One of the most important questions for any homeowner considering rooftop solar is: how long will it take to get my money back? The answer varies significantly depending on your location, electricity prices, roof orientation, system size and available solar incentives and grants — but in most major markets, payback periods have improved significantly over the past five years.

The Key Variables

Solar payback period is driven primarily by three factors: the upfront installation costs of the installation, the amount of electricity the system generates, and the value of that electricity (either through reduced bills or export payments). Each of these varies by location and household circumstances.

UK: 8–12 Years in Most Cases

In the UK, a typical 4 kW south-facing rooftop system generates around 3,400 kWh per year and costs approximately £6,000–£8,000 installed. With electricity prices at around 25p per kWh and Smart Export Guarantee export payments of 5–15p per kWh, annual savings and earnings of £600–£900 are typical for households that self-consume around 50% of their generation. This gives payback periods of roughly 8–12 years.

US: 7–10 Years After the ITC

In the US, after applying the 30% federal Investment Tax Credit, a typical 6 kW system costing $14,000–$18,000 net is likely to generate annual savings of $1,200–$2,000 depending on local electricity prices and solar resource. Payback periods of 7–10 years are achievable in most sunny states, with shorter periods in high-electricity-price states like California, Massachusetts and New York.

Australia: Among the Best Globally

Australia’s combination of very high electricity prices and excellent solar resources produces some of the most attractive solar economics in the world. Payback periods of 4–7 years are achievable in many Australian states, making solar investment highly compelling for homeowners with suitable roofs.