# How to Calculate Your Solar System Payback Period?

Before implementing any type of solar systems projects, whether it is On Grid or Off Grid solar system, we need to calculate the return on investment of such project, and to be more specific, we need to calculate how much money we will harvest? In other word, how long does it take for the solar system project to pay for itself (payback period)? And what is the extra money we can get after the solar system project returned the expenditures we paid for it.

This is what we called, the economical feasible study, as if we will not profit from installing the solar system, then why we pay such considerable amount of money on purchasing and installing the solar system? After all, the solar power system to be properly purchased and installed involves many components inclduing solar panels, solar inverter, batteries, solar charge controller and so on.

Consequently, solar system economical feasible study is the correct first step we need to do before proceeding solar system purchasing and installation.

In order to calculate the on grid solar system payback period, we need to know the average value of our electricity bill we pay monthly to the electric utility, the approximate extra electrical energy our solar system will generate and we shall sell to the electric utility yearly and of course what will be the total cost of on grid solar system purchasing and installation.

By implementing simple logic calculation, we shall know what will be the return back period and what will be the return of investment of such solar project.

Actually the payback period differs from one country to another based electricity tariff and based on how much the electric utility will buy the kilo- watt hour electricity extra generated form solar system. Some countries electric utilities buy the solar energy production with high tariff, so it can push customers to generate electricity from solar energy and some other countries electric utilities provide less buying tariff. For example, in Washington, United States of America, the on grid solar residential system payback period will be approx. 11 years while in Egypt, the payback period for the same solar project will be 8 years only, you see the difference!

Usually the solar system life time will be approx. 25 years, so the return of investment will be higher in Egypt referred to aforementioned example, as you will gain approx. 17 years’ profits in terms of free electricity bill and the money of extra electric energy you will sell to the electric utility, while in United States there will be approx. 14 years’ profits. Generally, most of governments provide very good incentives program to urge customers using the solar energy.

In order to do perfect economical feasible study, you may need to hire professional contractor to assist, and in that case its strongly recommended to search for a good experienced contractor, and to ask others about his experiences before contacting with him.