Payback Period Calculation for Rooftop Solar PV

When considering the installation of a Rooftop Solar PV (PLTS Atap) system, one of the most common questions is: when will I break even?

The answer can be explained through what is called the payback period, which is the time required for the total electricity bill savings to equal the upfront cost of installing solar panels. Simply put, this is the point where your investment starts to “generate returns” because the installation costs are fully covered by monthly savings.

The answer can be explained through what is called the payback period, which is the time required for the total electricity bill savings to equal the upfront cost of installing solar panels. Simply put, this is the point where your investment starts to “generate returns” because the installation costs are fully covered by monthly savings.

In Indonesia, the payback period for rooftop solar PV generally ranges from 5 to 7 years. However, this may vary depending on several factors such as:

• The size of the installed system

• Current PLN (state electricity company) tariff

• Daily electricity consumption patterns

• Location and solar radiation intensity at your home

That said, with solar panels having a lifespan of up to 25–30 years, a 5–7 year payback period is considered quite fast. This means that after reaching that point, you can enjoy free electricity from the sun for many years to come.

Understanding how to calculate the payback period is crucial to assess how efficient and profitable a rooftop solar investment can be in the long run. Besides saving money, you also contribute to the adoption of cleaner and more environmentally friendly energy.

What is the Payback Period for Solar PV?

Payback Period for Solar PV

The payback period of a solar PV system is the interval between the installation and the point where the accumulated electricity savings equal the initial investment. In other words, the amount of electricity bills eliminated by solar energy during this period matches your upfront cost. This concept is often linked to the Break-Even Point (BEP) and is useful in determining how quickly the solar system begins to provide financial benefits.

Importance of Calculating the Payback Period

Knowing the payback period is essential for planning a solar PV investment. The shorter the payback period, the faster you recover your initial cost and start generating net financial benefits. Moreover, solar PV systems provide tangible economic value. By understanding the payback period, you can adjust the system design and set realistic expectations for returns according to local conditions.

Factors Affecting the Payback Period

Several main factors influence how long the payback period will be:

• Electricity tariff (Rp/kWh)

• Total investment cost

• System energy production
  

How to Calculate the Payback Period

To calculate the payback period, follow these steps:

1. Calculate the total upfront cost

2. Estimate the annual savings

3. Apply the formula:Payback Period = Total Investment / Annual Savings

   
   

Example of Payback Period Calculation

For example, a 5 kWp solar PV system can generate around 600 kWh per month.With an electricity tariff of Rp1,699.53/kWh plus 11% VAT and 3% regional tax (PPJ), the effective rate becomes:

Rp1,699.53 + 14% = Rp1,937.46/kWh

Monthly savings:600 kWh × Rp1,937.46 = Rp1,162,476

Annual savings:Rp1,162,476 × 12 = Rp13,949,712 (≈ Rp14 million)

If the total system investment is Rp70 million, then:

Payback Period = 70 million / 14 million = 5 years

Conclusion

Calculating the payback period of rooftop solar PV helps you understand when your investment will break even and start generating profit. By considering installation costs, local electricity tariffs, and potential energy production, the payback period can be estimated simply by dividing the total investment by annual energy savings.

In Indonesia, most solar PV systems—whether on-grid, off-grid, or hybrid—generally require around 7–10 years to reach break-even. After that point, the remaining lifespan of the solar panels will deliver truly free electricity.