Solar Panel ROI & Payback Calculator
Results Summary
Understanding Your Solar Panel Investment
Installing solar panels is more than an environmental choice; it's a significant financial investment. To determine if solar is right for your home, you must look at the Return on Investment (ROI) and the Payback Period. Our calculator helps you visualize how much you can save over the typical 25-year lifespan of a photovoltaic (PV) system.
Key Factors in Solar Math
- System Size: Measured in kilowatts (kW), this is the power capacity of your panels. A typical US home uses a system between 5kW and 10kW.
- Net Cost: This is your total out-of-pocket expense after applying the Federal Solar Tax Credit (ITC) and any local state rebates.
- Utility Rate: The price you pay per kilowatt-hour (kWh). The higher your local utility rate, the faster your solar panels pay for themselves.
- Annual Sun Hours: This represents the "peak sun hours" your location receives. Even in cloudy areas, panels produce energy, but efficiency is higher in the Sun Belt.
Example Calculation
Imagine a homeowner in Florida installing an 8kW system:
- Gross Cost: $24,000
- 30% Federal Tax Credit: -$7,200
- Net Investment: $16,800
- Annual Production: 11,600 kWh (8kW x 1,450 hours)
- Annual Savings: $1,856 (at $0.16/kWh)
- Payback Period: Approximately 9 years
Is Solar a Good Investment?
Most residential solar systems offer an internal rate of return (IRR) between 10% and 20%, which often outperforms the S&P 500 over a 25-year period. Additionally, solar installations can increase property value by an average of 4%, according to Zillow data. With energy inflation typically rising at 3% per year, your savings actually grow every year as utility companies raise their rates.