Estimate your payback period and 25-year total savings
Net System Cost
$0
Payback Period
0 Years
Year 1 Savings
$0
25-Year Net Profit
$0
How to Calculate Your Solar Return on Investment (ROI)
Investing in solar panels is not just an environmental choice; it's a financial strategy. To accurately determine if solar is right for your home, you must look beyond the initial sticker price and consider the net cost after incentives, the production efficiency of your local climate, and the rising cost of utility electricity.
Understanding the Key Metrics
Net System Cost: This is your total out-of-pocket expense. In the United States, the Federal Investment Tax Credit (ITC) currently allows you to deduct 30% of your installation costs from your federal taxes.
Solar Production Estimate: Your system's output depends on its size (kW) and your location's "Peak Sun Hours." A 10kW system in Arizona will produce significantly more energy than the same system in Washington.
Payback Period: This is the time it takes for your cumulative energy savings to equal your initial net investment. Most residential systems see a payback between 6 to 10 years.
Example Scenario
Suppose you install an 8kW system at a cost of $24,000. With a 30% federal tax credit, your net cost drops to $16,800. If you live in a region with 5 sun hours per day and pay $0.15 per kWh, your system produces roughly $1,500 worth of electricity annually. Without accounting for utility rate hikes, your payback period would be roughly 11.2 years. However, when factoring in a 3% annual utility increase, that payback period often drops to 8-9 years.
function calculateSolarROI() {
var cost = parseFloat(document.getElementById('sysCost').value);
var creditPercent = parseFloat(document.getElementById('taxCredit').value);
var sizeKw = parseFloat(document.getElementById('sysSize').value);
var sunHours = parseFloat(document.getElementById('sunHours').value);
var rate = parseFloat(document.getElementById('utilRate').value);
var hike = parseFloat(document.getElementById('elecHike').value) / 100;
if (isNaN(cost) || isNaN(sizeKw) || isNaN(sunHours) || isNaN(rate)) {
alert("Please fill in all fields with valid numbers.");
return;
}
// 1. Calculate Net Cost
var netCost = cost – (cost * (creditPercent / 100));
// 2. Calculate Annual Production (kWh)
// 0.78 is the standard derate factor accounting for inverter efficiency, wiring, and dirt
var annualKwh = sizeKw * sunHours * 365 * 0.78;
// 3. Year 1 Savings
var yearOneSavings = annualKwh * rate;
// 4. Payback Period & 25-Year Savings Logic
var cumulativeSavings = 0;
var currentRate = rate;
var paybackYear = 0;
var foundPayback = false;
var total25YearSavings = 0;
for (var year = 1; year = netCost) {
paybackYear = year – 1 + ((netCost – (cumulativeSavings – yearlySavings)) / yearlySavings);
foundPayback = true;
}
if (year === 25) {
total25YearSavings = cumulativeSavings;
}
}
// Display Results
document.getElementById('solarResults').style.display = 'block';
document.getElementById('resNetCost').innerText = '$' + netCost.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('resPayback').innerText = foundPayback ? paybackYear.toFixed(1) + ' Years' : '> 25 Years';
document.getElementById('resYearOne').innerText = '$' + yearOneSavings.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('resLifetime').innerText = '$' + (total25YearSavings – netCost).toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
}