Skip to content
MasterMath

Solar Panel Payback

When a solar installation pays for itself, counting what you use directly, what you export, panel degradation and rising energy prices.

Currency and number format for

Pays for itself in

—

Pays for itself in—
Saving in the first year—
A month—
Balance over 25 years—
Annualised return—
Cost after the grant—
Ignoring energy price rises—

Year by year

YearGeneratesYou useYou exportSavingCumulative

How this was worked out

    Indicative result. This is a projection built on the assumptions you enter: the rise in energy prices and the export rate are estimates, not data. Change those fields and you will see how much the answer moves.

    The formula

    saving for the year = used × price of electricity + exported × export rate

    Where it comes from

    The quick sum — cost divided by annual saving — is both too long and too short, because it ignores three things pulling in different directions. Panels lose around 0.5 % of their output every year, which stretches the payback. Electricity gets more expensive, which shortens it. And what you export is paid a good deal less than what it costs to buy, so two installations generating the same amount pay back over very different periods depending on how much is used as it is generated.

    How to work it out by hand

    1. Split the output between what you use as it is generated and what you export
    2. Multiply each part by its own price: they are not the same
    3. Subtract maintenance and you have the saving for the year
    4. Repeat with output down 0.5 % and the price of electricity up
    5. The year the cumulative saving reaches the cost is the payback

    What is worth knowing

    The field that moves the answer most is not the cost or the sunshine: it is the share you use as it is generated. Taking that from 30 to 60 % is worth more than adding half the panels again, and you get there by moving loads into the middle of the day — washing machine, dishwasher, hot water cylinder, electric car — or with a battery, although a battery has to pay for itself separately. It is also worth looking at the twenty-five-year balance and not only at the payback period: two installations that pay back at the same time can leave very different money behind them.

    Frequently asked questions

    How long do solar panels take to pay for themselves?

    With 60 % used directly and electricity rising 3 % a year, around eleven years. With 90 % used directly, considerably less.

    How much do you get paid for exporting?

    A good deal less than it costs to buy, which is why using the power directly is what pays for the installation.

    Do panels lose output over time?

    Around 0.5 % a year. After twenty-five years they still produce close to 88 % of the first year.

    How do I use more of what I generate?

    Move the big loads into the sunny hours. It is the cheapest thing you can do.