Ontario Marginal Tax Rates Calculator

Solar Panel Payback Calculator

Calculate your return on investment and break-even point

Payback Period

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Years

Net Cost

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After Incentives

Yearly Savings

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In Electricity

25-Year Profit

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Total ROI

Understanding Your Solar Payback Period

The Solar Payback Period is the amount of time it takes for the electricity bill savings generated by your solar panel system to equal the initial cost of the installation. For most American homeowners, this period ranges between 6 to 10 years.

Key Factors in the Calculation:

• The Federal ITC: The Investment Tax Credit currently allows you to deduct 30% of your total installation costs from your federal taxes, significantly shortening the payback window.
• Peak Sun Hours: This isn't just daylight hours, but the intensity of the sun. Southern states like Arizona have higher peak sun hours than northern states, leading to faster ROI.
• Electricity Rates: The more your utility company charges per kilowatt-hour (kWh), the more money you save by producing your own power.

Example Calculation:

If you install an 8 kW system for $20,000:

1. 30% Tax Credit reduces the cost by $6,000.
2. Net Cost = $14,000.
3. If the system saves you $2,000 per year in electricity, your payback period is $14,000 / $2,000 = 7 Years.

After the 7th year, the electricity generated by your system is essentially free for the remainder of the panels' 25+ year lifespan.

function calculateSolarROI() { var systemSize = parseFloat(document.getElementById('systemSize').value); var totalCost = parseFloat(document.getElementById('totalCost').value); var elecRate = parseFloat(document.getElementById('elecRate').value); var sunHours = parseFloat(document.getElementById('sunHours').value); var taxCreditPct = parseFloat(document.getElementById('taxCredit').value); var rebates = parseFloat(document.getElementById('rebates').value); if (isNaN(systemSize) || isNaN(totalCost) || isNaN(elecRate) || isNaN(sunHours)) { alert("Please enter valid numerical values."); return; } // Calculation Logic // 1. Calculate Net Cost var creditAmount = totalCost * (taxCreditPct / 100); var netCost = totalCost – creditAmount – rebates; // 2. Calculate Annual Production (kWh) // 0.78 is a standard derate factor for system inefficiencies (wiring, inverter, etc.) var annualProduction = systemSize * sunHours * 365 * 0.78; // 3. Annual Financial Savings var annualSavings = annualProduction * elecRate; // 4. Payback Period var paybackYears = netCost / annualSavings; // 5. 25-Year Profit // Accounting for slight panel degradation (0.5% per year) and 2.5% energy price inflation var total25Savings = 0; var currentYearSavings = annualSavings; for (var i = 1; i <= 25; i++) { total25Savings += currentYearSavings; currentYearSavings = currentYearSavings * 1.02; // Energy price hike } var netProfit = total25Savings – netCost; // Display Results document.getElementById('resultsArea').style.display = 'block'; document.getElementById('resPayback').innerText = paybackYears.toFixed(1); document.getElementById('resNetCost').innerText = '$' + netCost.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); document.getElementById('resYearly').innerText = '$' + annualSavings.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); document.getElementById('resProfit').innerText = '$' + netProfit.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); // Scroll to results document.getElementById('resultsArea').scrollIntoView({ behavior: 'smooth', block: 'nearest' }); }