Solar Power: How Do I Calculate My Payback Period?

There are a number of methods which can be used to calculate the payback period of solar power. This total amount of time that it would take for an investment to pay for itself can be calculated by dividing the sum of the upfront costs with the savings in power bills over a specific time period. There are two common ways that this calculation can be done, using a formula and using a simple spreadsheet.

This calculator will help you calculate your payback period with either method if you have any upfront costs as well as annualized power bill savings.

This Calculator Uses the Following Inputs:

1.Number of Months (Q) - how many months you will be saving on your electric bill.

2.Annualized Power Bill - the amount of money you will save over the Q months starting at your electric bill.

3.Upfront Costs - the cost of solar panels and other equipment needed to purchase solar power. *Initial Cost - the cost of electricity you normally use.

4.Operating Costs - the cost of maintaining your solar panels and other equipment.

Payback Period Formula: C / (Y * A) = Q where C is the cost of the equipment, Y is total power bill savings over the time period, and A is monthly power bill savings. This formula assumes that you already have electricity at home and that this amount does not change throughout this time period. Payback Period Spreadsheet: (Share Estimate) - The share estimate determines how much of your household's electricity will come solely from solar power.

This chart displays the payback period for both a fixed upfront cost and a variable upfront cost.

The people in the market for solar power are not all going to have the same experience with their system. As long as you have an operating history and you do your research, it is possible to calculate your own payback period. For example, if you have installed your solar panels during a time when they were one of the cheapest systems on the market, you may find that you can only get back half of your money at best. But if you were to locate your system during an expensive time in the market for solar power, you may be able to get back over three-quarters of your money at best. This is why it is important to do your research before you buy a system.

The payback period for solar power is a very important figure to look into when deciding whether or not the cost of installing solar panels is worth it. With this information, you will know exactly how much money you are going to save over the long term and whether or not your investment was worth it.

Conclusion

A solar calculator can help a consumer of solar panels to end up saving money in the long term. The important thing to know when calculating your payback period is that price should not be the only thing you look at. You need to focus on the quality of the panels you buy, as well as how much solar power they will generate over time. What is also important is what prices are going to be like in your area, so you can have an idea of whether or not these panels are going to provide good returns for you over time.