Your solar payback period is the net cost of the system divided by the amount it saves you each year. Those savings come from two sources: solar you use yourself, which avoids buying grid power that commonly costs 30-45 c/kWh, and solar you export, which earns a feed-in credit of only a few cents. Because the two are valued so differently, the share of solar you use at home shapes the answer more than almost anything else. The method below lets you work it out with your own numbers.

What you need before you start

• Twelve months of electricity bills showing your usage in kWh, your usage rates and your feed-in tariff.
• The quoted system size and price after STCs.
• A rough picture of when your household uses power: who is home during the day, and which big loads could move to daylight hours.

If you have a smart meter, your retailer can usually provide interval data showing usage by half-hour, which makes the estimate much more reliable than working from bill totals alone.

The method, step by step

1. Net cost. Use the installed price after STCs. For a 6.6 kW system in Sydney, the published indicative range in 2026 is $4,500-$6,500, confirmed after a site assessment.
2. Annual production. A 6.6 kW system in Sydney typically produces around 24-27 kWh a day on average across the year, or roughly 8,750-9,850 kWh a year. Shading, orientation and tilt move this up or down.
3. Self-consumption share. Estimate the percentage of production you will use directly. Households that are out all day use less; those at home in daylight, running air-conditioning, a pool pump or a home office, use more.
4. Value of self-consumed solar. Multiply self-consumed kWh by your usage rate. On a time-of-use plan, use the rates that apply during daylight hours.
5. Value of exports. Multiply exported kWh by your feed-in tariff.
6. Annual saving. Add steps 4 and 5.
7. Payback. Divide the net cost by the annual saving.

A worked example

Take a 6.6 kW system at $6,500, the top of the published range so the result stays cautious, producing 9,000 kWh a year. The household uses 30% of that directly, pays 35 c/kWh for grid power and receives 4 c/kWh for exports. These are illustrative assumptions, not the rates of any particular retailer.

• Self-consumed: 2,700 kWh x 35 c = $945
• Exported: 6,300 kWh x 4 c = $252
• Annual saving: $945 + $252 = $1,197
• Payback: $6,500 / $1,197 = about 5.4 years

How sensitive is the answer?

Change the assumptions and the result moves a long way. The table keeps the system cost at $6,500 and production at 9,000 kWh a year.

Three further factors belong in an honest calculation:

• Degradation. Panels commonly lose around 0.4-0.55% of output a year, trimming savings slightly over time.
• Tariff changes. Usage rates and feed-in tariffs can rise or fall. Test a flat-price scenario rather than relying on an assumed yearly increase.
• Running costs. Allow for occasional professional panel cleaning, indicatively $150-$300, and a possible inverter replacement during the system's life.

If you finance the system, add the interest to the net cost; our solar finance guide shows how repayments change the picture. For how the STC discount is calculated and why it steps down each 1 January, see the federal STC rebate explainer.

Common mistakes in DIY payback sums

Many errors in home-made payback calculations push the result in a flattering direction. Watch for these:

• Using the whole bill. Solar reduces the usage part of your bill, not the daily supply charge, so dividing the cost by your total annual bill overstates savings.
• Using the price before STCs, or after an incentive you are not eligible for. Use the net price on your actual quote.
• Scaling up one summer bill. Production and usage both change with the seasons, so work from a full year of bills.
• Assuming today's feed-in tariff is permanent. Retailers can change feed-in rates, and switching plans may change yours.
• Ignoring your plans. An EV, a heat pump or a home office will change your usage and self-consumption, often in solar's favour.

Improving your payback without overspending

The quickest lever is using more of your solar at home. Shifting the dishwasher, washing machine, pool pump and hot water into daylight hours raises self-consumption without buying anything. Sizing matters too: a system far larger than your daytime use exports more at low feed-in rates, although a larger system can still make sense if you plan an EV, a heat pump or a battery. Our sizing guide helps you balance the two.

A battery needs its own calculation. It turns exported solar into evening use, so each kWh shifted is worth roughly the difference between your usage rate and your feed-in tariff, less storage losses. With a 10 kWh battery indicatively $8,000-$11,000 after the federal battery discount, confirmed after a site assessment, work out its payback separately rather than blending it into the solar figure, so you can see whether each part stands on its own.

Checking your result after installation

Your estimate becomes a measurement once the system is running. After the first full year, take your actual production and export figures from the monitoring app and your bills, rerun the same steps and compare. If self-consumption is lower than you assumed, look at which loads could move to daylight; if production is well below the typical range for your system size, ask your installer to investigate.

Next steps

Gather your bills, work through the steps with a cautious and an optimistic self-consumption estimate, and compare the range with any payback figure in your quotes. If you would like the modelling done for you, the Solar + Battery ROI Report is listed from $199 in the energy market, an indicative price. For a system designed around your roof and usage, request a free assessment from Blue Energy Solar; system prices are confirmed after the site assessment.

Frequently asked questions

Should I use payback period or return on investment?

Both are useful. Payback period tells you how quickly the upfront cost is recovered, which makes quotes easy to compare. Return on investment expresses the annual saving as a percentage of the cost, which helps when weighing solar against other ways of using the same money. Neither captures everything, so treat both as guides alongside equipment quality, warranties and after-sales support.

Does moving to a time-of-use tariff change my payback?

It can. Under time-of-use pricing, daytime electricity may cost less than the evening peak, so each self-consumed solar kWh can be worth less than on a flat rate, while evening usage costs more. Recalculate using the rates that actually apply during solar hours, and compare plans against your own usage pattern before switching.

How accurate is a payback estimate over 25 years?

It becomes less certain the further ahead you look. Tariffs, household size, appliances and your electricity plan will all change, and panels slowly lose output. That is why a range built from cautious and optimistic assumptions is more useful than a single precise figure. Treat anything beyond the first decade as a rough indication rather than a forecast you can rely on.