Payback is the number most people ask about first: how many years until the solar system has paid for itself? The simple formula is installed price divided by yearly savings. The difficulty is that most quotes use the best-case savings figure. Here is how to get a figure you can rely on.
The simple calculation
Take a 5 kW system quoted at KES 520,000 for a home on the domestic DC2 tariff. In Kenya each kW of panels produces about 1,400 kWh a year, so the system produces about 7,000 kWh a year. If every unit replaces a KPLC unit at the all-in rate of KES 28.30, it saves about KES 198,000 a year:
That is the figure many sales sheets show. It assumes everything goes right.
Adjustment 1: how much of the output you actually use
Solar saves money only when it replaces energy you would otherwise buy. If nobody is home during the day, or the system is larger than the daytime load, some output goes unused. Without an export arrangement, unused output is worth nothing.
| Share of output used on site | Yearly savings | Payback |
|---|---|---|
| 100% | about KES 198,000 | 2.6 years |
| 70% | about KES 138,000 | 3.8 years |
Most homes and many businesses use between 50% and 90% of a well-sized system's output. Estimate yours from when you use power, not from the monthly total.
Adjustment 2: your tariff class
Savings depend on the rate each solar unit replaces. The same fully used system saves less for a business on the CI1 commercial tariff, whose daytime all-in rate is KES 22.09, than for a home on DC2 at KES 28.30:
| Tariff | Rate replaced | Yearly savings (all output used) | Payback |
|---|---|---|---|
| Domestic DC2 | KES 28.30 | about KES 198,000 | 2.6 years |
| Commercial CI1, daytime | KES 22.09 | about KES 154,000 | 3.4 years |
See what a KPLC unit really costs for every class.
Adjustment 3: the costs that come later
- Maintenance: panel cleaning, inspections and the odd replacement part. Allow about 1% of the installed price a year.
- Inverter replacement: inverters often last 10 to 15 years, against 25 years or more for panels. Budget for one replacement.
- Panel ageing: output falls by about 0.5% a year.
- Battery replacement, if you have one, depending on its cycle life and how hard it works.
Putting it together
For the same 5 kW home system, using 70% of the output, with 1% maintenance a year, 0.5% yearly panel ageing and an example KES 100,000 inverter replacement in year 12:
| Simple estimate | Honest estimate | |
|---|---|---|
| Savings in the first year | KES 198,000 | about KES 133,000 |
| Payback | 2.6 years | about 4 years |
| Net savings over 25 years | not shown | about KES 2.5 million |
The system is still an excellent investment. The honest figure simply sets the right expectation, and it is the one a bank, board or finance officer will check.
What about a battery?
A battery lets you use solar output that would otherwise be wasted, but it has its own payback. In the example, the 30% unused output is about 2,100 kWh a year. A battery that stores it and returns it in the evening, losing about 8% on the way, saves about KES 55,000 a year. If that battery costs KES 350,000, it pays back in about 6.4 years on its own, and the whole system in about 4.6 years. If you buy a battery for outage backup, count the value of avoided downtime too, which this calculation leaves out. Our battery backup guide covers sizing.
Tariff changes cut both ways
The fuel cost charge and forex adjustment change every month. If they rise, solar saves more; if they fall, it saves less. Run the payback at today's rate and at a lower rate to see how sensitive it is.
Work out your own payback
- Get a first estimate of size and savings from your bill with the free solar calculator.
- Read how to compare solar quotes before choosing a supplier.
- For businesses, the commercial and industrial solar guide explains how StimaPulse shows payback with every assumption visible.