A solar system is not an expense โ it is an asset that produces a commodity (electricity) you currently buy at retail price. Evaluate it like any investment.
Simple payback
Divide net system cost by first-year savings. Typical results: residential 4โ6 years, commercial 3โ5 years, irrigation vs diesel 2โ4 years. Everything after payback is profit for the remaining 20+ years of panel life.
Don't forget these in the model
- Tariff inflation: grid prices rise 5โ10% yearly in most markets; your solar price is locked at zero.
- Degradation: quality panels lose only ~0.5%/year โ warranted.
- O&M: budget ~1% of system cost per year. It is genuinely that low.
- Diesel displacement: for irrigation and gensets, count fuel, oil, and engine overhauls.
The IRR view
A system with 5-year payback and 25-year life yields an IRR around 18โ22% โ with lower risk than almost any other investment available to a household or campus. Try our solar savings calculator for your own numbers.
