Estimate the time it takes for your solar panel investment to pay for itself through energy savings.
Investment Summary
Enter your details and click calculate to see your ROI.
How to Calculate Your Solar Payback Period
The solar payback period is the amount of time it takes for the energy savings generated by a solar power system to equal the initial cost of the installation. For most homeowners in the United States, this period typically ranges between 6 and 10 years, depending on location, utility rates, and available incentives.
The Formula for Solar ROI
To determine your payback period, we use the following logical steps:
Net Cost: Subtract all federal tax credits (like the 30% ITC), state rebates, and local performance-based incentives from the gross installer price.
Annual Savings: Multiply your annual kWh production by your current utility rate. For example, if you produce 10,000 kWh and pay $0.16/kWh, you save $1,600 in year one.
Account for Inflation: Utility companies typically raise rates by 2% to 5% annually. This makes solar more valuable every year.
Example Calculation
Imagine a $25,000 solar installation. After the 30% Federal Tax Credit ($7,500), your net cost is $17,500. If your system saves you $1,800 in the first year and utility rates rise by 4% annually, your payback period would be approximately 8.2 years. After those 8 years, the electricity generated for the remaining life of the system (usually 25+ years) is essentially free.
Key Factors Influencing Your Results
Several variables can speed up or slow down your return on investment:
Sunlight Hours: Homes in Arizona will naturally see faster payback than homes in Washington due to higher solar irradiance.
Local Electricity Rates: The more you currently pay your utility company, the more you save by switching to solar.
Financing: Paying cash yields the fastest payback, while solar loans include interest costs that extend the payback period.
Net Metering: Policies that allow you to sell excess energy back to the grid at retail rates significantly improve ROI.
function calculateSolarROI() {
var systemCost = parseFloat(document.getElementById('systemCost').value);
var incentives = parseFloat(document.getElementById('incentives').value);
var annualUsage = parseFloat(document.getElementById('annualUsage').value);
var elecRate = parseFloat(document.getElementById('elecRate').value);
var solarCov = parseFloat(document.getElementById('solarCov').value) / 100;
var utilInflation = parseFloat(document.getElementById('utilInflation').value) / 100;
// Validation
if (isNaN(systemCost) || isNaN(incentives) || isNaN(annualUsage) || isNaN(elecRate)) {
document.getElementById('solarResultDisplay').innerHTML = "Please ensure all fields are filled with valid numbers.";
return;
}
var netInvestment = systemCost – incentives;
var yearOneSavings = annualUsage * elecRate * solarCov;
var cumulativeSavings = 0;
var currentYearSavings = yearOneSavings;
var years = 0;
var maxYears = 40; // Limit loop to prevent infinite runs
// Year-by-year calculation to account for utility inflation
while (cumulativeSavings < netInvestment && years < maxYears) {
years++;
cumulativeSavings += currentYearSavings;
currentYearSavings *= (1 + utilInflation);
}
// Calculating 25-Year Total Savings
var total25YearSavings = 0;
var tempYearlySavings = yearOneSavings;
for (var i = 1; i <= 25; i++) {
total25YearSavings += tempYearlySavings;
tempYearlySavings *= (1 + utilInflation);
}
var netProfit = total25YearSavings – netInvestment;
var roiPercentage = (netProfit / netInvestment) * 100;
var resultHTML = "Estimated Payback Period:" + (years >= maxYears ? "40+" : years.toFixed(1)) + " years";
resultHTML += "Net Investment: $" + netInvestment.toLocaleString() + "";
resultHTML += "Year 1 Savings: $" + yearOneSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + "";
resultHTML += "Estimated 25-Year Total Savings: $" + total25YearSavings.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}) + "";
resultHTML += "25-Year ROI: " + roiPercentage.toFixed(1) + "%";
document.getElementById('solarResultDisplay').innerHTML = resultHTML;
}