After Tax Income Calculator

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Solar Panel ROI & Payback Calculator

Financial Summary

Net System Cost:

Year 1 Savings:

Payback Period:

25-Year Total Savings:

25-Year Net Profit:

Internal Rate of Return:

function calculateSolarROI() { var size = parseFloat(document.getElementById('sys_size').value); var cost = parseFloat(document.getElementById('sys_cost').value); var sun = parseFloat(document.getElementById('sun_hours').value); var rate = parseFloat(document.getElementById('elec_rate').value); var tax = parseFloat(document.getElementById('tax_credit').value); var deg = parseFloat(document.getElementById('degradation').value) / 100; if (isNaN(size) || isNaN(cost) || isNaN(sun) || isNaN(rate) || isNaN(tax)) { alert("Please enter valid numbers in all fields."); return; } // Logic: Calculate Net Cost after Incentives var netCost = cost – (cost * (tax / 100)); // Logic: Annual Production (Derating factor of 0.78 for system losses) var annualProd = size * sun * 365 * 0.78; var year1Savings = annualProd * rate; // Logic: Payback Period (Simplified linear) var payback = netCost / year1Savings; // Logic: 25 Year Savings with degradation var totalSavings = 0; var currentProd = annualProd; for (var i = 0; i < 25; i++) { totalSavings += (currentProd * rate); currentProd = currentProd * (1 – deg); } var netProfit = totalSavings – netCost; var irr = (year1Savings / netCost) * 100; // Estimated ROI percentage document.getElementById('res_net_cost').innerText = "$" + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('res_year1_savings').innerText = "$" + year1Savings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('res_payback').innerText = payback.toFixed(1) + " Years"; document.getElementById('res_total_savings').innerText = "$" + totalSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('res_net_profit').innerText = "$" + netProfit.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('res_irr').innerText = irr.toFixed(2) + "%"; document.getElementById('solar-results').style.display = 'block'; }

Understanding Your Solar ROI: A Complete Financial Guide

Investing in solar panels is not just an environmental decision; it is a significant financial maneuver. To determine if solar is right for your home, you must look beyond the sticker price and understand the Return on Investment (ROI) and the Payback Period.

How the Solar Payback Period is Calculated

The solar payback period represents the time it takes for the cumulative energy savings to equal the initial net cost of the system. Our calculator uses the following formula:

  • Gross Cost – Federal & State Incentives = Net Cost
  • System Size (kW) × Sun Hours × Efficiency Factor = Annual Generation (kWh)
  • Annual Generation × Utility Rate = Annual Savings
  • Net Cost ÷ Annual Savings = Payback Period

Key Factors Influencing Your Returns

Several variables can accelerate or delay your solar ROI:

  • The Federal Investment Tax Credit (ITC): Currently, the US federal government offers a 30% tax credit on the total cost of your solar installation. This is the single largest factor in reducing your "break-even" time.
  • Local Electricity Rates: Solar is most profitable in areas with high utility costs. Every kilowatt-hour you produce is a kilowatt-hour you don't have to buy at market rates.
  • Peak Sun Hours: This is not the total hours of daylight, but the hours where the sun's intensity reaches 1,000 watts per square meter. Southwestern states generally see higher ROI due to higher peak sun hours.
  • System Degradation: Solar panels lose a small amount of efficiency every year (typically 0.5%). High-quality panels maintain higher output over 25 years, leading to better long-term profit.

Realistic Example

Imagine a homeowner in California installing a 6kW system for $18,000. After the 30% federal tax credit, the net cost drops to $12,600. If they have 5 peak sun hours per day and pay $0.20 per kWh, they generate roughly $1,700 in electricity annually. Their payback period would be roughly 7.4 years. Given that panels are warrantied for 25 years, they would enjoy over 17 years of "free" electricity, resulting in tens of thousands of dollars in net profit.

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