Home / The guide / Permits and budget

Compare options with simple payback

Simple payback tells you roughly how many years a system takes to pay for itself compared with an alternative. It is a quick screen, not a full financial analysis.

How

1. Pick a system and an alternative, for example solar water heating versus heating water with a generator or bottled gas.
2. Find the extra upfront cost of the system, minus any confirmed incentive.
3. Estimate the yearly saving: what the alternative costs per year to run minus what the system costs per year to run and maintain.
4. Divide net cost by yearly saving to get payback in years, using the payback calculator. The USDA Forest Service uses the same form: installed cost minus rebates, divided by yearly energy savings, and notes it ignores interest.
5. Compare the payback with the expected life of the equipment. A payback longer than the equipment life means it does not pay back on cost alone.
6. Remember non-money factors: resilience, noise, fuel deliveries, and comfort.

Do these first

• legal-7

Sources

1. DSIRE: Database of State Incentives for Renewables and Efficiency. N.C. Clean Energy Technology Center, NC State University, accessed 2026-11
2. Cost Estimating and Assessment Guide: cost estimating challenges. US Government Accountability Office, accessed 2026-11
3. Fluorescent Lamp Retrofits: Savings or Fantasy? Simple Payback. USDA Forest Service, Technology and Development Program, accessed 2026-11

Open in the interactive guide