1. Caclulating Payback period Installing alternative is an investment The cost (plus risk) must be less then the potential gain

2. The payback period is the time it takes for a project to recover its investment expenditures. Alternative power system operation may be essentially free from month to month, but it may take years or even decades to recover the initial cost.

3. The simple calculation Calculate the number of kilowatt hours used per month Calculate monthly kilowatt output from system – Size of system times number of hours of sun per day (look at US solar map) times 30 days in a month – Adjust for real world conditions (reduce monthly output by 25%)

4. Divide the anticipated monthly output from the system by actual monthly use (from bill) to get a percentage of savings. Multiply the actual electric bill by these savings. Caclulate annual savings Divide cost of system by annual savings. This is the payback period

5. Average lifetime of a system is about 25 years. After payback period everything is a savings.

6. Items not calculated Potential increases in electricity costs Tax rebates and other incentives for the system Time value of money