Solar Panel ROI & Savings Calculator
How to Calculate Your Solar ROI
Switching to solar power is a significant financial decision. To understand your potential return on investment (ROI), you must look at your current energy consumption, local sunlight availability, and the net cost of the hardware. This calculator uses standard industry formulas to estimate how quickly your system will pay for itself.
Key Factors in Solar Calculations
- Peak Sun Hours: This isn't just daylight. It refers to the intensity of sunlight equivalent to 1,000 watts per square meter. Most US locations range between 3.5 and 6 peak hours daily.
- System Efficiency: Our calculator assumes a standard 78% system efficiency factor, accounting for energy loss in the inverter, wiring, and panel temperature fluctuations.
- The Payback Period: This is the time it takes for your cumulative energy savings to equal the initial out-of-pocket cost of the system.
Real-World Example
Suppose you live in a region with 5 peak sun hours per day. Your monthly bill is $150, and you pay $0.14 per kWh. After the Federal Solar Tax Credit, your system costs $12,000.
Your annual usage is roughly 12,857 kWh. To cover this, you would need roughly a 9 kW system. In this scenario, you would save approximately $1,800 per year, leading to a payback period of 6.7 years. Over 25 years (the standard life of a panel), you would save over $45,000 in total electricity costs.
Is Solar Worth It for Your Roof?
The best candidates for solar have south-facing roofs with little to no shade. While modern panels work in cloudy climates, the "Payback Period" will naturally be longer. Additionally, check if your utility company offers "Net Metering," which allows you to sell excess power back to the grid at retail rates, drastically increasing your annual savings.