Path-Q Solar

How should I calculate payback for a system that offsets only part of my electricity use?

Answer

Calculate annual bill savings from the energy actually offset, including the split between self-consumed and exported production, then divide the relevant upfront net cost by those savings for simple payback. Do not assume that the percentage of annual usage offset equals the percentage of cost recovered.

Key points

  • Model production and consumption timing, not just annual totals.
  • Separate avoided imports from exports and apply their respective values.
  • Include fixed charges, financing, maintenance, degradation, and replacement when assessing lifetime economics.
  • A partial-offset system can be sensible if additional generation has low value or high cost.

What it depends on

  • Annual and interval electricity use
  • Solar production and system size
  • Import and export valuation
  • Upfront net cost and financing
  • Operating and replacement costs

Risks and trade-offs

  • Annual offset percentages can hide low-value exports.
  • A small system may have lower total savings but better returns per dollar.
  • Future consumption changes can alter the offset and payback.

Information you may need

  • Usage history or interval data
  • Production estimate
  • System cost and financing terms
  • Current import and export treatment

Your next step

What to do next

Calculate savings for the proposed partial-offset system and at least one larger and one smaller design using the same tariff and cost assumptions.

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