Switching to solar power is a significant financial decision. To determine if it's right for you, you need to calculate the Solar Payback Period—the amount of time it takes for your electricity savings to cover the initial net cost of the system.
Key Factors in the Calculation
Gross System Cost: The total price of panels, inverters, and installation.
Federal Tax Credit (ITC): As of 2024, the federal government offers a 30% tax credit on residential solar installations, significantly reducing your net cost.
Utility Inflation: On average, electricity rates increase by 2-4% annually. Factoring this in shows that solar panels become more valuable every year.
Example Calculation
Imagine a system costing $20,000. After a 30% federal tax credit ($6,000), your net investment is $14,000. If your monthly electricity bill is $150 and utility rates rise by 3% per year, your payback period would be approximately 7.2 years. Over a 25-year lifespan (the standard warranty for panels), you would save over $65,000 in electricity costs.
function calculateSolarPayback() {
var systemCost = parseFloat(document.getElementById("systemCost").value);
var rebates = parseFloat(document.getElementById("rebates").value);
var monthlyBill = parseFloat(document.getElementById("monthlyBill").value);
var rateIncrease = parseFloat(document.getElementById("rateIncrease").value) / 100;
if (isNaN(systemCost) || isNaN(rebates) || isNaN(monthlyBill) || isNaN(rateIncrease)) {
alert("Please enter valid numbers in all fields.");
return;
}
var netCost = systemCost – rebates;
var cumulativeSavings = 0;
var currentAnnualSavings = monthlyBill * 12;
var years = 0;
var foundPayback = false;
var paybackYear = 0;
var savings25Years = 0;
for (var i = 1; i = netCost) {
var shortfall = netCost – (cumulativeSavings – currentAnnualSavings);
paybackYear = (i – 1) + (shortfall / currentAnnualSavings);
foundPayback = true;
}
if (i === 25) {
savings25Years = cumulativeSavings – netCost;
}
currentAnnualSavings *= (1 + rateIncrease);
}
document.getElementById("solarResult").style.display = "block";
if (foundPayback) {
document.getElementById("paybackYears").innerText = paybackYear.toFixed(1);
} else {
document.getElementById("paybackYears").innerText = "25+";
}
document.getElementById("totalSavings").innerText = "$" + Math.round(savings25Years).toLocaleString();
var roi = (savings25Years / netCost) * 100;
document.getElementById("roiText").innerText = "Estimated Return on Investment (ROI) over 25 years: " + Math.round(roi) + "%";
}