How solar payback is actually calculated (and why installer quotes look better than reality)

The skeleton of payback

Simple payback is: net installed cost ÷ annual saving. The controversy is never the division — it is what counts as annual saving.

In the solar payback calculator we use:

1. Annual generation ≈ system size (kWp) × specific yield (kWh/kWp/yr)
2. Self-consumed kWh earn the retail import rate
3. Exported kWh earn the export / feed-in rate
4. Generation falls slightly each year (degradation)
5. Retail prices may inflate; export rates often do not
6. An inverter replacement may appear mid-life

Why quotes look optimistic

Installer quotes often:

• Pick a high specific yield for a perfect south roof with no shading
• Assume self-consumption of 50%+ without showing a load profile
• Ignore inverter replacement
• Compound electricity inflation aggressively while holding costs fixed

None of those choices is automatically wrong — but they should be inputs you can change, not hidden constants.

What to do with the result

Treat payback as a sensitivity study. Move self-consumption and export price first; those usually swing the answer more than a 5% change in yield. Then get a site survey before spending money.