Solar salespeople often quote payback periods of "3-4 years" to close deals. The honest calculation for most Philippine residential installations is 5-8 years. Here's how to calculate it yourself — and why the salesperson's number is usually wrong.
Simple Payback = Total System Cost ÷ Annual Savings
But both numbers have hidden complexity.
| Factor | Optimistic (Sales Pitch) | Realistic (Engineering) |
|---|---|---|
| System output | 100% of rated Wp × peak sun hours | 75-80% after derating (heat, soiling, wiring losses) |
| Self-consumption rate | 100% (all solar used) | 60-80% (excess exported at lower rate) |
| Electricity rate used | Current Meralco rate (₱12-14/kWh) | Blended rate after deducting fixed charges |
| Annual degradation | Often ignored | 0.5% per year output loss |
That's actually close to the sales pitch for a well-designed system at today's Meralco rates. But add in:
Adjusted 10-year payback including maintenance and inverter replacement: 5.5-6.5 years. Still excellent — the system continues generating savings for 20+ years after payback.
Use the SolarEnergyPH 25-Year Cashflow Calculator for a complete financial analysis tailored to your actual electricity consumption.
Engr. Jason Morales — Founder, SolarEnergyPH