Unlocking ROI: Financial Advantages of Home Solar Systems

Determining the Return on Investment: Financial Benefits of home solar system

Have you ever wondered if investing in a home solar system is worth it? Well, just like any other purchase, it’s essential to evaluate the return on investment (ROI) before taking the leap. By understanding the financial benefits, you can determine if solar panels are the right choice for you.

One crucial factor to consider is the payback period, which represents the time it takes for your initial investment in the solar system to be recovered through energy savings. 

The shorter the payback period, the quicker you start reaping the rewards. Moreover, the ROI reflects the effective returns your investment will generate over the system’s lifetime. With substantial savings, your initial investment will be repaid faster, resulting in a higher ROI. 

In this blog, we will talk about how to take a first step towards sustainable living with a solar system, calculate the solar panel ROI and unleash the power of a home solar system!

Calculate Your Solar Payback Period with Freyr Energy’s Home Solar System Guidance

Simplifying solar payback period calculation for your solar system investment in the following ways:

Average Electricity Bill & Power Consumption

Did you know that by installing a 3kW solar system, you can save approximately 360 units of electricity per month? That’s a reduction of around ₹2,500 – ₹3,000 in your monthly electricity bills! Let’s break down the numbers for your home solar system.

Check out this formula (Electricity Cost per kWh x Monthly Usage in kWh x 12 months x 25 years) to calculate lifetime electricity costs.

Assuming a 1 kW system generates an average of 4 units (kWh) per day, a 5 kW system would generate about 20 kWh/day or 600 units per month. 

Depending on your current electricity bills, the savings can be significant. For instance, if your bills are around ₹3,000/month, installing the solar system would eliminate your power bills altogether.

Keep in mind that the numbers may vary based on factors like electricity generation and tariffs in your city. Additionally, net metering availability plays a crucial role in earning from surplus power generation.

Solar System Size

When considering a home solar system in India, the size of the system depends on your electricity consumption. 

On average, a typical solar panel system consists of 9-15 solar panels, occupying 300-500 sq ft of shadow-free space. This configuration generates 3-5 kilowatts of power, fulfilling the energy needs of an average household. Larger homes or those with higher energy consumption may require additional panels for ample power generation.

Now, let’s talk about the cost. A home solar panel system’s price in India varies based on system size and location. On average, the cost ranges from Rs. 1-2 lakhs, with larger systems incurring higher expenses. This includes the solar panels, inverter, and installation.

But here’s the exciting part: you can significantly reduce the cost through government subsidies. The Indian government offers various subsidies schemes for homeowners who install solar panel systems. Moreover, several states in India have their own enticing incentives for solar power.

Cost of the Solar System

The cost of a solar panel for a home depends on its size. Opting for a larger system not only reduces the cost per kW but also generates more electricity, leading to faster payback. In Telangana, for example, a 3kW solar panel system can cost around ₹1,80,000/- with a subsidy.

Households, farmhouses, and businesses with high electricity bills can save tens of thousands of rupees by choosing the right solar system size. However, it’s essential to consider the upfront installation cost, which includes solar components, mounting modules, and labor.

Homes blessed with maximum solar access can recoup their installation cost within 3-4 years. The payback period depends on factors such as electricity costs, home size, and payment method.

Solar Panels Payback Period

Making the smart choice to invest in solar panels for home promises substantial long-term savings on your electricity bill. 

On average, commercial and industrial consumers can expect payback within 3-5 years, while residential consumers can anticipate payback within 4-5 years. Once the initial cost is recovered, the energy generated by your solar system for the next 18-22 years is virtually free.

What sets solar investment apart is the assured returns it offers. Unlike other market investments, solar system for home guarantee returns since they consistently generate electricity as long as the sun shines. 

With solar panels, you not only contribute to a sustainable future but also secure a reliable and cost-effective energy source.

What Factors Affect Solar ROI?

Cracking the ROI Code: key factors to consider for solar panels for home investment. From electricity costs to panel warranty, we’ve got you covered:

Solar Panel Installation Costs

Investing in solar panels for home, equipment, and installation costs poses the initial financial challenge. 

Depending on factors like region, contractor costs, and equipment requirements, a full-sized residential system can cost INR 1,00,000/- or more. The design of a solar power system is customized based on the structure type, roof specifications, shading, and utility. 

On average, a 3kW solar panel system installation costs range from Rs. 1,89,000 to Rs. 2,15,000. The per-watt price of solar panel system for home in India typically falls between Rs. 75 and Rs. 85.

Maintenance & Replacements

When it comes to solar system for home, grid-tied systems offer several advantages. These systems require minimal maintenance due to their few moving parts. Keeping the panels clean and free from debris is typically all that’s needed.

Grid-tied systems enable homeowners to save money through net metering, where excess electricity is sent back to the utility grid, earning credits. This eliminates the need for costly battery storage.

Additionally, grid-tied systems act as virtual batteries, generating power on demand and allowing for unlimited energy availability. Unlike off-grid systems that require expensive batteries, grid-tied systems are more affordable and easier to design and maintain.

Net Metering Agreements

Net metering plays a crucial role in promoting solar system for home utilization, offering a range of advantages for users and the environment alike.

One major benefit is the elimination of storage batteries. With net metering, solar panel owners can effortlessly transfer excess power to the grid, eliminating the need for costly battery investments. This means uninterrupted access to electricity without incurring additional charges.

Additionally, net metering boasts a low maintenance cost. By transferring surplus power to the electric grid, maintenance expenses are significantly reduced compared to non-grid systems.


When installing a solar system for home, it’s crucial to consider sun exposure for maximum efficiency and a higher return on investment (ROI). 

Obstructions like trees or chimneys can hinder sunlight access, impacting energy generation and potential savings. Fortunately, many states in India experience 3 to 5 peak sun hours, with longer days during summer and abundant daylight hours. 

Your location’s average sun hours play a vital role in determining the solar power output achievable through installation.

Mount Angle & Orientation

To maximize the efficiency of solar power for home, it’s essential to consider their angle concerning the sun’s position. As the sun moves across the sky throughout the day, panels facing directly towards it generate the most power.

For homeowners, the ideal angle for solar power for home installation is often close to or equal to the latitude of your home. You ensure your solar power system achieves its maximum average output, delivering optimal energy generation throughout the year.

Panel Degradation

Solar panels have an expected lifespan of 25-30 years, after which their performance gradually declines. The degradation rate measures how quickly a panel’s power production decreases over time, typically averaging 0.5% per year.

When calculating the return on investment (ROI) and potential savings from solar power for home, it’s crucial to consider this degradation factor. As panels age, their output slightly diminishes, impacting the overall efficiency and maximum savings potential.

To make an informed decision, it’s essential to evaluate the degradation rate of solar panels before making a purchase. Ensuring long-term efficiency will help you maximize the benefits of solar power for home.

Electricity Costs

With electricity rates steadily increasing over time, it’s challenging to predict future changes. However, home solar power can provide financial security by fixing your electric rate for the next 25 years. This ensures predictability in your energy bills and shields you from future rate hikes.

To encourage clean energy adoption, the MNRE introduced the Rooftop Solar Programme Phase – Ⅱ, offering fixed solar subsidies for homeowners and housing societies. 

The National Portal for Rooftop Solar simplifies the home solar power subsidy application process, providing transparency and access to crucial information on eligibility criteria, approved solar models, and impaneled solar vendors.


Ready to take charge of your energy future? Let Freyr Energy’s expert services calculate your solar payback period and guide you toward a sustainable future. We’re not your average solar company – we’re committed to quality, customer satisfaction, and making finances crystal clear.

Optimal savings come when your bill shrinks by 80-90%. Start saving and join the solar revolution with Freyr Energy today!

Asked Questions

Absolutely! Solar panels can be a worthwhile investment, providing long-term ROI (Return on Investment) and a greener future.

Yes, but significantly reduced. Solar panels can greatly reduce your electricity bill, by generating clean energy from the sun.

To maximize your solar panel ROI, consider factors like system size, location, and optimizing energy usage patterns.

While a home solar system can’t generate direct income, it can provide financial benefits through savings on your electricity bill and potential incentives.

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