Calculate your return on investment and break-even point for solar energy.
Your Investment Summary
Net System Cost
$0
Payback Period
0 Years
Year 1 Savings
$0
25-Year Total Profit
$0
Understanding Your Solar Return on Investment (ROI)
Deciding to go solar is a significant financial decision. To accurately determine when your solar panels will "pay for themselves," you must look at the Solar Payback Period. This is the amount of time it takes for the cumulative energy savings to equal the initial net cost of the system.
Key Factors in the Calculation
Gross System Cost: The total price of hardware, labor, and permits.
Federal Investment Tax Credit (ITC): As of 2024, the federal government offers a 30% tax credit on the total cost of installation.
Electricity Rates: The higher your local utility rate (kWh), the faster your payback period will be.
Solar Offset: How much of your annual energy usage the panels actually cover.
Utility Inflation: Traditionally, electricity prices rise by 2-4% annually. Factoring this in shows that your savings grow every single year.
Example Calculation
If a homeowner installs a system for $20,000 and receives a $6,000 tax credit, the net cost is $14,000. If that system saves the homeowner $150 per month ($1,800 per year), the simple payback would be approximately 7.7 years. However, when factoring in a 3% annual increase in electricity costs, the payback period often drops to under 7 years.
Is Solar Worth It?
Most residential solar systems are designed to last 25 to 30 years. If your payback period is 8 years, you will enjoy 17 to 22 years of essentially free electricity. This often results in a total net profit ranging from $30,000 to $60,000 depending on your location and energy needs.
function calculateSolarPayback() {
var totalCost = parseFloat(document.getElementById('solar_total_cost').value);
var rebates = parseFloat(document.getElementById('solar_rebates').value) || 0;
var monthlyBill = parseFloat(document.getElementById('solar_monthly_bill').value);
var offset = parseFloat(document.getElementById('solar_offset').value) / 100;
var inflation = parseFloat(document.getElementById('solar_inflation').value) / 100;
if (isNaN(totalCost) || isNaN(monthlyBill) || totalCost <= 0 || monthlyBill <= 0) {
alert("Please enter valid positive numbers for cost and monthly bill.");
return;
}
var netCost = totalCost – rebates;
var annualSavingsYear1 = monthlyBill * 12 * offset;
// Calculate Payback Period with Inflation
var cumulativeSavings = 0;
var years = 0;
var currentAnnualSavings = annualSavingsYear1;
var totalSavings25Years = 0;
// We run a 25-year projection
for (var i = 1; i <= 25; i++) {
cumulativeSavings += currentAnnualSavings;
if (cumulativeSavings < netCost) {
years = i;
} else if (years === i – 1) {
// Find fractional year for better accuracy
var remainderNeeded = netCost – (cumulativeSavings – currentAnnualSavings);
var fraction = remainderNeeded / currentAnnualSavings;
years = (i – 1) + fraction;
}
if (i <= 25) {
totalSavings25Years += currentAnnualSavings;
}
// Apply utility inflation for next year
currentAnnualSavings = currentAnnualSavings * (1 + inflation);
}
// Display Results
document.getElementById('solar_results_box').style.display = 'block';
document.getElementById('res_net_cost').innerText = '$' + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
if (cumulativeSavings 25 Years';
} else {
document.getElementById('res_payback').innerText = years.toFixed(1) + ' Years';
}
document.getElementById('res_year1').innerText = '$' + annualSavingsYear1.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var profit = totalSavings25Years – netCost;
document.getElementById('res_profit').innerText = '$' + profit.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}