Online Tool Store
· 4 min read
How to Estimate Solar Payback Honestly
Heshan Fernando
Co-founder & COO
An installer quotes a system generating 5,200 kWh a year and shows a payback of six years. The number is arithmetically correct and rests on one assumption that determines nearly the whole answer.
That assumption is self-consumption, and most household estimates are optimistic about it.
Two very different values per unit
Every kilowatt-hour your panels produce goes one of two places.
Used at home, displacing a unit you’d have bought. Worth the full import rate.
Exported to the grid, earning whatever your export tariff pays. Typically a fraction of the import rate.
With an import rate of 62 and an export rate of 22, a unit consumed at home is worth nearly three times one exported. So the split between the two matters more than total generation does.
annual saving = generation × self-consumption% × import rate + generation × (1 − self-consumption%) × export rate
At 5,200 kWh and 55% self-consumption: about 177,000 saved on imports plus 51,000 from export. Drop self-consumption to 30% and the total falls substantially — same panels, same sunshine, considerably worse return.
Why self-consumption is usually overestimated
Solar generation peaks in the middle of the day. Household consumption peaks in the morning and evening. Those curves don’t overlap well.
A household where everyone leaves at eight and returns at six self-consumes a modest share — often 30% or less without intervention. Working from home, an electric vehicle charged during the day, or a heat pump running on a daytime schedule all raise it substantially.
A battery raises it too, by storing midday surplus for evening use. It also costs money, and whether that nets out depends on the gap between import and export rates and on the battery price. Model it as a separate scenario rather than assuming it improves the case.
| Household pattern | Typical self-consumption |
|---|---|
| Out all day, no battery | Low — often 30% or less |
| Someone home during the day | Moderate |
| EV charged daytime, or heat pump | Higher |
| Battery installed | Substantially higher — at a cost |
The assumptions you can’t know
Electricity prices over a decade. The single largest uncertainty in any payback figure, and entirely unknowable. Rising prices shorten payback; falling ones lengthen it.
Export tariff terms. These change, and a favourable rate today isn’t guaranteed for the system’s life.
Degradation. Panels lose output slowly over decades. Real and small relative to price uncertainty.
Generation estimate. Depends on orientation, pitch, shading and local climate. A site-specific estimate is meaningfully better than a regional average, and shading in particular is often underestimated in quotes.
Given all that, a payback figure should be a range, not a number — and the honest version says which assumption it’s most sensitive to.
Common mistakes to avoid
- Accepting a quoted self-consumption figure without checking it against how your household actually uses electricity.
- Treating export earnings as equivalent to import savings.
- Assuming a battery improves the economics without modelling it separately.
- Ignoring shading, which affects output disproportionately on some panel configurations.
- Presenting a single payback year rather than a range across price scenarios.
How to do it with Solar Payback Calculator
The Solar Payback Calculator separates self-consumed and exported units.
- Enter installed cost after any grants, and a realistic site-specific generation figure.
- Set self-consumption honestly, based on when your household actually uses power.
- Enter both the import and export rates — they’re different numbers doing different work.
- Run it again at a lower self-consumption and a different price assumption, and quote the range.
Other energy calculators are in the tools directory.
Frequently asked questions
What self-consumption share is realistic?
Without a battery or daytime occupancy, often 30-50% for a household, because generation peaks when nobody is home. Working from home, an EV, or a battery raises it substantially.
Does a battery improve payback?
It raises self-consumption and adds cost, and whether that nets out depends on the gap between import and export rates and on battery price. Model it as a separate scenario.
What about panel degradation?
Output declines slowly over decades, lengthening payback slightly. Rate changes over the same period matter far more and are much less predictable.
Final thought
Ask what self-consumption the quote assumes, then check it against when your house actually uses electricity. That one number moves the answer more than anything else on the page.