Estimate the value of self-used and exported solar electricity
Solar savings are not determined by panel capacity alone. A six-kilowatt array can produce different annual electricity quantities depending on orientation, shading, climate, equipment and operating condition. Enter an annual kilowatt-hour yield per installed kilowatt based on a credible local production model or system estimate. The calculator applies that figure to the system's DC nameplate capacity to estimate first-year production.
The energy used inside the property and the energy exported to the grid do not necessarily have the same financial value. Enter the share of solar generation used on site, the avoidable retail electricity value for those kilowatt-hours, and the actual value of exported electricity under the applicable utility arrangement. The model evaluates these separately rather than assuming every generated unit offsets electricity at the full retail rate.
Annual value and cumulative payback formulas
First-year gross value = production × (self-use share × retail value + export share × export value)
Net initial investment = installed cost − applicable incentives
First-year net value = gross value − annual maintenance
Later-year electricity value = first-year gross value × (1 − annual degradation)^(year − 1) × (1 + annual electricity-value change)^(year − 1)
Worked example: a six-kilowatt array
A six-kilowatt array at an entered yield of 1,350 kilowatt-hours per kilowatt generates 8,100 kilowatt-hours in the first year. If 70% is used on site at an illustrative avoided rate of $0.18 per kilowatt-hour, that portion is worth $1,020.60. The remaining 30% exported at $0.04 per kilowatt-hour is worth $97.20. Gross first-year value is therefore $1,117.80.
Subtracting an entered $150 annual maintenance allowance gives first-year net value of $967.80. With an illustrative net installation cost of $17,000 and no change in rates or production, division by that first-year value suggests roughly 17.6 years; the actual multi-year model adjusts production using the specified annual decline, so its cumulative payback may be later or not reached within the selected horizon.
How to interpret a modeled solar payback period
The displayed payback crossing is the first point when accumulated annual net benefits recover the entered net upfront investment. The calculation accumulates each year's changing production and electricity value, subtracts the same entered maintenance amount each year and estimates the fractional crossing within the year when the balance becomes nonnegative. If the chosen period ends before recovery, it reports that payback has not been reached rather than presenting a misleading positive payback number.
This is an undiscounted cash-flow scenario, not a financing, tax or investment appraisal. The result does not predict future retail prices, outages, equipment failure or export rules. Battery storage, inverter replacement, loan interest, insurance, panel cleaning variations, demand charges and taxes can change the actual economics. The incentive amount should only reflect benefits for which the project is genuinely eligible, not assumed generic rebates.
Solar payback questions
Why does self-consumption change my solar savings?
Electricity consumed directly can avoid some purchased kilowatt-hours, while energy exported may receive a different credit. A lower export credit means greater on-site use can raise the modeled value, but actual timing, tariff structures and billing rules should be checked against the utility agreement.
Does the calculation include panel degradation?
Yes. The entered annual degradation rate reduces modeled production in each subsequent year. The calculation separately allows a user-specified annual change in electricity values. Neither input is a prediction; use documented product and tariff assumptions.
Is the payback figure the same as investment return?
No. It is an undiscounted cost-recovery scenario. Financing terms, taxes, time value of money, replacements and residual equipment value are not modeled. A financing decision needs a more complete cash-flow analysis using actual contractual costs and terms.