A Simple Way to Calculate the Payback of Home Solar Power (Without IRR or NPV)
Many people message me saying formulas like IRR and NPV give them a headache.
I totally agree. For households, I’m using a much simpler way of calculating things that’s still enough to make decisions.
The core comes down to just 2 numbers:
- The electricity bill you should have paid (if you didn’t have solar yet)
- The actual electricity bill paid after installing the system
From there you can immediately see whether you’re making a profit or not, and more importantly, you’ll know the actual electricity unit price you’re paying per kWh.
1) The monthly calculation method I’m using
Step 1: Record the month’s total kWh consumption
Take the actual electricity usage for the month (from the power company’s app or the main meter).
Step 2: Calculate the “bill you should have paid”
Use that exact consumption level and apply the EVN price tiers at the time of calculation.
Step 3: Take the “actual bill paid”
This is the bill after solar power has already offset part of the load.
Step 4: Calculate 3 sufficient indicators
- Monthly savings = Bill you should have paid − Actual bill paid
- Electricity unit price before investment = Bill you should have paid / Total kWh consumed
- Actual electricity unit price after investment = Actual bill paid / Total kWh consumed
That’s it. No need for complex financial models; you can still clearly see the effectiveness.
2) My own real-life example
From my actual operating data:
- The bill I should have paid (without solar): around 3.4 million VND/month
- The actual bill paid after optimized operation: around 1.55 million VND/month
=> Savings: around 1.85 million VND/month
If we convert that to the average electricity unit price at the same consumption level:
- Before investment: the unit price is clearly much higher
- After investment: the actual unit price drops significantly
This difference is what helps me recover my capital in about 24 months.
3) Why is there profit according to this simple calculation?
a) Invest early
Every month you delay is a month of missed electricity savings.
If you’ve already decided to use electricity long-term at your current home, doing it early is usually more beneficial.
b) Match the load
Solar power consumed on-site is the most valuable portion.
The closer you match your daytime load, the better the effectiveness.
c) Small capacity is enough
I lean towards installing just enough, not chasing oversized systems.
Start small so you can recover capital quickly, gather real operating data, then expand.
4) Practical principles for choosing capacity for households
- Prioritize offsetting the important daytime load first
- Don’t try to “cover 100% at all times” right from the start
- Choose a system that’s easy to operate and maintain
- Monitor for the first 2–3 months before deciding to increase capacity
In short: start from small to medium, don’t over-size on day one.
5) Quick checklist before spending money
- Collect the last 12 months of electricity bills
- Determine your actual daytime load
- Install a system with just enough capacity to match the load
- Track these 3 indicators every month:
- The bill you should have paid
- The actual bill paid
- The actual electricity unit price after investment
Just consistently following these 4 steps is enough to manage financial performance very well.
Conclusion
If you ask me in one short question: should you invest in solar power?
My stance is still very clear:
- You should invest early
- You should install a system that matches your load
- You should start with a small, sufficient capacity
For households, there’s no need for overly complex calculations. Just by tracking those “2 bills” each month, you’ll know whether the system is helping you pay a lower electricity price or not.
If you need it, I’ll share a very compact tracking template (3 columns of numbers) so you can self-check effectiveness each month in 1 minute.