.
Cash flow = savings × price growth × panel ageing − upkeep − loan − inverter
Payback and ROI
Payback is the point where running cash flow turns positive. ROI is the total 25-year gain divided by what you paid after incentives.
NPV and IRR
Net present value discounts future money, because money today is worth more than money later. Internal rate of return is the yearly return that brings net present value to zero, which you can compare with other investments.
Worked example: a $13,000 system
A $13,000 system saving $1,300 in its first year, with prices rising 3% a year, pays back in about 9.4 years.
Over 25 years it gains about $28,390. Its return is about 10.3% a year, and its net present value at 5% is about $8,890.
How accurate is this?
The maths is exact for your inputs, and we test it against known NPV and IRR cases. The real uncertainty is future prices and your actual savings, so we show cases with savings 20% higher and lower.
Common mistakes
- Using a salesperson's high price growth without testing a lower one
- Forgetting inverter replacement partway through the system's life
- Counting an incentive you have not yet confirmed
- Comparing payback only, when a loan changes your yearly cash flow
Limits of this tool
- Tax effects, insurance, and home value changes are not included
- Prices may fall as well as rise, and policies can change
- This is not financial advice. Speak to a licensed adviser about your own finances
What to do next
- Get a realistic price from the installation cost calculator
- Check what you may qualify for with the incentive checker
Frequently asked questions
How long does it take for solar panels to pay for themselves?
It varies with your price, savings, and incentives. In this example it takes about 9.4 years, but high electricity rates can shorten that a lot.
What is a good ROI for solar panels?
Compare the internal rate of return with what your money could earn elsewhere at similar risk, and with your loan rate if you borrow.
Does a solar loan change payback?
Yes. Interest adds to the total cost, but the upfront cost falls, so yearly cash flow can be positive sooner even when total return is lower.
How long do solar panels last?
Many panels carry 25-year performance warranties and can run longer. Inverters often need replacing sooner, so we include one replacement.