What Is the Solar Payback Period?
Updated September 14, 2026
Simple payback divides net installation cost by estimated first-year electricity savings. It is a screening calculation, not a guaranteed return.
A transparent example
Assume a $26,000 installation, no verified incentives, 12,500 kWh annual production, 50% self-use, a $0.30/kWh import assumption and $0.05/kWh export assumption. These are example inputs, not a published SCE tariff.
Estimated annual energy value is 6,250 × $0.30 + 6,250 × $0.05 = $2,187.50. Simple payback is approximately 11.9 years, before financing, maintenance, degradation or changes in rates. Household demand can further limit usable credits.
Compare the full picture
A 25-year total energy value is not net profit: subtract installation, financing and operating costs to evaluate the investment. Check interval usage and time-of-use tariffs before relying on a flat-rate calculation.
September 2026: incentives and utility rules
The federal Residential Clean Energy Credit is unavailable for property placed in service after December 31, 2025. Do not subtract an automatic 30% residential credit from a 2026 quote. Verify any other incentive separately. IRS guidance.
New SCE systems generally use net billing: electricity used onsite offsets purchased energy, while exported generation earns a separate credit. LADWP has its own net metering rider. Confirm the electric provider and tariff on the homeowner’s bill; the water provider or ZIP alone is not proof of electric service. CPUC customer generation · LADWP rates and NEM.
SunPilot reports are illustrative scenarios until usage, rates and the proposed installation have been reviewed. Savings refer to electricity charges before equipment, financing and maintenance. Water, sewer and fixed charges are not assumed to disappear.