Estimate your savings and return on investment for a residential solar system.
Your Financial Forecast
Net System Cost (after credits):$0.00
Annual Energy Production:0 kWh
Year 1 Electricity Savings:$0.00
Estimated Payback Period:0 Years
Total 25-Year Profit:$0.00
How Solar ROI is Calculated
Investing in solar panels is not just an environmental choice; it is a significant financial decision. The Return on Investment (ROI) for solar is primarily determined by the "Payback Period"—the number of years it takes for your cumulative energy savings to equal the net cost of the system.
Key Factors in Your Solar Payback
Federal Tax Credit (ITC): In the United States, the Residential Clean Energy Credit allows you to deduct 30% of the cost of installing solar from your federal taxes. This significantly lowers the net cost.
Peak Sun Hours: This isn't just daylight hours, but the intensity of the sun. A home in Arizona will generate significantly more power with the same equipment than a home in Washington.
Utility Rates: The more you pay your utility company per kWh, the more you save by producing your own power. ROI is typically higher in states with expensive electricity.
System Derate Factor: Our calculator assumes a standard 18% loss for system inefficiencies (inverters, wiring, and soilage), using a 0.82 multiplier for real-world generation.
Example Scenario
If you purchase a 10 kW system for $25,000:
Apply the 30% Tax Credit: $25,000 – $7,500 = $17,500 Net Cost.
If you get 5 sun hours/day, you produce ~14,965 kWh per year.
At $0.16 per kWh, you save $2,394 in Year 1.
Your payback period would be roughly 7.3 years.
After the payback period, the electricity generated is essentially free for the remainder of the system's 25-30 year lifespan.
function calculateSolarROI() {
var grossCost = parseFloat(document.getElementById('solar_system_cost').value);
var taxCreditPercent = parseFloat(document.getElementById('solar_tax_credit').value);
var systemSizeKW = parseFloat(document.getElementById('solar_system_size').value);
var sunHours = parseFloat(document.getElementById('solar_sun_hours').value);
var elecRate = parseFloat(document.getElementById('solar_elec_rate').value);
var annualIncrease = parseFloat(document.getElementById('solar_annual_increase').value) / 100;
if (isNaN(grossCost) || isNaN(systemSizeKW) || isNaN(sunHours) || isNaN(elecRate)) {
alert("Please enter valid numerical values.");
return;
}
// 1. Calculate Net Cost
var netCost = grossCost * (1 – (taxCreditPercent / 100));
// 2. Calculate Annual Generation (kWh)
// Formula: Size (kW) * Sun Hours * 365 days * 0.82 (efficiency factor)
var annualKwh = systemSizeKW * sunHours * 365 * 0.82;
// 3. Year 1 Savings
var year1Savings = annualKwh * elecRate;
// 4. Payback Period & 25-Year Savings (including rate increases)
var cumulativeSavings = 0;
var paybackPeriod = 0;
var currentRate = elecRate;
var total25Savings = 0;
var foundPayback = false;
for (var i = 1; i = netCost) {
paybackPeriod = i – 1 + ((netCost – (cumulativeSavings – annualSavingThisYear)) / annualSavingThisYear);
foundPayback = true;
}
currentRate *= (1 + annualIncrease);
}
var totalProfit = total25Savings – netCost;
// Display results
document.getElementById('res_net_cost').innerText = "$" + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('res_annual_kwh').innerText = Math.round(annualKwh).toLocaleString() + " kWh";
document.getElementById('res_year1_savings').innerText = "$" + year1Savings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('res_payback').innerText = foundPayback ? paybackPeriod.toFixed(1) + " Years" : "Over 25 Years";
document.getElementById('res_25year_profit').innerText = "$" + totalProfit.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('solar_results_box').style.display = 'block';
}