Solar Panel ROI Calculator
Calculate your estimated savings, payback period, and 25-year return on investment for a residential solar system.
Net System Cost (after tax credit):
$0
Year 1 Estimated Savings:
$0
Estimated Payback Period:
0 Years
Total 25-Year Savings:
$0
Total Net Profit:
$0
How to Calculate Solar ROI
Investing in solar panels is one of the most effective ways to reduce long-term household expenses while increasing property value. Understanding the Return on Investment (ROI) requires looking at the "break-even" point—the moment your cumulative electricity savings equal the cost of the installation.
The primary formula used in our calculator involves determining the Net System Cost (Gross Cost minus the 30% Federal Investment Tax Credit) and dividing it by your Annual Energy Production multiplied by your local utility rate.
Key Factors Influencing Your Payback Period
- Sunlight Hours: This isn't just "daylight," but "peak sun hours" where the sun's intensity reaches 1,000 watts per square meter. Most US locations range from 3.5 to 6.0 hours daily.
- Utility Rates: The higher your current electricity bill, the faster your solar panels pay for themselves.
- System Efficiency: We factor in a standard 0.5% annual degradation rate for solar panels and a 78% overall system efficiency (accounting for inverter loss and wiring).
- Energy Inflation: Electricity prices typically rise by 2-4% annually. Factoring this in significantly increases your total 25-year ROI.
Example Calculation
Imagine a homeowner in Florida installing a 7kW system for $21,000. With the 30% Federal Tax Credit, the net cost drops to $14,700. If that system produces 10,000 kWh annually at a rate of $0.15/kWh, the first-year savings are $1,500. Without accounting for energy inflation, the payback period would be roughly 9.8 years. However, with energy prices rising, the actual payback is often 20-30% faster.