Solar Panel ROI Calculator
Calculate your estimated savings, payback period, and return on investment for a solar energy system.
Net System Cost:
$0.00
Year 1 Savings:
$0.00
Payback Period:
0.0 Years
25-Year Total Savings:
$0.00
Total ROI (25 Years):
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How to Calculate Your Solar ROI
Investing in solar panels is one of the most effective ways to reduce long-term household expenses while contributing to environmental sustainability. To understand the true financial benefit, you must look beyond the initial price tag and calculate the Solar Return on Investment (ROI).
The calculation involves several critical factors:
- Gross Cost vs. Net Cost: The gross cost is what you pay the installer. The net cost is what remains after the Federal Solar Tax Credit (currently 30% in many regions) and local utility rebates.
- Energy Production: A standard system produces roughly 1,300 to 1,600 kWh per kW of installed capacity annually, depending on your geographic location and roof orientation.
- Payback Period: This is the time it takes for your cumulative energy savings to equal the net cost of the system. In the United States, the average payback period typically ranges between 6 to 10 years.
Factors That Speed Up Your ROI
Your ROI isn't static. It is heavily influenced by Electricity Inflation. As utility companies raise rates (historically 2-4% per year), your solar energy becomes more valuable. Additionally, Panel Degradation is minimal, usually around 0.5% per year, meaning your system will likely still produce 85-90% of its original power after 25 years.
Example Calculation
If you install a 7kW system for $21,000 and receive $6,300 in tax credits, your net cost is $14,700. If that system produces $1,800 worth of electricity in Year 1, and electricity prices rise by 3% annually, your system will pay for itself in approximately 7.5 years. Over a 25-year lifespan, that same system could save you over $60,000 in total energy costs.