When going solar, the payback period for your panels is one of the most crucial factors to take into account. People naturally want to know when and how their investment in residential solar electricity will pay for themselves. This blog post will show you how to calculate your individual return on investment and will assist you in understanding all the aspects that go into determining the payback period for solar panels.

What Is A Solar Panel Payback Period?

Calculating how long it will take you to “break even” on your solar energy investment, the solar panel payback period is a useful tool. Consider it a calculator that might assist you in calculating when your initial solar power investment will pay for itself.

How to Calculate Your Solar Payback Period?

1. Calculate or request a quotation for the total cost of your system.

 For information on your system’s gross upfront cost, get in touch with Greenon Energy. Keep in mind that this will depend on the system’s size, the kind of equipment you require, and any add-ons like solar battery storage.

2. Factor in Governmental Rebates

These financial benefits can significantly lower your solar costs. in particular, 

Solar subsidy offered by Central Government (Residential Sector)

1KW = ₹ 14,588

2KW = ₹ 29,176

3KW = ₹ 43,764

4KW = ₹ 51,058

5KW = ₹ 58,352

6KW = ₹ 65,646

7KW = ₹ 72,940

8KW = ₹ 80,234

9KW = ₹ 87,528

10KW = ₹ 94,822

3. Include any fees or additional charges when financing solar panels. You must include in any other costs related to the loan if you’re taking out a solar loan to pay for your system.

4. Determine the amount you will save on energy by switching to solar by computing your average yearly electricity use and prices.

 Greenon energy will make every effort to design a system that suits your power needs, but there are many factors to consider, such as seasonal variations. Even so, being aware of your annual electricity costs might help you estimate your possible savings.

1. Take the annual amount you will save on electricity bills and divide it by the system’s cost (including financial incentives). 

Example: 

1KW solar power plant

 60,000 (Cost to have a solar panel system installed)

 – 14,588  (Rebate you receive)

 = 45,412  (Total Investment)

  = 10,528(Savings per year)

SOLAR PAYBACK PERIOD

= Total Investment / Savings per year = 45,412  / 10,528

= 4.3 Years SOLAR PAYBACK PERIOD

Savings in 25 years

= 2,33,909 

3KW solar power plant

 180,000 (Cost to have a solar panel system installed)

 -43,764   (Rebate you receive)

 = 136,236 (Total Investment)

  = 31,584 (Savings per year)

SOLAR PAYBACK PERIOD

= Total Investment / Savings per year = 136,236 / 31,584

= 4.3 Years SOLAR PAYBACK PERIOD

Savings in 25 years

= 7,01,729 

5KW solar power plant

 300,000 (Cost to have a solar panel system installed)

 -58,352   (Rebate you receive)

 = 241,648  (Total Investment)

  = 52640 (Savings per year)

SOLAR PAYBACK PERIOD

= Total Investment / Savings per year = 241,648 / 52640

= 4.5 Years SOLAR PAYBACK PERIOD

Savings in 25 years

=11,69,548

Calculation assumes that your electricity rates don’t go up. If they do, your savings are also going to increase, and your payback period will be shorter.

Four to five years is the most typical estimate for the average payback period for solar panels. Modern photovoltaic (PV) solar panels should have an expected lifespan of at least 25-30 years and an efficiency of at least 80%.

Some modern solar panel models have even longer lifespans. Therefore, even if your payback period is 4-5 years, you will still save money on electricity for an additional 20+ years. 

This will give you a general idea of how long it will take you to recover your initial investment. Refer to the example above of 5KW. In addition, you can consider the money you get from using your solar system each month as profit.

The best way to get an accurate assessment of your solar payback period is to connect with Greenon Energy right now!