How is solar payback calculated?

Simple payback = net upfront cost (after STC and other rebates) ÷ annual savings. Annual savings come from self-consumed generation valued at your grid import rate, plus exported generation valued at the feed-in tariff. The calculator also reports discounted payback, which accounts for the time value of money at your chosen discount rate.

What is the difference between NPV and IRR for a solar investment?

NPV (net present value) discounts every year of savings back to today’s dollars and subtracts the net upfront cost: a positive NPV means the system beats your discount rate. IRR (internal rate of return) is the discount rate at which NPV equals zero, so you can compare it directly against your cost of capital or alternative investments.

How does adding a battery change the return?

A battery raises self-consumption: storing midday surplus that would otherwise export at a low feed-in tariff and discharging it in the evening to offset grid import at a much higher rate. The Solar + Battery mode applies a higher self-consumption share, and the Battery Retrofit mode values each stored kWh at (round-trip efficiency × import rate − feed-in tariff).

How are rebates handled?

You enter the total installed price net of any rebates: deduct STCs (small-scale technology certificates) and any federal or state battery incentives such as Cheaper Home Batteries yourself before entering the figure. Because those schemes change frequently and vary by state, keeping them out of the model means the payback, NPV and IRR always reflect the real price you pay.

Should solar and battery ROI be on one calculator?

Yes: they share most inputs (usage, tariffs, feed-in rate, discount rate) and the most useful question is what a battery adds on top of solar. This tool keeps them together with a mode switch so you can evaluate solar alone, solar with a battery, a battery retrofit to existing solar, or a battery on a time-of-use tariff with no solar at all, without re-entering data.

Can a home battery pay for itself without solar?

That is exactly what the Battery TOU mode tests. On a time-of-use tariff you charge the battery from the grid at the off-peak rate and discharge it through the peak window, and the annual saving is (energy delivered × peak rate) − (energy delivered ÷ round-trip efficiency × off-peak rate). Arbitrage only pays when the peak rate beats the off-peak rate grossed up for round-trip losses (at 90% efficiency the peak rate has to be more than about 1.11× the off-peak rate), and the calculator flags it when the spread is too narrow.

Does the calculator account for electricity price rises and panel degradation?

Yes: optional advanced assumptions let you escalate the electricity tariff each year (e.g. 2–5%/yr) and fade system output year-on-year (e.g. 0.5%/yr panel degradation). Leave both at 0% for a level, conservative baseline. Price escalation shortens the payback period while degradation slightly lengthens it; the cash-flow projection and break-even point update for whichever assumptions you set.

What is a good solar payback period in Australia?

For a well-sized rooftop system with a healthy self-consumption share, 4 to 7 years is typical in 2026. Anything under about 5 years is excellent, and under 7 years is still a strong return given panels last 25+ years. Payback is shortest where you use most of your generation yourself (high self-consumption), your import tariff is high and the installed price after STCs is competitive.

How do you calculate solar return on investment?

ROI = (savings over your chosen analysis period − net installed cost) ÷ net installed cost, expressed as a percentage. The annual savings come from self-consumed generation valued at your import rate plus exported generation valued at the feed-in tariff. The ElecAS calculator reports ROI% alongside simple payback, discounted payback, NPV and IRR so you can judge the investment by whichever measure suits a household or commercial decision.

Is a home battery worth it in Australia in 2026?

It is closer than it has ever been. The federal Cheaper Home Batteries program lowers the upfront cost and rising import tariffs raise the value of each stored kilowatt-hour, but a battery still rarely pays back on energy arbitrage alone. The deciding number is the marginal value of each stored kWh (roughly (round-trip efficiency × import rate − feed-in tariff)) multiplied by the cycles the battery actually achieves. Use the Battery Retrofit or Solar + Battery mode to test it on your own tariffs.

Why is self-consumption more important than feed-in tariff?

Because grid import rates (around 25–45 c/kWh) are now several times higher than feed-in tariffs (around 3–8 c/kWh). Every kilowatt-hour you consume at the moment it is generated avoids buying grid power at the high import rate, whereas an exported kilowatt-hour only earns the low feed-in rate. Raising self-consumption (through usage timing or a battery) is the single biggest lever on solar payback, which is why the calculator weights savings by your self-consumption share.

Should I deduct the STC rebate before entering the system price?

Yes. Enter the installed price net of all rebates: deduct STCs and any battery incentive such as Cheaper Home Batteries yourself. Because rebate schemes change frequently and vary by state, keeping them out of the model means the payback, NPV and IRR always reflect the real out-of-pocket price and do not go stale when a scheme is updated.

What discount rate should I use for a solar NPV calculation?

Use a rate that reflects your alternative use of the money. For a household, 3–5% (roughly an offset account or term deposit) is reasonable; for a business, use your weighted average cost of capital, often 6–10%. A positive NPV at your chosen rate means the system beats that benchmark. IRR tells you the break-even discount rate so you can compare the project directly against other investments.

Does this solar ROI calculator work for New Zealand?

Yes. Auckland, Wellington and Christchurch are included with PVGIS-derived specific yields, and you can enter NZ buy-back rates and import tariffs directly. The payback, NPV, IRR and cash-flow methodology is identical: only the tariffs, rebates and specific yield differ by location.

What tariff spread do I need for battery arbitrage to be worth it?

The peak rate must exceed the off-peak rate divided by the round-trip efficiency, because you buy more energy than you get back. At 90% round-trip efficiency a 22 c/kWh off-peak rate needs a peak rate above about 24.4 c/kWh just to break even on energy, so a real return needs a much wider spread: a 55 c/kWh peak against a 22 c/kWh off-peak is the sort of gap that makes the case. Battery TOU mode warns when the spread cannot cover the losses.

Which mode should I use: Solar Only, Solar + Battery, Battery Retrofit or Battery TOU?

Solar Only for a new array with no storage. Solar + Battery for a new array and battery together, which applies a higher self-consumption share. Battery Retrofit for a battery added to panels you already have, valued on the spare solar you currently export. Battery TOU for a battery with no solar at all, charged from the grid off-peak and discharged during the peak window.

Why does a bigger battery not always improve the payback?

Because battery output is capped by the energy there actually is to displace, not by nameplate capacity. In Battery Retrofit mode delivery is limited by the spare solar available to store and by your own usage; in Battery TOU mode it is limited by your peak-window consumption. Once that cap binds, extra capacity adds cost without adding savings, and the calculator says so in its design notes.

ElecAS

Solar & Battery ROI Calculator

Estimate the return on investment of a solar PV system, a home battery, or both: payback period, NPV, IRR, total savings and ROI, with Australian feed-in tariff modelling, time-of-use battery arbitrage and a cumulative cash-flow projection.

Key facts

The calculator reports payback period, NPV, IRR and lifetime savings with a cumulative cash-flow projection.
Self-consumption is the biggest driver of solar payback; exported energy earns only the feed-in tariff.
Battery economics depend on cycling daily against the gap between the import rate and the feed-in tariff.
A battery with no solar can still pay on a time-of-use tariff, but only if the peak rate beats the off-peak rate grossed up for round-trip losses.

Who this page is for

Electrical engineers, solar designers, energy consultants, installers and homeowners evaluating the financial return of solar PV and battery storage in Australia.

Relevant standards

AS/NZS 4777
AS/NZS 5139

What this tool helps with

Four modes (Solar Only, Solar + Battery, Battery Retrofit and Battery TOU) each with its own self-consumption or arbitrage savings model.
Returns simple payback, discounted payback, NPV, IRR, total savings and ROI percentage from a configurable discount rate and analysis horizon.
Optional advanced projection escalates electricity tariffs and fades output year-on-year, with a cumulative cash-flow chart that marks the break-even point.
Models self-consumption at the import tariff and exports at the feed-in tariff, with battery retrofit shifting spare solar from export into evening self-consumption.
Battery TOU models a solar-free battery on a time-of-use tariff: charge at the off-peak rate, discharge into the peak window, and capture the spread net of round-trip losses.
Every mode caps battery output at the energy there actually is to displace (your usage, your spare solar or your peak-window consumption), so a bigger battery never invents savings.
Export a branded PDF report with project details, ROI summary, cost breakdown, energy assumptions and a year-by-year cash-flow table.

How to calculate solar and battery ROI for an Australian installation

Choose the mode: Pick Solar Only, Solar + Battery, Battery Retrofit or Battery TOU. Solar Only and Solar + Battery model a new system; Battery Retrofit values a battery added to existing solar by storing spare exported energy; Battery TOU values a battery with no solar, charged off-peak and discharged at peak.
Set system size and location: Enter the solar size in kW and select your city. The location preset applies a realistic specific yield (kWh per kW per year) (Sydney ~1420, Melbourne ~1310, Brisbane and Adelaide ~1530, Perth and Darwin ~1600), or choose Custom to enter your own yield.
Enter the installed price net of rebates: Enter the total installed cost after deducting STCs and any battery rebate such as Cheaper Home Batteries, so every result reflects the real price you pay.
Set your tariffs and usage: Enter your grid import rate (c/kWh), feed-in tariff (c/kWh) and daily usage (kWh). In Battery TOU mode enter the peak rate, the off-peak rate and the peak-window usage per day instead. For every battery mode, set usable capacity, round-trip efficiency and effective cycles per year.
Set the self-consumption share: Enter the percentage of generation you use directly. A higher self-consumption share (and a battery) shifts energy from low-value export to high-value self-use and shortens payback.
Choose the discount rate and horizon: Pick a discount rate (e.g. 5%) and an analysis horizon (5–30 years). Optionally set price escalation and output degradation under advanced assumptions for a rising-cost scenario.
Review the metrics and export the report: Read the simple and discounted payback, NPV, IRR, lifetime savings and ROI%, check the break-even point on the cumulative cash-flow chart, and export the branded PDF for the proposal or record.

Solar & battery ROI in Australia: payback, NPV and IRR explained

Is solar worth it in Australia in 2026?

For most Australian homes and businesses a well-sized rooftop solar system still pays for itself in roughly 4 to 7 years and then delivers free electricity for the remaining 18–20+ years of its life. The return depends on three things you control and one you do not: the installed price (after STC rebates), how much of the generation you use yourself versus export, your grid import tariff and feed-in tariff, and how much sun your roof actually receives. The ElecAS Solar & Battery ROI calculator turns those inputs into the four numbers that actually decide the case (payback period, net present value (NPV), internal rate of return (IRR) and lifetime savings) instead of a single optimistic headline figure.

The economics have shifted: feed-in tariffs have fallen to roughly 3–8 c/kWh in most states while grid import rates sit around 25–45 c/kWh. That gap is why self-consumption (using your own solar at the moment it is generated) is now far more valuable than exporting it, and why a correctly modelled self-consumption share matters more to your payback than the system size alone.

How the four modes model the return

Solar Only estimates annual generation as system size (kW) × specific yield (kWh per kW per year for your location), splits it into self-consumed energy valued at your import rate and exported energy valued at the feed-in tariff, and nets the result against the installed price. The location preset sets a realistic specific yield (for example about 1420 kWh/kW/yr in Sydney, 1310 in Melbourne, 1530 in Brisbane and Adelaide, and 1600 in Perth and Darwin), so the generation figure reflects real Australian and New Zealand sun rather than a nameplate ideal.

Solar + Battery applies a higher self-consumption share because the battery stores midday surplus that would otherwise export cheaply and discharges it in the evening to displace expensive grid import. Battery Retrofit values each stored kilowatt-hour at (round-trip efficiency × import rate − feed-in tariff) (the true marginal benefit of shifting a unit of spare solar from export to evening use), and caps it at the spare solar actually available to store. If the feed-in tariff is high relative to the import rate, the tool flags that storing energy may save little.

Battery TOU is the solar-free case: pure grid arbitrage on a time-of-use tariff. The battery charges overnight at the off-peak rate and discharges through the peak window, and the energy it can deliver each year is the smaller of its own throughput (usable capacity × cycles per year) and the peak-window consumption there actually is to displace. The annual saving is the peak energy avoided less the off-peak energy bought to store it, so the model captures the spread net of round-trip losses rather than crediting the battery with the full peak rate.

Payback, NPV and IRR: which number should you trust?

Simple payback (net cost ÷ annual savings) is the most intuitive figure and the one most quoted, but it ignores the time value of money and everything that happens after break-even. NPV discounts every year of savings back to today at your chosen discount rate and subtracts the upfront cost: a positive NPV means the system beats that hurdle rate, and it captures the full system life, not just the years up to payback. IRR is the discount rate at which NPV equals zero, so you can compare it directly against a term deposit, an offset account or your cost of capital.

For a household decision, payback period and lifetime savings are usually the clearest lens. For a commercial or investment decision, NPV and IRR are the defensible metrics. The ElecAS calculator reports all of them from one set of inputs, plus a cumulative cash-flow chart that marks the exact break-even point, so you can present whichever framing your audience expects.

Is a home battery worth it yet?

A battery rarely pays for itself on arbitrage alone at today’s prices, but the gap has narrowed sharply with the federal Cheaper Home Batteries program cutting upfront cost and rising import tariffs increasing the value of each stored kilowatt-hour. The honest test is the marginal one: every kWh you cycle through the battery is worth roughly your import rate minus your feed-in tariff, less round-trip losses (typically 5–15%). Multiply that by realistic daily throughput and the cycles the battery actually achieves (not its nameplate capacity), and compare the lifetime total against the installed price.

Run the Battery Retrofit mode to value a battery added to an existing solar array, or Solar + Battery to model both together. Because the calculator separates the battery’s contribution, you can see exactly what the battery adds on top of solar rather than crediting it with savings the panels would have delivered anyway.

If there is no solar in the picture at all, Battery TOU answers the other version of the question: can a battery pay for itself on the tariff spread alone? The break-even test is peak rate > off-peak rate ÷ round-trip efficiency: at 90% round-trip efficiency the peak rate has to be roughly 1.11× the off-peak rate before a single cent is saved, and wider spreads (a 55 c/kWh peak against a 22 c/kWh off-peak, say) are what make the case. The calculator warns when the spread is too narrow to cover the losses, and when the battery is bigger than the peak-window usage it has to displace.

Rebates, escalation and degradation

Enter the installed price net of rebates: deduct small-scale technology certificates (STCs) and any federal or state battery incentive such as Cheaper Home Batteries before entering the figure. Keeping rebates out of the model means the payback, NPV and IRR always reflect the real price you pay, and the result does not silently go stale when a scheme changes. The optional advanced assumptions let you escalate the electricity tariff each year (electricity prices have historically risen faster than CPI) and fade output year-on-year for panel and battery degradation, so you can stress-test a level baseline against a more realistic rising-cost scenario.

The output is an indicative engineering estimate, not a quote or financial advice. It is most accurate when you use your own retailer tariffs, a quoted installed price and a realistic self-consumption share for your usage pattern. Export the branded PDF report (project details, ROI summary, cost breakdown, energy assumptions and the year-by-year cash-flow table) for a client proposal or your own records.

Key terms

Payback period: The time taken for cumulative savings to cover the net installed cost. Simple payback ignores the time value of money; discounted payback measures the same crossing point after every year of savings has been discounted back to today.
Net present value (NPV): The sum of every year of savings discounted back to today at a chosen discount rate, less the net upfront cost. A positive NPV means the system beats that discount rate over the analysis horizon.
Internal rate of return (IRR): The discount rate at which the net present value of a system equals zero: the effective annual return of the investment, directly comparable against a term deposit, an offset account or a business cost of capital.
Self-consumption: The share of solar generation used on site at the moment it is produced rather than exported. Self-consumed energy is valued at the retail import rate; exported energy earns only the feed-in tariff, so self-consumption is the largest single lever on solar payback.
Feed-in tariff (FiT): The credit an electricity retailer pays per kilowatt-hour exported to the grid, typically around 3–8 c/kWh in Australia in 2026: several times lower than the 25–45 c/kWh retail import rate.
Specific yield: Annual generation per kilowatt of installed solar capacity, in kWh/kW/yr, for a well-oriented unshaded roof in a given location. It converts system size into an annual generation figure: about 1420 in Sydney, 1310 in Melbourne, 1530 in Brisbane and Adelaide, 1600 in Perth and Darwin.
Round-trip efficiency: The proportion of energy put into a battery that comes back out, typically 85–95% for lithium systems. Losses are charged against every stored kilowatt-hour, so they set the minimum tariff spread at which storage or arbitrage breaks even.
Time-of-use (TOU) arbitrage: Charging a battery from the grid during a cheap off-peak window and discharging it during an expensive peak window, capturing the difference. It pays only when the peak rate exceeds the off-peak rate divided by the round-trip efficiency.
Small-scale technology certificate (STC): The federal renewable-energy certificate created by a small solar or battery installation, normally assigned to the installer and taken off the quoted price as an upfront discount. ElecAS asks for the installed price net of STCs so results reflect the real out-of-pocket cost.
Discount rate: The annual rate used to convert future savings into today’s dollars, reflecting the alternative use of the money: typically 3–5% for a household and 6–10% for a business weighted average cost of capital.

Reviewed by

Wisam Tozah: Associate Electrical Engineer. B.Eng (Electrical), MIEAust, CPEng, NER, NSW DBP, NSW PRE, APEC, IntPE(Aus). See how these calculations are verified. LinkedIn.

Frequently asked questions

How is solar payback calculated?: Simple payback = net upfront cost (after STC and other rebates) ÷ annual savings. Annual savings come from self-consumed generation valued at your grid import rate, plus exported generation valued at the feed-in tariff. The calculator also reports discounted payback, which accounts for the time value of money at your chosen discount rate.
What is the difference between NPV and IRR for a solar investment?: NPV (net present value) discounts every year of savings back to today’s dollars and subtracts the net upfront cost: a positive NPV means the system beats your discount rate. IRR (internal rate of return) is the discount rate at which NPV equals zero, so you can compare it directly against your cost of capital or alternative investments.
How does adding a battery change the return?: A battery raises self-consumption: storing midday surplus that would otherwise export at a low feed-in tariff and discharging it in the evening to offset grid import at a much higher rate. The Solar + Battery mode applies a higher self-consumption share, and the Battery Retrofit mode values each stored kWh at (round-trip efficiency × import rate − feed-in tariff).
How are rebates handled?: You enter the total installed price net of any rebates: deduct STCs (small-scale technology certificates) and any federal or state battery incentives such as Cheaper Home Batteries yourself before entering the figure. Because those schemes change frequently and vary by state, keeping them out of the model means the payback, NPV and IRR always reflect the real price you pay.
Should solar and battery ROI be on one calculator?: Yes: they share most inputs (usage, tariffs, feed-in rate, discount rate) and the most useful question is what a battery adds on top of solar. This tool keeps them together with a mode switch so you can evaluate solar alone, solar with a battery, a battery retrofit to existing solar, or a battery on a time-of-use tariff with no solar at all, without re-entering data.
Can a home battery pay for itself without solar?: That is exactly what the Battery TOU mode tests. On a time-of-use tariff you charge the battery from the grid at the off-peak rate and discharge it through the peak window, and the annual saving is (energy delivered × peak rate) − (energy delivered ÷ round-trip efficiency × off-peak rate). Arbitrage only pays when the peak rate beats the off-peak rate grossed up for round-trip losses (at 90% efficiency the peak rate has to be more than about 1.11× the off-peak rate), and the calculator flags it when the spread is too narrow.
Does the calculator account for electricity price rises and panel degradation?: Yes: optional advanced assumptions let you escalate the electricity tariff each year (e.g. 2–5%/yr) and fade system output year-on-year (e.g. 0.5%/yr panel degradation). Leave both at 0% for a level, conservative baseline. Price escalation shortens the payback period while degradation slightly lengthens it; the cash-flow projection and break-even point update for whichever assumptions you set.
What is a good solar payback period in Australia?: For a well-sized rooftop system with a healthy self-consumption share, 4 to 7 years is typical in 2026. Anything under about 5 years is excellent, and under 7 years is still a strong return given panels last 25+ years. Payback is shortest where you use most of your generation yourself (high self-consumption), your import tariff is high and the installed price after STCs is competitive.
How do you calculate solar return on investment?: ROI = (savings over your chosen analysis period − net installed cost) ÷ net installed cost, expressed as a percentage. The annual savings come from self-consumed generation valued at your import rate plus exported generation valued at the feed-in tariff. The ElecAS calculator reports ROI% alongside simple payback, discounted payback, NPV and IRR so you can judge the investment by whichever measure suits a household or commercial decision.
Is a home battery worth it in Australia in 2026?: It is closer than it has ever been. The federal Cheaper Home Batteries program lowers the upfront cost and rising import tariffs raise the value of each stored kilowatt-hour, but a battery still rarely pays back on energy arbitrage alone. The deciding number is the marginal value of each stored kWh (roughly (round-trip efficiency × import rate − feed-in tariff)) multiplied by the cycles the battery actually achieves. Use the Battery Retrofit or Solar + Battery mode to test it on your own tariffs.
Why is self-consumption more important than feed-in tariff?: Because grid import rates (around 25–45 c/kWh) are now several times higher than feed-in tariffs (around 3–8 c/kWh). Every kilowatt-hour you consume at the moment it is generated avoids buying grid power at the high import rate, whereas an exported kilowatt-hour only earns the low feed-in rate. Raising self-consumption (through usage timing or a battery) is the single biggest lever on solar payback, which is why the calculator weights savings by your self-consumption share.
Should I deduct the STC rebate before entering the system price?: Yes. Enter the installed price net of all rebates: deduct STCs and any battery incentive such as Cheaper Home Batteries yourself. Because rebate schemes change frequently and vary by state, keeping them out of the model means the payback, NPV and IRR always reflect the real out-of-pocket price and do not go stale when a scheme is updated.
What discount rate should I use for a solar NPV calculation?: Use a rate that reflects your alternative use of the money. For a household, 3–5% (roughly an offset account or term deposit) is reasonable; for a business, use your weighted average cost of capital, often 6–10%. A positive NPV at your chosen rate means the system beats that benchmark. IRR tells you the break-even discount rate so you can compare the project directly against other investments.
Does this solar ROI calculator work for New Zealand?: Yes. Auckland, Wellington and Christchurch are included with PVGIS-derived specific yields, and you can enter NZ buy-back rates and import tariffs directly. The payback, NPV, IRR and cash-flow methodology is identical: only the tariffs, rebates and specific yield differ by location.
What tariff spread do I need for battery arbitrage to be worth it?: The peak rate must exceed the off-peak rate divided by the round-trip efficiency, because you buy more energy than you get back. At 90% round-trip efficiency a 22 c/kWh off-peak rate needs a peak rate above about 24.4 c/kWh just to break even on energy, so a real return needs a much wider spread: a 55 c/kWh peak against a 22 c/kWh off-peak is the sort of gap that makes the case. Battery TOU mode warns when the spread cannot cover the losses.
Which mode should I use: Solar Only, Solar + Battery, Battery Retrofit or Battery TOU?: Solar Only for a new array with no storage. Solar + Battery for a new array and battery together, which applies a higher self-consumption share. Battery Retrofit for a battery added to panels you already have, valued on the spare solar you currently export. Battery TOU for a battery with no solar at all, charged from the grid off-peak and discharged during the peak window.
Why does a bigger battery not always improve the payback?: Because battery output is capped by the energy there actually is to displace, not by nameplate capacity. In Battery Retrofit mode delivery is limited by the spare solar available to store and by your own usage; in Battery TOU mode it is limited by your peak-window consumption. Once that cap binds, extra capacity adds cost without adding savings, and the calculator says so in its design notes.