Home Equity Loan Rates Calculator Chase

Investment Summary

Net System Cost: $12,600

Annual Production: 7,391 kWh

Annual Savings: $1,182.56

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Estimated Payback Period

10.7 Years

Total 25-Year Savings

$29,564

How to Calculate Solar Panel ROI

Investing in solar energy is one of the most effective ways for homeowners to reduce their carbon footprint and slash monthly utility bills. However, determining the financial viability requires understanding the Solar Return on Investment (ROI) and the payback period.

Key Factors Influencing Your ROI

• System Cost and Incentives: The gross cost is just the starting point. The federal Investment Tax Credit (ITC) currently allows you to deduct 30% of the installation cost from your federal taxes, significantly lowering the net investment.
• Solar Irradiance: The "Daily Sun Hours" refers to how much usable sunlight your roof receives. States like Arizona or California will naturally have a faster ROI than cloudy regions.
• Electricity Rates: The more you pay your utility company per kilowatt-hour (kWh), the more you save by generating your own power. As utility rates rise, your solar ROI actually improves.

The Calculation Formula

Our calculator uses a standardized industry formula to estimate your returns:

1. Net Cost: Gross Cost – Rebates/Tax Credits.
2. Annual Energy Production: (System Size in kW × Daily Sun Hours × 365 days) × 0.75 (Efficiency Factor).
3. Annual Savings: Annual kWh Produced × Local Electricity Rate.
4. Payback Period: Net Cost / Annual Savings.

Is Solar a Good Investment?

Most residential solar systems pay for themselves within 6 to 11 years. Considering most panels are warrantied for 25 years, you can expect 15+ years of virtually free electricity. This often results in a total profit exceeding $20,000 to $40,000 over the life of the system, depending on your local energy costs.

function calculateSolarROI() { var systemSize = parseFloat(document.getElementById("solarSystemSize").value); var grossCost = parseFloat(document.getElementById("solarGrossCost").value); var incentives = parseFloat(document.getElementById("solarIncentives").value); var elecRate = parseFloat(document.getElementById("solarElecRate").value); var sunHours = parseFloat(document.getElementById("solarSunHours").value); if (isNaN(systemSize) || isNaN(grossCost) || isNaN(incentives) || isNaN(elecRate) || isNaN(sunHours)) { alert("Please enter valid numeric values in all fields."); return; } // Calculation Logic var netCost = grossCost – incentives; // 0.75 accounts for real-world system losses (inverters, wiring, soiling) var annualProduction = systemSize * sunHours * 365 * 0.75; var annualSavings = annualProduction * elecRate; var paybackPeriod = 0; if (annualSavings > 0) { paybackPeriod = netCost / annualSavings; } var lifetimeSavings = (annualSavings * 25) – netCost; // Format results document.getElementById("resNetCost").innerText = "$" + netCost.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); document.getElementById("resProduction").innerText = Math.round(annualProduction).toLocaleString() + " kWh"; document.getElementById("resAnnualSavings").innerText = "$" + annualSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); if (paybackPeriod > 0) { document.getElementById("resPayback").innerText = paybackPeriod.toFixed(1) + " Years"; } else { document.getElementById("resPayback").innerText = "N/A"; } document.getElementById("resTotalProfit").innerText = "$" + Math.round(lifetimeSavings).toLocaleString(); } // Initialize calculation on load window.onload = function() { calculateSolarROI(); };