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Solar Panel ROI & Payback Calculator

Calculate your estimated savings, payback period, and 25-year return on investment.

Net System Cost: $0
Estimated Annual Generation: 0 kWh
First Year Savings: $0
Payback Period: 0 Years
Estimated 25-Year Profit: $0

Understanding Solar Panel ROI

Investing in solar energy is not just an environmental choice; it is a significant financial decision. The Return on Investment (ROI) for solar panels typically focuses on the "Payback Period"—the amount of time it takes for the energy savings to equal the initial cost of the installation.

How We Calculate Your ROI

The math behind solar savings involves several critical variables:

  • Net Cost: This is the gross price of the installation minus the 30% Federal Investment Tax Credit (ITC) and any local rebates.
  • Solar Irradiance: The average "peak sun hours" in your geographic location determines how much energy your panels actually produce.
  • System Efficiency: We apply a standard 78% system derate factor to account for real-world losses in wiring, inverters, and panel soiling.
  • Utility Inflation: Electricity prices typically rise 2-3% annually. Our calculator factors this in to show more realistic long-term savings.

Example Calculation

Imagine a homeowner in California installs an 8kW system for $24,000. After a 30% tax credit ($7,200), the net cost is $16,800. If the system produces 12,000 kWh annually and the electricity rate is $0.20/kWh, the first-year savings are $2,400. In this scenario, the payback period would be approximately 7 years.

Factors That Impact Your Payback Period

While the calculator provides a robust estimate, your actual results may vary based on:

  1. Roof Orientation: South-facing roofs in the northern hemisphere produce the most energy.
  2. Net Metering Policies: Some utilities credit you the full retail rate for excess power sent back to the grid, while others pay a lower "avoided cost" rate.
  3. Degradation: Solar panels lose about 0.5% efficiency per year, which we account for in the 25-year profit forecast.
  4. Maintenance: Solar systems are generally low maintenance, but inverter replacements may be needed every 12-15 years.
function calculateSolarROI() { // Get Input Values var cost = parseFloat(document.getElementById('sysCost').value); var credit = parseFloat(document.getElementById('taxCredit').value); var size = parseFloat(document.getElementById('sysSize').value); var sun = parseFloat(document.getElementById('sunHours').value); var rate = parseFloat(document.getElementById('elecRate').value); var hike = parseFloat(document.getElementById('annualIncrease').value) / 100; // Validate inputs if (isNaN(cost) || isNaN(size) || isNaN(sun) || isNaN(rate)) { alert("Please enter all required numeric values."); return; } // 1. Net Cost var netCost = cost – credit; if (netCost < 0) netCost = 0; // 2. Annual Production (kWh) // Formula: kW * Daily Sun Hours * 365 * Derate Factor (0.78) var annualKwh = size * sun * 365 * 0.78; // 3. First Year Savings var firstYearSavings = annualKwh * rate; // 4. Calculate Payback and 25-Year Total var cumulativeSavings = 0; var paybackPeriod = 0; var currentRate = rate; var foundPayback = false; for (var year = 1; year = netCost) { // Simple interpolation for more accuracy var prevSavings = cumulativeSavings – yearlySaving; var needed = netCost – prevSavings; paybackPeriod = (year – 1) + (needed / yearlySaving); foundPayback = true; } } var totalProfit = cumulativeSavings – netCost; // Display Results document.getElementById('solarResults').style.display = 'block'; document.getElementById('resNetCost').innerHTML = "$" + netCost.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); document.getElementById('resGen').innerHTML = annualKwh.toLocaleString(undefined, {maximumFractionDigits: 0}) + " kWh"; document.getElementById('resFirstYear').innerHTML = "$" + firstYearSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); if (foundPayback) { document.getElementById('resPayback').innerHTML = paybackPeriod.toFixed(1) + " Years"; } else { document.getElementById('resPayback').innerHTML = "Over 25 Years"; } document.getElementById('resTotalProfit').innerHTML = "$" + totalProfit.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); }

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