Solar Panel ROI Calculator
Estimate your payback period and long-term savings from switching to solar energy.
Estimated Financial Returns
Net System Cost (after incentives):
$0.00
Year 1 Energy Savings:
$0.00
Estimated Payback Period:
0 Years
25-Year Total Net Savings:
$0.00
Return on Investment (ROI):
0%
Understanding Your Solar ROI
Investing in solar panels is one of the few home improvements that pays for itself over time. To accurately calculate your Return on Investment (ROI), you must consider the upfront gross cost, government incentives, and your local utility rates.
Key Factors in the Calculation
- The Federal Investment Tax Credit (ITC): Currently, the US federal government allows homeowners to deduct a significant percentage (typically 30%) of their solar installation costs from their federal taxes.
- Peak Sun Hours: This isn't just daylight; it's the intensity of sunlight. Areas like Arizona have higher peak sun hours than Washington state, meaning the same size system produces more energy in the desert.
- Electricity Rates: The more your utility company charges you per kWh, the faster your solar panels will pay for themselves.
Example ROI Scenario
Imagine a homeowner installs a 7 kW system for $21,000. With a 30% federal tax credit, the net cost drops to $14,700. If the system produces 10,000 kWh annually and the electricity rate is $0.16/kWh, the first-year savings are $1,600. In this scenario, the payback period is roughly 9.2 years, leaving 15+ years of pure profit during the panels' expected lifespan.
Long-term Performance
Most modern solar panels are warrantied for 25 years. While they do degrade slightly (about 0.5% per year), they continue to produce significant power. Our calculator accounts for this degradation to give you a realistic view of your 25-year cumulative savings.