Solar Panel ROI Calculator
Estimate your savings and payback period for a residential solar installation.
Net Cost (After Tax Credit):
$0.00
Year 1 Energy Savings:
$0.00
Estimated Payback Period:
0 Years
Total 25-Year Savings:
$0.00
How to Calculate Solar Panel ROI
Calculating the Return on Investment (ROI) for solar panels involves more than just looking at the initial price tag. To find your true break-even point, you must account for the Federal Investment Tax Credit (ITC), your local sunlight exposure, and your utility's electricity rates.
Key Factors in the Calculation:
- System Size: Measured in kilowatts (kW), this is the maximum capacity of your panels. A typical home uses between 6kW and 10kW.
- Sun Hours: This isn't the total daylight time, but the "peak sun hours" where solar intensity is at 1,000 watts per square meter.
- Payback Period: The amount of time it takes for your cumulative energy savings to equal the net cost of the system.
Typical Example ROI
If you install a 7kW system costing $18,000 in an area with 4.5 sun hours per day, and your utility charges $0.16 per kWh, your annual production would be approximately 11,497 kWh. With the 30% Federal Tax Credit, your net cost drops to $12,600. Your first-year savings would be roughly $1,839, leading to a payback period of about 6.8 years.
Maximizing Your Solar Investment
To ensure the best ROI, consider cleaning your panels twice a year to maintain efficiency and monitor for any shading from growing trees. Most modern panels are rated for 25 years, meaning after your payback period, you will enjoy nearly two decades of free electricity.