Estimate your Return on Investment (ROI) and break-even point.
Your Solar Investment Summary
Net System Cost (after incentives):
Annual Savings (Year 1):
Estimated 25-Year Savings:
How to Calculate Solar Panel Payback
Understanding your solar payback period is essential before committing to a renewable energy transition. The payback period is the time it takes for the cumulative energy savings generated by your solar system to equal the initial net cost of the installation.
The Core Formula
To calculate the basic payback period, we use the following calculation:
(Gross System Cost – Incentives) / Annual Electricity Savings = Payback Period (Years)
Key Factors Influencing Your ROI
Federal Investment Tax Credit (ITC): As of 2024, the federal tax credit allows you to deduct 30% of your solar installation costs from your federal taxes.
Net Metering: If your utility provider offers net metering, you can sell excess energy back to the grid, significantly shortening your payback window.
Local Utility Rates: Homeowners in areas with high electricity rates (like California or the Northeast) see a much faster return on investment than those in low-cost areas.
System Degradation: Most panels are warrantied for 25 years but lose about 0.5% efficiency annually. This calculator accounts for typical performance and utility price inflation.
Example Calculation
If you install a system for $20,000:
Apply the 30% Federal Tax Credit: -$6,000.
Net Cost = $14,000.
If your monthly savings are $150, your annual savings are $1,800.
$14,000 / $1,800 = 7.7 Years.
After year 8, all the electricity produced is essentially free, leading to tens of thousands of dollars in pure profit over the life of the system.
function calculateSolarROI() {
// Inputs
var systemCost = parseFloat(document.getElementById('systemCost').value);
var taxCredit = parseFloat(document.getElementById('taxCredit').value);
var rebates = parseFloat(document.getElementById('otherRebates').value);
var monthlyBill = parseFloat(document.getElementById('monthlyBill').value);
var postSolarBill = parseFloat(document.getElementById('postSolarBill').value);
var inflation = parseFloat(document.getElementById('energyInflation').value) / 100;
// Validation
if (isNaN(systemCost) || isNaN(monthlyBill)) {
alert("Please enter valid numbers for system cost and electricity bills.");
return;
}
// Calculations
var netCost = systemCost – (systemCost * (taxCredit / 100)) – rebates;
var initialMonthlySavings = monthlyBill – postSolarBill;
var annualSavingsYear1 = initialMonthlySavings * 12;
// Calculate Payback Period with Energy Inflation (Iterative approach for accuracy)
var cumulativeSavings = 0;
var years = 0;
var currentAnnualSaving = annualSavingsYear1;
var maxYears = 50; // Prevent infinite loop
while (cumulativeSavings < netCost && years 0 && years < maxYears) {
var overage = cumulativeSavings – netCost;
var lastYearSaving = currentAnnualSaving / (1 + inflation);
var fraction = 1 – (overage / lastYearSaving);
var exactPayback = (years – 1) + fraction;
} else {
var exactPayback = years;
}
// 25-Year Total Savings Calculation
var total25Savings = 0;
var tempAnnualSaving = annualSavingsYear1;
for (var i = 1; i <= 25; i++) {
total25Savings += tempAnnualSaving;
tempAnnualSaving *= (1 + inflation);
}
var netProfit = total25Savings – netCost;
// Display Results
document.getElementById('solarResults').style.display = 'block';
document.getElementById('resNetCost').innerText = '$' + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resAnnualSavings').innerText = '$' + annualSavingsYear1.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resTotalSavings').innerText = '$' + netProfit.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
if (annualSavingsYear1 = maxYears) {
document.getElementById('resPayback').innerText = "Payback period exceeds 50 years.";
} else {
document.getElementById('resPayback').innerText = "Estimated Payback Period: " + exactPayback.toFixed(1) + " Years";
}
// Smooth scroll to results
document.getElementById('solarResults').scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}