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How to calculate the payback period of a solar sys…
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How to calculate the payback period of a solar system?
👤 Sita Ram from Jaipur👁 29 views💬 1 answers
payback periodROIcalculation
My vendor says the system will pay for itself in 3 years. I am paying ₹1,50,000 out of pocket (after subsidy). How do I mathematically calculate if 3 years is accurate?
💬 1 Answer
👤 Financial Modeler from Mumbai
To calculate simple payback:
1. Calculate your annual savings: If the system saves you ₹4,000 a month on your electricity bill, that's ₹48,000 per year.
2. Divide the Net Cost by Annual Savings: ₹1,50,000 / ₹48,000 = 3.12 years.
So your vendor is correct. Keep in mind that electricity tariffs usually increase by 3-5% every year, which actually makes the real payback period even shorter!