Solar Payback & ROI Calculator
Cost after subsidy, the year the system pays for itself, and what it earns for the twenty years after that — with tariff escalation and module degradation both carried through the cash flow rather than assumed away.
System
Tariff and yield
The red line is what you spent. Everything right of the green mark is return — 22 years of it.
Subsidy rates and net-metering terms change, and state top-ups vary. Confirm both before quoting.
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Solar Payback & ROI Calculator · Rooftop subsidy · net metering · 25-year cash flow · EnergyCalcHQ · energycalchq.com
Preliminary calculation. The figures behind it are representative values for the stated conditions, not a substitute for the current edition of the standard or the manufacturer's published data. Verify before issuing for construction. Not a substitute for a qualified engineer or a protection study.
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Why simple payback is wrong, and in which direction
Divide the cost by the first year’s saving and you get a number that is easy to quote and always too pessimistic. It assumes the tariff never moves. Indian retail tariffs have risen at roughly 3–5 % a year for two decades, which means every unit the array generates in year ten is worth substantially more than the same unit in year one.
Degradation pulls the other way — modules lose about 0.5–0.7 % of their output annually — but it is the smaller effect. Run both year by year and payback typically lands a year or more earlier than the simple figure. Both numbers are shown so you can see the gap.
Not every generated unit is worth the same
A unit consumed while it is being generated displaces one you would have bought at the retail tariff. A unit exported to the grid earns whatever the discom pays under the net-metering or net-billing arrangement, and in most Indian states that is meaningfully less than retail.
The split matters more than people expect. A household that is empty all day exports most of its generation and sees a longer payback than the same system on a house with a daytime load — identical hardware, different economics. Set the self-consumption share honestly.
The subsidy figure
The default follows a residential subsidy slab — ₹30,000 per kW for the first 2 kW, ₹18,000 for the third, capped at ₹78,000 for any system above 3 kW. Schemes of this shape typically apply to residential connections using approved modules, claimed through a national or regional portal.
Confirm it before you quote it. The field is editable because rates are revised, regions add their own top-up, and commercial and multi-dwelling installations follow entirely different rules. If you are outside the region these defaults were written for, clear the field and enter your own figure — everything downstream follows from it. The number here is a starting point, not an authority.
Cost per unit generated
The most useful single figure on the page is the cost per unit over the system’s life: net capital plus upkeep, divided by everything it will generate in twenty-five years. After the subsidy it usually lands between ₹1.30 and ₹2.00, against a retail tariff of ₹7–10 — and nearer ₹2.50 to ₹3.50 on a system too large to qualify for one.
That comparison is the honest way to judge a quote. It is immune to tariff assumptions, it exposes an overpriced installation immediately, and it is the same calculation a utility uses to compare generation sources. If a quote pushes the figure above your tariff, the system will never pay for itself no matter how the escalation is argued.
What is not modelled
Financing cost, inverter replacement at around year twelve, and any accelerated depreciation benefit on a commercial connection are all left out. The first two make the return slightly worse, the third makes it considerably better for a business. Add them yourself for anything beyond a residential rooftop.
The inverter is a second purchase
Panels carry a 25-year performance warranty and generally earn it. The inverter does not. String inverters are built to last around 10 to 12 years in Indian conditions, and a rooftop system that runs for its full panel life will need at least one replacement — typically 8 to 12 per cent of the original system cost, landing in the same years the payback chart shows as pure profit.
A payback figure that ignores it is not describing the same system after year 12. Neither is one that ignores cleaning: dust deposition in most of northern and western India costs 8 to 15 per cent of annual yield if nobody washes the array, and more where the site is near a road, a cement works or open fields in harvest season. Two washes a year is the usual compromise, and it is a recurring cost with a real labour component, not a one-off.
Add earth-fault protection checks, AC and DC isolator inspection, and the occasional connector replacement, and the honest figure for annual operations and maintenance is around 1 per cent of capital cost. Over 25 years that is a quarter of the system price, and it comes out of the same savings the payback is counted from.
What the policy can take away
The largest single assumption in any rooftop payback is that the export arrangement you signed up to survives the life of the plant. It often does not. Net metering, where an exported unit cancels an imported one at full retail tariff, is the most generous arrangement and the one states have been steadily narrowing — moving to net billing, where export is bought at a lower wholesale rate, or capping eligibility at a system size well below what a commercial roof would install.
Banking rules matter just as much and are easier to miss. Some states settle the credit annually and pay out the surplus; others settle monthly and let anything unused expire, which quietly deletes the value of every sunny month where the site was closed. A system sized to produce an annual surplus is being designed against a rule that may not reward it.
None of this argues against solar. It argues for sizing against your own daytime consumption rather than against the roof area, because self-consumed units are worth full retail tariff under every policy that exists, and exported units are worth whatever the current rule says they are worth.
Questions people ask
- Why is simple payback the wrong number?
- Because it assumes the tariff never moves, which makes it always too pessimistic. Indian retail tariffs have risen roughly 3 to 5 per cent a year for two decades, so every unit the array generates in year ten is worth substantially more than the same unit in year one. Degradation pulls the other way at about 0.5 to 0.7 per cent a year, but it is the smaller effect. Run both year by year and payback typically lands a year or more earlier than the simple figure.
- What is the most useful figure for judging a solar quote?
- Cost per unit generated over the system's life: net capital plus upkeep, divided by everything it will generate in twenty-five years. After a residential subsidy it usually lands between ₹1.30 and ₹2.00, and nearer ₹2.50 to ₹3.50 on a system too large to qualify — against a retail tariff of ₹7 to ₹10. That comparison is immune to tariff assumptions, it exposes an overpriced installation immediately, and if a quote pushes the figure above your own tariff then the system will never pay for itself however the escalation is argued.
- Does it matter how much I use versus export?
- It changes the economics more than people expect. A unit consumed while it is being generated displaces one you would have bought at the retail tariff. A unit exported earns whatever the discom pays under net metering or net billing, and in most Indian states that is meaningfully less. A household that is empty all day exports most of its generation and sees a longer payback than the same system on a house with a daytime load — identical hardware, different return. Set the self-consumption share honestly rather than optimistically.
- What does a payback figure usually leave out?
- Three recurring costs and one windfall. The inverter is a second purchase: string inverters last around 10 to 12 years in Indian conditions, so a replacement at 8 to 12 per cent of the original system cost lands in the years the chart shows as pure profit. Cleaning matters more than it sounds — dust deposition costs 8 to 15 per cent of annual yield if nobody washes the array. Add isolator and earth-fault checks and honest annual operations and maintenance is around 1 per cent of capital, which is a quarter of the system price over 25 years. On the other side, accelerated depreciation helps a commercial connection considerably.
- Can the net metering arrangement change after I install?
- It is the largest single assumption in any rooftop payback, and it often does change. States have been steadily narrowing net metering — where an exported unit cancels an imported one at full retail — towards net billing, where export is bought at a lower wholesale rate, and capping eligibility at sizes well below what a commercial roof would install. Banking rules are easier to miss and matter as much: some states settle the credit annually and pay out the surplus, others settle monthly and let anything unused expire, which quietly deletes the value of every sunny month when the site was closed.