Estimate your payback period and long-term energy savings.
Net System Cost (after Tax Credit):$0.00
Annual Energy Savings:$0.00
Estimated Payback Period:0 Years
25-Year Cumulative Savings:$0.00
How to Calculate Your Solar Panel Return on Investment
Switching to solar energy is one of the most significant financial decisions a homeowner can make. Understanding the ROI (Return on Investment) requires looking beyond the initial sticker price and analyzing long-term utility avoidance.
The Components of Solar Savings
To get an accurate estimate, our calculator uses four primary data points:
Monthly Electric Bill: This determines your baseline expenditure. As utility rates rise (averaging 2-4% annually), this "avoided cost" becomes more valuable.
Gross System Cost: The total price of panels, inverters, labor, and permitting before any incentives.
Federal Investment Tax Credit (ITC): Currently set at 30%, this is a dollar-for-dollar reduction in the federal income tax you owe.
Energy Offset: Most systems are designed to cover 80% to 100% of your energy needs. A 100% offset means you produce as much energy as you consume.
Real-World Solar Calculation Example
Imagine a homeowner in California with a $200 monthly bill. They install a solar array costing $20,000.
Tax Credit: 30% of $20,000 = $6,000 credit.
Net Cost: $20,000 – $6,000 = $14,000.
Annual Savings: $200 x 12 months = $2,400 per year.
Payback Period: $14,000 / $2,400 = 5.8 Years.
After the 6th year, every dollar saved on electricity is pure profit. Over a 25-year lifespan (the standard warranty for Tier 1 panels), that homeowner could save over $60,000, accounting for rising energy costs.
Factors That Influence Your ROI
While the calculator provides a strong baseline, several local factors can accelerate your savings:
Net Metering (NEM): Some states allow you to "sell" excess energy back to the grid at retail rates, further reducing your bill.
Local Incentives: States like New Jersey or Massachusetts offer SRECs (Solar Renewable Energy Certificates) or performance-based incentives that pay you for the power you produce.
Property Value: Studies by Zillow and Lawrence Berkeley National Laboratory show that solar installations can increase home value by an average of 4.1%.
function calculateSolarSavings() {
var monthlyBill = parseFloat(document.getElementById("monthlyBill").value);
var systemCost = parseFloat(document.getElementById("systemCost").value);
var taxCreditPercent = parseFloat(document.getElementById("taxCredit").value);
var energyOffset = parseFloat(document.getElementById("energyOffset").value);
if (isNaN(monthlyBill) || isNaN(systemCost) || isNaN(taxCreditPercent) || isNaN(energyOffset)) {
alert("Please enter valid numbers in all fields.");
return;
}
// 1. Calculate Federal Tax Credit Value
var taxCreditValue = systemCost * (taxCreditPercent / 100);
// 2. Calculate Net Cost
var netCost = systemCost – taxCreditValue;
// 3. Calculate Monthly and Annual Savings
var monthlySavings = monthlyBill * (energyOffset / 100);
var annualSavings = monthlySavings * 12;
// 4. Calculate Payback Period (simple ROI)
var paybackPeriod = annualSavings > 0 ? (netCost / annualSavings) : 0;
// 5. Calculate 25-Year Savings (assuming 3% annual utility inflation)
var totalSavings = 0;
var currentYearSavings = annualSavings;
for (var i = 1; i <= 25; i++) {
totalSavings += currentYearSavings;
currentYearSavings *= 1.03; // 3% inflation factor for utility rates
}
var net25YearProfit = totalSavings – netCost;
// Display Results
document.getElementById("solarResults").style.display = "block";
document.getElementById("netCostDisplay").innerHTML = "$" + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("annualSavingsDisplay").innerHTML = "$" + annualSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("paybackPeriodDisplay").innerHTML = paybackPeriod.toFixed(1) + " Years";
document.getElementById("longTermSavingsDisplay").innerHTML = "$" + net25YearProfit.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
// Smooth scroll to results on mobile
if (window.innerWidth < 600) {
document.getElementById("solarResults").scrollIntoView({ behavior: 'smooth' });
}
}