Estimate your savings and calculate how many years it will take for your solar investment to pay for itself.
Net System Cost
$0.00
Year 1 Savings
$0.00
Payback Period
0 Years
25-Year Total Savings
$0.00
How to Calculate Solar Panel ROI
Switching to solar energy is one of the most significant financial decisions a homeowner can make. Understanding the Return on Investment (ROI) requires looking at more than just the sticker price. You must account for government incentives, local electricity rates, and the physical characteristics of your property.
Key Factors in Solar Math
System Size (kW): Most residential systems range between 5kW and 10kW. This is the peak power capacity of your panels.
Peak Sun Hours: This is not the total daylight, but the intensity equivalent to 1,000 watts per square meter. In the US, this typically ranges from 3 to 6 hours daily.
The Federal Solar Tax Credit (ITC): Currently, homeowners can deduct 30% of the cost of installing a solar energy system from their federal taxes.
Utility Inflation: Electricity prices historically rise about 2-3% annually. Solar "locks in" your rate, making your savings grow every year as utility prices climb.
Example Calculation
Imagine a homeowner in Arizona installs a 7kW system for $21,000.
1. Net Cost: After the 30% tax credit, the cost drops to $14,700.
2. Production: With 5.5 sun hours, the system generates roughly 14,000 kWh per year.
3. Savings: At $0.14/kWh, that is $1,960 in year-one savings.
4. Payback: $14,700 / $1,960 = 7.5 years to reach the break-even point.
Is Solar Worth It in 2024?
With the extension of the 30% Residential Clean Energy Credit through 2032, the financial case for solar has never been stronger. Beyond the direct utility savings, solar panels often increase home resale value and provide a hedge against volatile fossil fuel prices. If your payback period is under 10 years, the system will effectively provide free electricity for the remaining 15-20 years of its warranted life.
function calculateSolarROI() {
var systemSize = parseFloat(document.getElementById("systemSize").value);
var installCost = parseFloat(document.getElementById("installCost").value);
var sunHours = parseFloat(document.getElementById("sunHours").value);
var elecRate = parseFloat(document.getElementById("elecRate").value);
var taxCredit = parseFloat(document.getElementById("taxCredit").value);
var annualIncrease = parseFloat(document.getElementById("annualIncrease").value) / 100;
if (isNaN(systemSize) || isNaN(installCost) || isNaN(sunHours) || isNaN(elecRate)) {
alert("Please fill in all fields with valid numbers.");
return;
}
// Calculations
var netCost = installCost * (1 – (taxCredit / 100));
// Annual Production (System Size * Sun Hours * 365 days * efficiency factor)
// 0.85 is a standard derate factor for real-world system losses (inverter, wiring, dirt)
var annualKwh = systemSize * sunHours * 365 * 0.85;
var year1Savings = annualKwh * elecRate;
// Calculate Payback Period and 25-Year Savings with utility inflation
var runningSavings = 0;
var total25YearSavings = 0;
var paybackYear = 0;
var foundPayback = false;
var currentYearSavings = year1Savings;
for (var i = 1; i = netCost && !foundPayback) {
paybackYear = i – 1 + ((netCost – (runningSavings – currentYearSavings)) / currentYearSavings);
foundPayback = true;
}
// Increase savings for next year based on utility inflation
currentYearSavings *= (1 + annualIncrease);
}
// Display Results
document.getElementById("netCost").innerText = "$" + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("year1Savings").innerText = "$" + year1Savings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
if (foundPayback) {
document.getElementById("paybackYears").innerText = paybackYear.toFixed(1) + " Years";
} else {
document.getElementById("paybackYears").innerText = "> 25 Years";
}
document.getElementById("totalSavings").innerText = "$" + total25YearSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("solar-results").style.display = "block";
// Smooth scroll to results
document.getElementById("solar-results").scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}