System Payback

System Payback

The payback or breakeven period is a measure of how long it will take to re-coup enough savings to offset the initial investment in a solar power system. Most systems will have a payback period between 3 to 7 years.

To calculate the system payback, divide the total cost by the annual utility bill savings. Remember to first subtract any incentives, tax credits or rebates from the total cost to arrive at a Net Cost.

For example, a recent 9.2kW SolarWorld system had a cost of $14,439 and annual utility savings of $3,114.

First, subtract the 30% Federal income tax credit for a Net Cost of $10,045.

Next, divide the Net Cost by $3,114 annual utility savings.

The payback period is 3.23 years. That is very fast; the initial investment will be recovered in 3.23 years. After that, the system will continue to deliver utility savings for 25-years or longer.

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