Estimate your potential savings and break-even point for a residential solar system.
Net System Cost:$0.00
Year 1 Energy Production:0 kWh
Year 1 Savings:$0.00
Estimated Payback Period:0 Years
25-Year Total Savings:$0.00
How to Calculate Your Solar Return on Investment
Deciding to go solar is a significant financial commitment. Understanding your Return on Investment (ROI) involves more than just looking at the sticker price of the panels. To get an accurate picture, you must consider the net cost after federal tax credits (like the ITC) and local rebates.
The Formula:
First, determine your Annual Production: System Size (kW) × Peak Sun Hours × 365 days × 0.85 (efficiency factor). Then, multiply that by your current electricity rate to find your annual savings.
Key Factors Influencing Your Savings
Peak Sun Hours: This isn't just daylight; it's the intensity of sunlight. Areas like Arizona have higher peak hours than Seattle.
Utility Rates: The more you pay your utility company per kWh, the faster your solar panels will pay for themselves.
Incentives: The Federal Solar Tax Credit currently allows you to deduct a significant percentage of your installation costs from your federal taxes.
Degradation: Solar panels slightly lose efficiency (about 0.5% per year), which is factored into long-term savings estimates.
Real-World Example
Imagine a 7kW system installed in a region with 5 peak sun hours. If the installation costs $20,000 and you receive a $6,000 tax credit, your net cost is $14,000. If your utility rate is $0.16/kWh, your year one savings would be approximately $1,800. In this scenario, your payback period would be roughly 7.7 years, with pure profit every year thereafter.
function calculateSolarROI() {
var size = parseFloat(document.getElementById('systemSize').value);
var cost = parseFloat(document.getElementById('installCost').value);
var sun = parseFloat(document.getElementById('sunHours').value);
var rate = parseFloat(document.getElementById('elecRate').value);
var credits = parseFloat(document.getElementById('incentives').value) || 0;
var increase = parseFloat(document.getElementById('annualIncrease').value) / 100 || 0.03;
if (isNaN(size) || isNaN(cost) || isNaN(sun) || isNaN(rate)) {
alert("Please enter valid numbers for system size, cost, sun hours, and rate.");
return;
}
// Calculations
var netCost = cost – credits;
// 0.78 is a standard derate factor accounting for inverter efficiency, wiring loss, and soiling
var yearlyKwh = size * sun * 365 * 0.78;
var year1Savings = yearlyKwh * rate;
// Payback Period Logic (Accounting for utility rate increases)
var currentNetCost = netCost;
var years = 0;
var totalSavings25 = 0;
var annualSavings = year1Savings;
for (var i = 1; i 0) {
currentNetCost -= actualYearlySavings;
if (currentNetCost 0 && years 25) {
document.getElementById('resPayback').innerText = "25+ Years";
} else {
document.getElementById('resPayback').innerText = "Instant (Credits > Cost)";
}
document.getElementById('resTotalSavings').innerText = "$" + totalSavings25.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
// Show results box
document.getElementById('solarResults').style.display = 'block';
}