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. Export treatment varies sharply by market: Great Britain uses supplier Smart Export Guarantee tariffs for eligible exports, while other markets may limit exports, apply utility-specific rules or place more value on direct daytime self-consumption. Always use the current local tariff and interconnection rules rather than a global default.
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