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Costs & prices 2 min read

Solar Payback Period: How to Calculate Your Return on Investment

How to calculate payback and ROI for a solar plant in Egypt, what shortens payback, and a complete worked example.

GPS Engineering Team
Solar Payback Period: How to Calculate Your Return on Investment

Solar is an investment, and investments are judged by their return. The good news is that the formula is transparent and the results are measurable on your bill every month. Here we explain payback and ROI step by step.

Key takeaways

  • Payback = plant cost ÷ annual savings.
  • Typical payback in Egypt is 3–6 years depending on sector and tariff.
  • After payback you get near-free electricity for roughly 20 more years.
  • Every tariff increase shortens payback.

The basic formula

Payback (years) = plant cost ÷ annual savings

Annual savings = annual usable production × the price per kWh you would otherwise pay

A complete worked example: factory

Item Value
Plant size 400 kW
Approx. cost (EGP 12,500/kW) EGP 5,000,000
Annual production (1,800 × 400) 720,000 kWh
Average price per kWh EGP 2.3
Annual savings EGP 1,656,000
Payback about 3 years
3years payback in the example
25years plant life
30+ millionEGP approx. lifetime savings

What shortens payback?

  1. Higher tariffs: successive increases in 2026 improved returns directly.
  2. Daytime consumption: using production as it happens.
  3. Scale: larger plants cost less per kW.
  4. Design quality: more energy from the same panels.
  5. Regular maintenance: keeping dust from eroding output.

Other metrics for investors

  • IRR: often above 20% a year for commercial and industrial projects.
  • LCOE: the levelised cost per kWh over the plant’s life — far below the commercial grid price.

Calculate payback for your site with the calculator and read solar prices in 2026.

How much would your plant save?

Get system size, cost and expected savings in under a minute.

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GPS

GPS Engineering Team

GPS engineers have designed and built solar plants across Egypt for 15+ years. Here they share what they learn in the field.

Frequently asked questions

Is payback faster for homes or factories?

Usually factories and hotels, thanks to large daytime demand and higher commercial prices; for homes it depends on the tariff tier.

Can the plant be depreciated for tax?

In most companies the plant is treated as a fixed asset and depreciated. Check with your accountant for your specific case.

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