How to Calculate Mortgage Payments

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Solar Panel ROI & Payback Calculator

Investment Analysis

Net System Cost –
Annual Savings –
Payback Period –
25-Year Total Profit –
function calculateSolarROI() { var cost = parseFloat(document.getElementById('systemCost').value); var size = parseFloat(document.getElementById('systemSize').value); var sun = parseFloat(document.getElementById('sunlightHours').value); var rate = parseFloat(document.getElementById('elecRate').value); var rebatePercent = parseFloat(document.getElementById('incentives').value); var maint = parseFloat(document.getElementById('maintenance').value); if (isNaN(cost) || isNaN(size) || isNaN(sun) || isNaN(rate) || isNaN(rebatePercent)) { alert("Please enter valid numbers in all fields."); return; } // 1. Calculate Net Cost after tax credits var netCost = cost * (1 – (rebatePercent / 100)); // 2. Calculate Annual Production (kWh) // Standard efficiency factor of 0.78 accounts for inverter loss, wiring, and dirt var annualkWh = size * sun * 365 * 0.78; // 3. Annual Savings var annualSavings = (annualkWh * rate) – maint; // 4. Payback Period var payback = netCost / annualSavings; // 5. 25-Year Profit (Typical solar panel warranty life) // Note: This simplifies by not factoring in electricity rate inflation or panel degradation var totalProfit = (annualSavings * 25) – netCost; // Display results document.getElementById('solar-results').style.display = 'block'; document.getElementById('resNetCost').innerText = '$' + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resAnnualSavings').innerText = '$' + annualSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resPayback').innerText = payback.toFixed(1) + ' Years'; document.getElementById('resTotalROI').innerText = '$' + totalProfit.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); }

How Solar Panel ROI is Calculated

Deciding to switch to solar energy is as much a financial decision as it is an environmental one. To understand your Return on Investment (ROI), you must look beyond the initial sticker price and evaluate the long-term energy savings against the net cost of the system.

Key Factors in the Calculation

  • Gross Cost vs. Net Cost: The gross cost is what you pay the installer. The net cost is what remains after applying the Federal Solar Tax Credit (ITC)—currently 30% in the US—and any local utility rebates.
  • Solar Irradiance: Not all sunlight is equal. A 6kW system in Arizona will produce significantly more power than the same system in Washington due to higher peak sun hours.
  • Electricity Rates: The more you pay your utility company per kWh, the more money your solar panels "earn" you by offsetting that cost.
  • System Degradation: Most modern panels are warrantied for 25 years. While they lose about 0.5% efficiency per year, they continue to provide significant value for decades.

Real-World Example

Imagine a homeowner in a sunny region installing a 7kW system for $18,000. After a 30% tax credit, the net cost drops to $12,600. If that system produces 10,000 kWh per year and the local electricity rate is $0.16/kWh, the homeowner saves $1,600 annually. The payback period would be roughly 7.8 years ($12,600 / $1,600), leaving over 17 years of "free" electricity.

Pro Tip: When using this calculator, check your most recent utility bill to find your exact price per kilowatt-hour (kWh), as this is the biggest variable in determining your annual savings.

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