Solar Payback and Return-on-Investment Calculator
A solar system is an investment, and it deserves investment arithmetic — not just a payback guess. Enter the system size and cost, the site yield, how much of the energy you actually use on site, and your tariff, and this calculator runs a full multi-year cash flow with panel degradation, tariff escalation and O+M costs to return the annual savings, simple and discounted payback, net present value, internal rate of return and estimated lifetime savings.
Size the system first with the Solar PV Calculator, and get your exact effective tariff from the Electricity Bill Calculator.
Investment summary CALC-11 · REV 2026-07
| Year-1 generation | – |
|---|---|
| Year-1 annual savings (net of O+M) | – |
| Simple payback | – |
| Discounted payback | – |
| Net present value (NPV) | – |
| Internal rate of return (IRR) | – |
| Lifetime savings (nominal, net) | – |
| Average cost of solar energy (LCOE-style) | – |
Estimate only. Real returns depend on the measured load profile (self-consumption is the single most sensitive input), tariff decisions, financing structure, and system performance. A bankable proposal needs a metered load study and a site-specific yield simulation — both part of our design service.
How this calculator works
- The cash-flow model. Each year’s generation is the system size times the specific yield, reduced by panel degradation (typically 0.5%/year). Energy used on site is valued at your offset tariff; the exported remainder at the export rate — zero unless a net-metering or export agreement exists. Savings escalate with the tariff; O+M (typically 1.5% of capex per year) escalates alongside and is deducted.
- Payback. Simple payback divides the capex by year-1 net savings. Discounted payback finds where the cumulative present value of savings crosses the capex — the honest version, at your cost of capital.
- NPV and IRR. The net present value discounts every year’s cash flow at your discount rate (default 12%, a typical Kenyan cost of capital) and subtracts the capex — positive means the system beats putting the money to work elsewhere. The internal rate of return is the discount rate at which the NPV is exactly zero, solved numerically — compare it directly to a bank deposit or loan rate.
- The sensitivity that matters. Self-consumption dominates every result: a kWh used on site earns the full tariff, an exported one may earn nothing. The calculator flags unpaid export and the design implication — right-size the array to the daytime load, or shift loads into the solar window.
Assumptions and limits
- Cash purchase assumed; financed projects need the loan schedule in the model (coming in a later revision).
- The LCOE-style figure is a simple undiscounted lifetime-cost-per-kWh for intuition, not a bankable LCOE.
- Battery storage economics (deep-cycle replacement, backup value during outages) are a separate assessment.
Want a bankable proposal with a metered load study and site yield simulation? See our consultancy services, or learn the method in a training program.