Simple payback is useful—but incomplete
Solar payback calculator
Simple payback is not a financial forecast. It excludes financing, degradation, replacement costs, tax treatment, inflation and changing electricity tariffs.
Simple payback divides net annual savings into initial cost. It is easy to understand, but it does not model financing cost, inflation, tariff changes, equipment replacement, degradation, tax incentives or the time value of money.
Use local tariff and self-consumption assumptions
A payback estimate is only as useful as the electricity-price and bill-offset assumptions behind it. This matters especially in markets where exported solar energy receives little or no credit. Indonesia’s current rooftop-PV framework, for example, removed the previous export-import crediting mechanism, making daytime self-consumption especially important for many projects.
What to model for a more serious business case
- Year-by-year energy production
- Expected self-consumption and export treatment
- Tariff escalation assumptions
- Battery replacement or major service
- Financing and cost of capital
- Tax treatment and incentives
- Residual value
Primary sources and further reading
Melnti uses primary or institutional sources where they are available. Always confirm current rules, tariffs and equipment documentation before purchasing.