In southern and eastern Spain, a solar panel installation typically delivers:
- Internal rate of return of 20–22%
- Break-even point of 4–5 years
But these figures vary depending on your pre-solar electricity bill, system size, whether you include a battery, and how you finance the installation – all explored below.
What Is a Good ROI for Solar Panels?
A 20–22% internal rate of return is strong by any investment standard.
For context, the long-run average annual return from the S&P 500 is approximately 10–11%. A savings account in Spain currently offers 2–3%. Residential property in southern Spain typically delivers 5–8% annually when rental income and capital growth are combined.
Solar beats all three – and unlike equities, the return is predictable. Your electricity savings don’t fluctuate with market conditions.
The 20–22% figure is based on a panels-only system serving a property with a pre-solar bill in the €150–€510 per month range. As the case studies below show, the right system on the right property can do considerably better.
| Investment | Typical Annual Return (IRR) | Predictability | Liquidity |
|---|---|---|---|
| S&P 500 | ~10–11% | Low – market dependent | High |
| Spanish savings account | ~2–3% | High | High |
| Residential property | ~5–8% | Medium | Low |
| Solar panels – panels only (Costa del Sol and Costa Blanca) | ~20–22% | High – bill savings are fixed | None |
How to Read Your Solar ROI: Four Metrics That Matter
Most people ask two questions:
- What’s the ROI?
- When does the system pay for itself?
Those are the right questions to start with. But at Marblanc Solar, every proposal includes four metrics to give a complete financial picture.
ROI (Return on Investment)
ROI measures total profitability as a percentage of system cost. A system that costs €17,100 and saves €3,800 per year over 25 years delivers a lifetime ROI of 455%. It tells you how much you made – not how fast.
Payback Period
The payback period is the number of years for cumulative savings to cover the upfront cost. It tells you when you break even – not how much you ultimately earn. The two metrics answer different questions.
Net Present Value (NPV)
NPV calculates the present-day value of all future savings, adjusted for inflation. A positive NPV confirms the investment is worthwhile in today’s money. The higher the figure, the stronger the financial case.
Internal Rate of Return (IRR)
IRR is the annualised return on your investment – the most useful metric for comparing solar against alternatives. An IRR of 20% means your money works harder in solar than in almost any other asset class. It is the figure we use to benchmark one system design against another.
Table 1 — Four metrics: what each measures and what a strong result looks like
| Metric | What It Measures | What a Strong Result Looks Like |
|---|---|---|
| ROI | Total profit as a % of system cost | 200%+ over 25 years |
| Payback Period | Years to break even | Under 6 years |
| NPV | Present-day value of future savings | Positive and increasing with system life |
| IRR | Annualised return on investment | 15%+ (beats most comparable alternatives) |
How Do You Calculate the ROI of Solar Panels?
Three calculations cover the key metrics. Each starts with two figures: system cost and annual electricity savings.
Simple ROI is calculated as follows:
- Lifetime savings are found by multiplying annual electricity savings by expected system lifespan (typically 25 years)
- System cost is subtracted from lifetime savings
- The result is divided by system cost
- The figure is multiplied by 100 to produce a percentage
ROI (%) = (Lifetime Savings – System Cost) ÷ System Cost × 100
Payback Period is simpler:
- Annual savings are taken from the system proposal
- System cost is divided by annual savings to give years to break even
Payback Period = System Cost ÷ Annual Savings
IRR requires a financial model or spreadsheet. It accounts for the time value of money across the full system life. Every Marblanc Solar proposal includes a full IRR calculation — alongside NPV, payback period and total ROI – produced using specialist design software.
Here is what those four metrics look like on a real installation.
All six Marblanc Solar case studies at a glance
| Installation | System Size | Pre-Solar Bill (Monthly) | Annual Savings | Break-Even | IRR (Approx.) |
|---|---|---|---|---|---|
| Nueva Andalucía, Marbella (39 panels) | 22kW | €3,309 | ~€30,000 | 8-10 months | ~145% |
| Manilva (9 panels) | 5.4kW | €109 | €1,118 | 7-8 years | ~13% |
| Mijas — financed (11 panels + battery) | 6.5kW | €152 | €1,524 | 7 years* | N/A |
| Alora (14 panels + 2× battery) | 8kW | €201 | €2,352 | 5-6 years | ~18% |
| Mijas Pueblo (29 panels) | 17.3kW | €510 | €3,800 | 4-5 years | ~22% |
| Large villa — 61 panels + battery | 34.5kW | €3,766 | €10,742 | 3-4 years | ~28% |
*System break-even, excluding finance costs – see financed ROI section
What’s the Payback Period for Solar Panels in Spain?
For a panels-only system in southern and eastern Spain, our clients typically reach break even in 4-7 years.
That is ahead of the European average. Strong solar irradiance, high electricity prices, and the ability to monetise surplus generation through feed-in tariffs all reduce the payback period.
The payback period is not fixed. It shifts based on your bill size, system design, and whether you include battery storage.
How Does Your Pre-Solar Electricity Bill Affect ROI?
Your pre-solar bill is the single biggest driver of ROI. The higher the bill, the more each unit of solar generation is worth — and the faster the system pays for itself.
The contrast between these two installations makes that point with numbers.
Does Adding a Battery Improve or Reduce ROI
Adding a solar battery almost always extends the payback period. Batteries add cost – and that cost takes longer to recover than panels alone.
That does not make batteries the wrong choice. It depends on what you need the system to do.
When is a lower ROI worth it?
When grid reliability matters as much as bill reduction.
Our client in Alora didn’t want savings alone – they wanted a property that ran independently of the grid. The battery and SmartGuard delivered that. A lower IRR was the rational outcome given those priorities.
Energy independence, backup power, EV charging, and future-proofing are real benefits that don’t appear in an IRR calculation. The question is whether those benefits are worth the additional investment for your property and your situation.
What Is the ROI on a Financed Solar Installation?
Financing changes the ROI calculation. The system cost doesn’t change – but interest does. Your monthly cash position during the loan period looks different.
A 7% IRR isn’t as exciting as 14% or 22%. But there’s something worth noting.
This client’s monthly electricity bill before solar was €152. Their monthly finance repayment is €153.19. For the same money they were already spending, they now own a battery-powered solar system, an integrated EV charger, and charge their car using energy they generate themselves. The cost of running their home and vehicle has not increased by a single euro.
My take on ROI for financed solar: think less about the financials, and more about the home upgrades you can make at no extra expense.
How Do Warranties Affect the ROI of Solar Panels?
Warranties matter. But in our experience, equipment failure is rarely what damages a solar ROI.
Solar panel warranties typically split into two categories:
- Product warranty – covers manufacturing defects and malfunctions, typically 10–15 years
- Performance warranty – guarantees output stays above 80–90% of rated capacity, typically 25 years. If performance drops below that threshold, panels are replaced.
Across over 500 solar installations, we have never had to action a product or performance warranty on solar panels.
The equipment holds. The installation is where problems arise.
Am I Protected if my installer just disappears?
We take calls every month from homeowners whose installer has vanished. No answer on the phone. No response to emails. The system underperforms and there is no one responsible.
This is why Marblanc Solar provides a 25-year workmanship warranty. It means we are legally responsible for the correct operation of your system for 25 years.
We have inspected properties with cables undersized for the load they carry, creating a fire hazard and a serious performance drag. We have seen panels installed in full shade. Most commonly, we find systems that were never legalised – meaning the homeowner has no access to a feed-in tariff and gives hundreds of euros of surplus electricity to the grid for free, every year.
A 25-year performance warranty is worthless if the system was installed incorrectly in the first place. The workmanship warranty is what protects your ROI.
Does Living in Spain Help You Get a Better Solar ROI?
Yes – and the gap between Spain and the rest of Europe is significant.
The Costa del Sol and Costa Blanca regions in particular get an annual average of 5.0 to 6.0 peak sun hours per day. The equivalent figure across much of northern Europe is 2.5 to 3.5.
More peak sun hours means more electricity generated per panel. More electricity means greater annual savings. Greater annual savings means a faster payback and a higher IRR.
If you own a property in southern Spain with a bill above €150 per month, the conditions for an excellent solar ROI are already in place.
Get a Free Solar Survey with Marblanc Solar
Understanding the theory is one thing. Knowing exactly what a solar system would do for your property is another.
Our Free Solar Survey delivers €250 of value at no cost.
It includes:
- On-site inspection by a qualified electrician or survey engineer
- Drone roof mapping
- Shading, orientation and tilt analysis
- Full review of your electricity bill
- Q&A about future consumption — including AC habits and EV charging
- Solar proposal using the world’s leading design software
- Itemised quote and full financial analysis — ROI, payback period, NPV and IRR
Roman Mitchell is a BEng-qualified civil engineer and Co-Owner of Marblanc Solar. Since joining in 2024 he has overseen 500+ installations across southern Spain.
Can’t I just use ChatGPT to calculate my ROI?
We see homeowners do this every week. ChatGPT doesn’t know your roof angle, your orientation, or how shading affects your output across 12 months.
AI is only as good as the data you feed it. For accurate figures you need the drone scan and specialist design software. Get the survey first – then use AI to interrogate the results if you want. It will be far more useful.
