Affordability Calculator Mortgage

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Solar Panel ROI & Savings Calculator

Estimate your payback period and 25-year total savings from solar energy.

Net System Cost $0
Est. Monthly Savings $0
Payback Period 0 Years
25-Year Total ROI $0

Understanding Solar Panel ROI: How to Calculate Your Savings

Investing in solar panels is one of the most effective ways to reduce your carbon footprint and eliminate monthly utility bills. However, understanding the financial metrics behind the installation is key to determining if it's the right choice for your home. Our Solar Panel ROI Calculator helps you break down the numbers instantly.

How the Solar Calculation Works

To provide an accurate estimate, the calculator looks at several specific data points:

  • System Size: Measured in kilowatts (kW), this is the total power capacity of your solar array.
  • Peak Sun Hours: This isn't just daylight; it's the intensity of sunlight equivalent to 1,000 watts per square meter. Most regions in the US range from 3.5 to 6.0 hours daily.
  • Net Cost: This includes the gross price of the panels and installation minus the Federal Investment Tax Credit (ITC), which currently sits at 30% of the total project cost.
  • Electricity Rate: The price you currently pay your utility company per kilowatt-hour (kWh). As these rates rise, your solar savings increase.

Example Calculation

Imagine a homeowner in Arizona with a 6kW system costing $18,000. With the 30% federal tax credit, the net cost drops to $12,600. If the area receives 5 sun hours per day and the utility rate is $0.15/kWh, the system generates roughly 900 kWh per month, saving the homeowner $135 monthly. In this scenario, the system pays for itself in roughly 7.8 years.

Factors That Influence Your Payback Period

1. Local Incentives: Beyond federal credits, many states and utilities offer SRECs (Solar Renewable Energy Credits) or local rebates that can shorten the payback period significantly.

2. Net Metering: If your state has strong net metering laws, you can sell excess energy back to the grid at retail rates, maximizing your ROI.

3. Maintenance: Solar panels are low-maintenance, but you should factor in a small cost for inverter replacement after 10-15 years.

function calculateSolarROI() { var bill = parseFloat(document.getElementById('monthlyBill').value); var rate = parseFloat(document.getElementById('elecRate').value); var size = parseFloat(document.getElementById('systemSize').value); var hours = parseFloat(document.getElementById('sunHours').value); var cost = parseFloat(document.getElementById('totalCost').value); var credit = parseFloat(document.getElementById('taxCredit').value); if (isNaN(bill) || isNaN(rate) || isNaN(size) || isNaN(hours) || isNaN(cost) || isNaN(credit)) { alert("Please enter valid numbers in all fields."); return; } // Efficiency loss factor (standard 78% efficiency for inverters/wiring/soiling) var efficiency = 0.78; // Calculation logic var dailyProduction = size * hours * efficiency; var monthlyProduction = dailyProduction * 30.42; // Avg days in month var monthlySavings = monthlyProduction * rate; // Cap monthly savings at the actual bill amount (assuming no net-metering profit) if (monthlySavings > bill) { monthlySavings = bill; } var netCost = cost – (cost * (credit / 100)); var annualSavings = monthlySavings * 12; var paybackYears = netCost / annualSavings; // 25-year ROI calculation (assuming 2.5% energy price inflation) var total25YearSavings = 0; var currentAnnualSavings = annualSavings; for (var i = 1; i 0 && isFinite(paybackYears)) { document.getElementById('paybackResult').innerHTML = paybackYears.toFixed(1) + " Years"; } else { document.getElementById('paybackResult').innerHTML = "N/A"; } document.getElementById('roiResult').innerHTML = "$" + netProfit.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); document.getElementById('results').style.display = 'block'; }

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