Why use this calculator
Almost every solar calculator published by an installer answers the wrong question. It multiplies system size by sun hours, multiplies that by your usage rate, and reports a payback of three or four years. That result assumes you personally consume every kilowatt-hour the moment it is generated, which nobody does.
Solar produces at midday, most households use power in the evening, and the gap between the two is exported for a feed-in tariff worth a small fraction of the retail rate. Self-consumption, not generation, is what drives the return. This calculator separates the two flows, values each one properly, applies panel degradation and grid price rises across the analysis period, and tells you the year your cumulative position turns positive.
It is the difference between a payback of four years and a payback of eight on the exact same roof.
How to use it
- Enter the system size in kilowatts from the quote, and the installed cost you will actually pay, which in Australia is already net of the small-scale technology certificate discount.
- Set the daily output per kilowatt for your location, since a Perth roof produces meaningfully more than a Hobart one.
- Take a full year of electricity bills, divide by twelve, and enter that as the monthly bill, then read the usage rate per kilowatt-hour off the same bill, ignoring the daily supply charge because solar cannot reduce it.
- Enter your actual feed-in tariff, not the headline number from an advertisement.
- Estimate the share of generation used on site, which is the number worth thinking hardest about.
- Finally set panel degradation, the rate at which you expect grid prices to rise, and how many years to project.
What each result means
- Annual energy production
- Kilowatt-hours the array generates in its first year, before degradation. Size times daily yield times 365.
- Used on site each year
- The generation you consume as it is produced. This portion avoids the full retail rate and drives almost all of the return.
- Exported to the grid
- Generation sent to the grid because nothing in the house was using it. It earns only the feed-in tariff.
- Year one bill savings
- Money not paid to your retailer in the first year, capped at your actual bill because you cannot save more than you spend.
- Year one export credit
- Feed-in credit for exported power in the first year. Usually a small fraction of the bill saving despite being most of the generation.
- Monthly bill after solar
- Your current monthly bill less an average month of the year one savings and export credit, which is roughly what will land in the post once the system is running.
- Year one total benefit
- Bill savings plus export credit. The real first-year cash benefit of the system.
- Payback period
- When cumulative benefits equal the installed cost. Four to seven years is normal in Australia for a well-sized, well-used system.
- Net benefit over the analysis period
- Total benefits across the projection minus the installed cost. This is the profit, not the gross saving.
- Return on investment
- Net benefit as a percentage of what you paid. Compare it with what the same money would earn elsewhere over the same years.
- Your solar energy cost per kWh
- Installed cost divided by lifetime generation. If it is well under the grid rate, the economics work even with poor self-consumption.
- Total generation over the period
- Every kilowatt-hour the array makes across the projection, after degradation. Useful for comparing quotes on different panel brands.
The formula
Annual generation = system size in kW × daily output per kW × 365
That splits into self-consumed = generation × self-consumption share
Exported = generation − self-consumed
Year one benefit = min(self-consumed × usage rate, annual bill) + exported × feed-in tariff
In later years generation is multiplied by (1 − degradation)^(year − 1) and the usage rate by (1 + price rise)^(year − 1), while the feed-in tariff is held flat. Payback is the year the running total of benefits first exceeds the installed cost, interpolated within that year.
How this number is used in practice
Feed-in tariffs have collapsed, and that single change rewrote solar economics. Early Australian schemes paid 44 to 60 cents per kilowatt-hour under state gross-metering programs that have long since closed to new customers. Today most retailers offer somewhere between three and seven cents, and several have moved to time-varying export rates that pay almost nothing in the middle of the day, when your panels are producing hardest, because the grid is saturated with rooftop solar.
South Australia and Victoria have already introduced export charges at certain times. The practical consequence is blunt: exporting is no longer a business model. A kilowatt-hour you use yourself is worth roughly 35 cents, and the same kilowatt-hour exported is worth about 5 cents, which is a sevenfold difference in value from the identical panel.
That is why self-consumption is the number to optimise. Shifting the dishwasher, washing machine, pool pump and hot water system to the middle of the day is free and typically lifts self-consumption from around 25 per cent to 40 or 50 per cent, which can cut a year or two off payback without changing the hardware.
Working from home does the same thing. A battery lifts it further, often to 70 or 80 per cent, but at current installed prices a battery usually pays back more slowly than the panels did, so run the numbers separately rather than assuming it improves the case.
Electrifying heating, hot water or a car changes the picture more decisively, because it converts gas and petrol spending into daytime electricity demand your roof can supply.
On rebates: Australian quotes are almost always shown net of small-scale technology certificates, so the advertised price is the price. The certificate value steps down each year until the scheme ends, which is a reason not to sit on a quote for six months. Buyers in the United States should note that the 30 per cent residential clean energy credit under section 25D was repealed for systems placed in service after 31 December 2025, so an American calculator still defaulting to a 30 per cent federal credit is now giving a materially wrong answer. Check state and utility programs instead, and enter a net cost rather than a gross one.
Worked examples
6.6 kW at $7,000, 4.0 kWh/kW/day, 35% self-consumption, 35c usage and 5c export
$1,493.58 of benefit in year one, $1,180.41 off the bill plus $313.17 exported, and payback in 4.6 years.
The same system with self-consumption lifted to 60% by shifting loads to daytime
Year one benefit rises to $2,216.28 and payback falls to 3.1 years, with no change to the hardware.
An empty weekday house exporting almost everything at 20% self-consumption
Year one benefit of $1,059.96 and payback stretching to 6.4 years on the same $7,000 spend.
A 13.2 kW system at $12,500 on a home with a pool and an electric car, 55% self-consumed
Year one benefit of $4,143.48 and payback in 3.0 years, because the extra load absorbs the extra generation.
When people use it
- Checking whether an installer's quoted payback survives a realistic self-consumption assumption
- Deciding between a 6.6 kW and a 13.2 kW system for the same household
- Working out what shifting appliances to the middle of the day is worth in dollars
- Comparing two quotes on cost per kilowatt-hour generated rather than on headline price
- Testing how much a lower feed-in tariff would damage the return before you switch retailer
Tips
- Optimise self-consumption before you optimise system size. Moving the dishwasher and pool pump to midday is free and often worth a year of payback.
- Quote the usage rate off your bill, not the average retail price. Supply charges are fixed and solar cannot touch them.
- Treat any feed-in tariff above about 8 cents as temporary. Introductory export rates are frequently cut at the next plan change.
- Budget for one inverter replacement inside a 25-year projection; string inverters typically last 10 to 15 years and cost $1,500 to $2,500.
- Compare quotes on dollars per installed watt and on panel and inverter brand, not on a payback figure calculated by the seller.
- Get the roof orientation right. A west-facing array generates less in total but more in the late afternoon, which is often worth more to a household.
- If you are considering a battery, model it separately. It improves self-consumption but rarely pays for itself as fast as the panels do.
What it assumes, and where it stops being accurate
- Self-consumption is treated as a constant share of generation across the year. In reality it swings with the seasons and with occupancy.
- Savings are capped at your annual bill, so oversizing beyond your usage only adds export income, not bill reduction. Daily supply charges are never avoided.
- The feed-in tariff is held flat in nominal terms across the projection while usage rates rise. Time-varying export tariffs and export charges are not modelled.
- Australian pricing and rebate practice is assumed: quotes net of small-scale technology certificates. US, UK and EU incentives differ and the US federal 25D credit ended for systems placed in service after 31 December 2025.
- Inverter replacement, cleaning, insurance and any roof work are excluded, which typically costs $1,500 to $2,500 once inside twenty-five years.
- Degradation is applied as a smooth annual percentage. Real arrays lose slightly more in year one, then degrade more slowly.
- No finance cost is modelled. A system bought on a green loan or added to a mortgage carries interest that must be set against the savings.
Terms used on this page
- Self-consumption
- The share of solar generation used in the home at the moment it is produced, avoiding the retail usage rate.
- Feed-in tariff
- The credit a retailer pays per kilowatt-hour exported to the grid.
- Small-scale technology certificate
- An Australian certificate created by installing eligible solar, usually assigned to the installer as an upfront discount.
- Degradation
- The slow annual loss of panel output, typically guaranteed at no more than 0.5% a year.
- Levelised cost
- Installed cost divided by the total energy generated over the system's life, expressed per kilowatt-hour.
Questions people ask
- Why does self-consumption matter more than how much power the panels make?
- Because the two flows are valued completely differently. Power you use as it is generated avoids your usage rate, around 35 cents. Power you export earns a feed-in tariff, commonly 5 cents. The same kilowatt-hour is worth about seven times more used than exported, so shifting consumption into daylight hours improves payback far more than adding panels.
- What happened to feed-in tariffs?
- They collapsed as rooftop solar saturated the middle of the day. Early state schemes paid 44 to 60 cents and are closed to new entrants. Most Australian retailers now pay between 3 and 7 cents, some pay nothing in peak solar hours, and export charges have been introduced in parts of the country. Plan on the export credit being small and falling.
- Is a bigger system always better?
- Not once your bill is covered. Bill savings are capped at what you actually spend, so extra generation beyond your usage earns only the feed-in tariff. A larger array still makes sense if you are about to add a pool, a heat pump or an electric car, because those loads absorb daytime generation at the full retail value.
- Does this include the Australian solar rebate?
- Indirectly. Australian installers quote a price already discounted by the value of small-scale technology certificates, so entering the quoted price captures the rebate. If you have a quote showing the gross price and the certificate value separately, enter the net figure. State-based programs such as interest-free loans should be handled separately.
- How long do panels actually last?
- Panels commonly carry a 25-year performance warranty guaranteeing around 85 per cent of original output at the end, and many keep producing well past thirty years. The inverter is the weak point: string inverters typically last ten to fifteen years and cost fifteen hundred to twenty-five hundred dollars to replace, which belongs in any long projection.
- Should I add a battery?
- Model it separately rather than assuming it helps. A battery lifts self-consumption from roughly 35 per cent to 70 or 80 per cent, which is a real saving, but at current installed prices the payback is usually longer than the panels alone. Batteries make more sense where outages are frequent or where a state rebate is available.
Use this with
Solar Panel Savings Calculator answers one part of the question. These pick up where it stops: Power Bill Calculator, Energy Calculator, EV vs Petrol Cost Calculator and ROI Calculator.
Where these figures come from
Figures and rules on this page follow Australian law and ATO guidance.
- Clean Energy Regulator. Small-scale renewable energy scheme and certificate rules
- Australian Energy Regulator. Default market offer and retail electricity pricing
- Australian Government: energy.gov.au. Consumer guidance on solar systems and household energy
- ASIC Moneysmart. Independent Australian guidance on borrowing, budgeting and home ownership
Solar Panel Savings Calculator produces an estimate for general information. It is not financial, tax, medical, legal or engineering advice. read the full disclaimer. Spotted a wrong number? Report it and it gets fixed. The form picks up this calculator and the inputs you used.