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Free Tool

Solar Payback Period Calculator

See exactly when your solar system starts generating pure profit, with tariff inflation and panel degradation modeled in.

System & tariff inputs

Use round numbers from your quote and bill.

System Size

1 kW3 kW20 kW

Annual Generation

1,000 kWh4,500 kWh30,000 kWh

System Cost (before subsidy)

₹50,000₹1,80,000₹20,00,000

Subsidy

₹0₹78,000₹2,00,000

Grid Tariff (current)

Annual Tariff Inflation

2%5%10%

Your financial picture

Compounded Payback

3.1 yr

With tariff inflation

Simple Payback

3.2 yr

Year-1 cashflow only

Net Investment

₹1,02,000

After subsidy

25-Year ROI

1321%

₹14,48,961 lifetime savings

Cumulative savings over 25 years

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How to calculate solar payback period

Step-by-step guide to computing simple and compounded payback with 25-year ROI.

Enter your system size
Pick your planned kW. Most UP homes go for 2-5 kW.
Add system cost and subsidy
From your installer's quote. PM Surya Ghar: ₹30k/₹60k/₹78k, UP state: up to ₹30k.
Enter annual generation
UP average = 1,450-1,500 kWh/kW/year. Multiply by your kW.
Add your current tariff
Blended rate from your last electricity bill. UP residential average: ₹7-8/unit.
Set tariff inflation
UP historical: 4-6% annual rise. Use 5% as a middle-ground assumption.
Review payback
Simple payback = no tariff inflation. Compounded = realistic. ROI = 25-year lifetime return.

Payback is the single best metric for solar investment

EMI, monthly savings, and CO₂ numbers are all useful — but payback is the number that answers the question “when does my solar system start paying me back?”. For most UP homes with PM Surya Ghar subsidy, the answer is 3.5-5 years on compounded payback. After that, every unit generated is pure profit for the next 20 years.

Typical payback by system size (UP, 2026)

System	Net Cost	Annual Savings	Simple Payback	25-yr Savings
2 kW	₹60,000	₹22,000	2.7 yrs	₹6.5 L
3 kW	₹1,00,000	₹33,000	3.0 yrs	₹9.8 L
5 kW	₹1,92,000	₹56,000	3.4 yrs	₹16.6 L
10 kW	₹4,92,000	₹1.13 L	4.4 yrs	₹33.5 L

Payback is one of four views — cross-check with LCOE for true ₹/kWh cost, EMI if financing, the Subsidy Calculator for exact PM Surya Ghar amount, and net metering savings for the full monthly-bill picture.

Frequently Asked Questions

What is the payback period for solar panels in India?

For a residential rooftop system in UP with PM Surya Ghar subsidy, simple payback is typically 4-6 years. Compounded payback (accounting for 5% annual tariff inflation) drops to 3.5-5 years. After payback, the next 20 years of generation are essentially free electricity.

What's the difference between simple and compounded payback?

Simple payback divides your net investment by Year-1 savings, assuming flat tariffs. Compounded payback accounts for the real-world fact that grid tariffs rise 4-6% per year — making your solar system pay back faster each year.

What is the 25-year ROI on solar?

For a ₹3 kW system in UP (net ₹1-1.1 lakh after subsidy), total 25-year savings at ₹7.5/unit with 5% tariff inflation comes to ₹8-10 lakh. That's an ROI of 700-900%, far better than any bank deposit or market-linked investment.

Does this calculator account for panel degradation?

Yes. We assume 0.5% annual degradation (industry average for Tier-1 panels). Over 25 years, output drops to ~88% of Year-1 levels. This is already built into the calculator.

Should I include inverter replacement in payback?

Yes, and the calculator does. A typical inverter lasts 10-12 years. Replacement cost is ₹20-35k for a 3-5 kW inverter. This is modeled in Year 12.

What discount rate should I use?

Your personal opportunity cost of capital. Conservative: 6-7% (bank FD). Moderate: 8-10% (equity average). Aggressive: 12%+. We use 7% by default as a balanced assumption.

Is financing solar via EMI still profitable?

Yes, even with bank loans at 9-10% p.a. Solar savings exceed EMI in most cases from month one, especially with PM Surya Ghar subsidy reducing loan size. Check our Solar EMI Calculator for detailed comparisons.

Why does UP tariff inflation matter so much?

UP DISCOMs raise tariffs 4-6% annually. Every year the grid gets more expensive, solar becomes more valuable. Over 25 years, tariffs typically triple — which is why compounded payback is shorter than simple payback and your 25-year savings far exceed initial estimates.