Solar Payback Estimator

What each input means

State sets the default retail offset rate from EIA's average commercial price for that state [eia-epm-5-6-a]. Override the rate field when you know your all-in supply and delivery cents per kWh from bills.

System size (kW-DC) is nameplate panel capacity. A 250 kW system on a large cultivation roof is illustrative; many indoor buildings cannot fit enough area to offset more than a fraction of annual kWh [doe-solar-rooftop-potential].

Annual yield (kWh per kW-DC) converts DC size to production. EIA's utility-scale PV fleet averaged roughly 26 percent capacity factor in recent monthly data, which is about 2,280 kWh per kW-AC per year at full year operation; rooftop DC systems commonly land near 1,100 to 1,500 kWh per kW-DC when you account for tilt, shading, and inverter losses [eia-epm-6-07-b]. The default 1,250 is a mid-band scenario input, not a site-specific guarantee.

Installed cost ($/W-DC) is turnkey EPC price before incentives. Use your developer quote. This tool does not pull live market pricing.

Tax credit assumed (%) models net cost as gross times one minus the credit rate. The IRS Clean Electricity Investment Credit base is 6 percent and can reach 30 percent when prevailing wage and apprenticeship rules are met [irs-48e]. Notice 2025-42 ties solar credit termination to construction timing for facilities placed in service after 2027 [irs-notice-2025-42]. Many cannabis operators cannot claim the credit at all because Section 280E disallows credits for trafficking in a Schedule I substance [irs-marijuana-faq]. Set this field to zero unless your advisor says otherwise.

Share of production used on site (%) applies the retail offset rate only to that portion. Exported kWh are worth less than retail in most tariffs, which is why a night-lit grow rarely achieves 100 percent effective offset even when annual production looks large on paper.

Rate offset (optional) replaces the state average when you enter a positive number.

The math step by step

Output	Formula	Example (250 kW, 1,250 kWh/kW, $2.10/W, 30% credit, 85% self-use, 14.53 cents/kWh)
Gross system cost	kW-DC × 1,000 × $/W	250 × 1,000 × 2.10 = $525,000
Net system cost	gross × (1 − ITC ÷ 100)	525,000 × 0.70 = $367,500
Annual production	kW-DC × yield	250 × 1,250 = 312,500 kWh
Bill offset	production × self-use% × rate ÷ 100	312,500 × 0.85 × 0.1453 = $38,560/year
Simple payback	net cost ÷ annual offset	367,500 ÷ 38,560 = 9.5 years

Simple payback ignores O&M, inverter replacement, export revenue, demand effects, and financing cost. It is a screening number, not an IRR.

Why cannabis payback looks different from other businesses

Indoor loads are large and run on schedules that do not match the sun. The Northwest Power and Conservation Council measured indoor producers at 128 kWh per square foot of canopy per year in its survey [nwpcc-cannabis]. A building's roof produces on the order of 10 to 20 kWh per square foot per year in many U.S. climates [doe-solar-rooftop-potential], so even a full roof often covers well under half of metered use. That caps self-use and lengthens payback unless you have daytime process loads or a oversized site with carports.

Tax treatment is the other swing factor. A warehouse operator that claims 30 percent off gross cost sees payback shrink by roughly a third. A plant-touching cultivator that sets ITC to zero does not. Read on-site solar and battery storage for grow facilities for how batteries interact with demand, and 280E and energy cost control for why credits are not automatic.

Assumptions and limits

• One flat retail rate. No time-of-use, demand, or export tariff modeling.
• Production is constant per kW-DC; no degradation curve.
• Self-use is a single percentage, not an hourly load match.
• No battery, no community solar subscription, no REC revenue.
• Interconnection upgrades and standby charges are excluded.

When payback is under ten years with ITC set to zero, the project may be worth a developer quote and a utility pre-application report. When payback is long even with a 30 percent credit, compare community solar or focus on supply contract and demand work first. The facility energy cost calculator sizes the load this array would offset.

Load shape vs. solar production shape

Utility-scale PV fleets averaged roughly 26 percent capacity factor nationally in recent EIA monthly data [eia-epm-6-07-b]. Production peaks mid-day, summer-heavy. Indoor cannabis loads peak when lights energize, often evening or night for TOU arbitrage.

Self-use percentage captures how much production overlaps on-site consumption. A grow with 90 percent of kWh at night might achieve only 40 to 60 percent effective self-use even when annual kWh from the array equals 30 percent of meter use.

Daytime loads improve economics: greenhouse fans, extraction chillers on day shift, office and packaging, EV charging for delivery fleet. Model self-use from interval data, not rules of thumb, when a developer proposal arrives.

Roof area and system sizing sanity check

DOE rooftop potential methods estimate usable area and production by building type [doe-solar-rooftop-potential]. Indoor cultivation buildings often have limited unshaded roof relative to meter kWh. Northwest survey indoor intensity near 128 kWh per square foot of canopy per year [nwpcc-cannabis] dwarfs typical roof yield per square foot in many climates.

Carports, ground mounts, and adjacent land expand capacity but add interconnection and zoning review. Cannabis licensing and local land use may restrict ground arrays; confirm with counsel.

Oversizing DC relative to inverter AC clipping changes effective yield per kW-DC. Use developer production reports for site-specific yield instead of the default 1,250 kWh/kW-DC when available.

Tax credit scenarios for cannabis entities

The Clean Electricity Investment Credit base rate is 6 percent, with paths to 30 percent when labor requirements are met [irs-48e]. Notice 2025-42 ties termination timing to construction start for facilities placed in service after 2027 [irs-notice-2025-42].

Section 280E limits many plant-touching businesses from claiming credits tied to trafficking in Schedule I substances [irs-marijuana-faq]. Non-plant-touching landlords, management companies, or lessors may structure ownership differently; that is a tax advisor question, not a calculator input.

Run payback twice: ITC at 0 percent and ITC at 30 percent. Board packs should show both so decision-makers see range without assuming credit.

Read 280E and energy cost control for why on-bill savings sometimes beat capital credits for plant-touching operators.

Export tariffs and net metering

This tool applies retail rate only to self-use kWh. Exported kWh receive zero value unless you add export revenue manually. Many net metering tariffs credit exports below retail, especially for commercial accounts.

Standby charges, minimum bills, and demand charges remain after solar. A 250 kW array rarely eliminates a 500 kW peak set by lights.

Battery storage can shift solar kWh into night hours but is not modeled here. See on-site solar and battery storage for grow facilities for coupling economics.

Community solar alternative

When rooftop payback exceeds your hurdle rate with ITC at zero, subscription community solar may deliver smaller but faster savings without capex. Community solar for cannabis operators covers subscription mechanics and credit allocation.

REC purchases for brand claims differ from on-site offset; see renewable energy certificates.

Developer proposal checklist

Before you sign a PPA or EPC contract, compare developer yield, $/W-DC, and self-use assumption to this screening tool. Ask for hourly production vs. load overlay. Confirm interconnection upgrade cost responsibility. Verify whether cannabis licensing triggers additional fire or security review for equipment on roof.

FAQ on solar and renewables questions covers common operator concerns.

O&M and inverter replacement not in payback

Simple payback excludes ongoing O&M, typically quoted as dollars per kW-DC per year in developer models. Inverter replacement at year 10 to 15 adds lump cost.

Degradation reduces production 0.5 percent per year on many modules. Over 25 years cumulative production falls materially; screening tools use flat yield.

Insurance and property tax treatment of owned arrays varies by municipality. Cannabis facilities already face higher security insurance; confirm roof coverage changes.

Greenhouse vs. indoor economics

Greenhouses may achieve higher self-use if supplemental lighting runs daytime and fans track sun. Indoor night-lighting schedules hurt self-use unless batteries shift energy.

Greenhouse roof area relative to canopy can be favorable [doe-solar-rooftop-potential]. Structural load for snow and wind may limit ballast systems; engineering study required before sizing kW-DC.

Pair greenhouse solar screening with facility type energy benchmark lookup greenhouse row for kWh context.

Interconnection and standby charges

Utilities may impose standby or facilities charges when on-site generation connects. Those dollars are excluded from this screening tool but belong in developer comparisons.

Large cultivations requesting parallel generation trigger engineering studies with timelines measured in months. Start pre-application early if solar is contingent on license approval dates.

Cannabis security requirements for roof access can add fencing or monitoring cost not in EPC quotes.

When to stop at screening and call a developer

If simple payback with ITC at zero is under eight years and self-use exceeds 70 percent on interval review, request formal proposals from two developers plus a structural roof letter.

If payback exceeds fifteen years at zero ITC, prioritize supply procurement and demand work unless sustainability goals mandate renewables regardless of payback.