Estimate your savings and break-even point for solar energy.
Avg. residential size is 6-10 kW.
Gross cost before incentives.
Federal ITC is currently 30%.
Check your last electricity bill.
US average is 1,300 – 1,600 kWh/kW.
Historical average is 2-4%.
Payback Period
—
Years to break even
25-Year Savings
—
Net lifetime profit
Net System Cost
—
After incentives
Year 1 Savings
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Electric bill reduction
function calculateSolarROI() {
var size = parseFloat(document.getElementById('systemSize').value);
var cost = parseFloat(document.getElementById('totalCost').value);
var incentives = parseFloat(document.getElementById('incentives').value);
var rate = parseFloat(document.getElementById('utilityRate').value);
var prodRatio = parseFloat(document.getElementById('productionRatio').value);
var increase = parseFloat(document.getElementById('rateIncrease').value) / 100;
if (isNaN(size) || isNaN(cost) || isNaN(rate) || size <= 0 || cost <= 0) {
alert("Please enter valid positive numbers for system size, cost, and utility rate.");
return;
}
var netCost = cost – incentives;
var annualProduction = size * prodRatio;
var yearOneSavings = annualProduction * rate;
// Calculate Payback Period with rate increases
var cumulativeSavings = 0;
var paybackYears = 0;
var currentRate = rate;
var yearlySavingsArray = [];
for (var i = 1; i = netCost && paybackYears === 0) {
var previousCumulative = cumulativeSavings – yearlySaving;
var neededInFinalYear = netCost – previousCumulative;
paybackYears = (i – 1) + (neededInFinalYear / yearlySaving);
}
currentRate *= (1 + increase);
}
var lifetimeNetProfit = cumulativeSavings – netCost;
document.getElementById('netCostDisplay').innerText = "$" + netCost.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('yearOneSavings').innerText = "$" + yearOneSavings.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('paybackYears').innerText = paybackYears > 0 ? paybackYears.toFixed(1) : "25+";
document.getElementById('totalSavings').innerText = "$" + lifetimeNetProfit.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
var roiPercent = ((lifetimeNetProfit / netCost) * 100).toFixed(1);
document.getElementById('roiSummary').innerHTML = "Your solar investment yields a " + roiPercent + "% total ROI over 25 years, effectively generating electricity at a fraction of utility prices.";
document.getElementById('solarResults').style.display = 'block';
}
How to Calculate Your Solar Return on Investment
Investing in residential solar panels is one of the few home improvements that actually pays for itself. To understand the true ROI, you must look beyond the initial sticker price and consider the "Net Cost" and the "Payback Period."
Key Variables in the Calculation
The Federal Investment Tax Credit (ITC): As of 2024, the federal government offers a 30% tax credit on the total cost of solar installation, including equipment and labor.
Solar Production Ratio: This represents how much electricity (kWh) your system produces per kilowatt (kW) of capacity. In sunny regions like Arizona, this might be 1,600+, while in the Northeast, it might be 1,200.
Utility Inflation: Electricity prices typically rise by about 3% annually. Solar locks in your energy costs, meaning your savings actually increase every year as utility power becomes more expensive.
Example Scenario
Suppose you install an 8 kW system for $24,000. After the 30% federal tax credit ($7,200), your net cost is $16,800. If that system produces 10,800 kWh per year and your utility charges $0.15/kWh, you save $1,620 in the first year. With a 3% annual utility rate increase, your system would pay for itself in approximately 9.2 years, leaving you with over 15 years of "free" electricity.
Factors That Speed Up Your Payback
Your ROI will be faster if you live in a state with high electricity rates (like California or Massachusetts) or if your local utility offers Net Metering. Net metering allows you to send excess energy back to the grid during the day and receive a 1-to-1 credit on your bill for the energy you use at night.