Solar Panel Savings & ROI Calculator
Estimate your potential electricity savings and the payback period for your solar investment.
Net System Cost (after tax credit):
$0.00
Estimated Annual Production:
0 kWh
First Year Savings:
$0.00
Estimated Payback Period:
0 Years
25-Year Total Savings:
$0.00
Understanding Your Solar Investment
Switching to solar power is one of the most significant financial and environmental decisions a homeowner can make. This calculator helps you determine the Return on Investment (ROI) by looking at your local sun exposure, system size, and current utility costs.
How the Calculation Works
To provide an accurate estimate, the calculator uses the following logic:
- Annual Production: We multiply your system size (kW) by your daily peak sun hours and account for a standard 78% system efficiency factor (derating for AC/DC conversion and wiring losses).
- Net Cost: This represents your out-of-pocket expense after applying the Federal Solar Investment Tax Credit (ITC), which is currently 30% for systems installed through 2032.
- Payback Period: This is the time it takes for your cumulative energy savings to equal the net cost of the solar system.
- 25-Year Savings: Most solar panels come with a 25-year warranty. We calculate the total value of the electricity produced over this period, accounting for an annual increase in utility electricity rates.
Real-World Example
Imagine a homeowner in a sunny state like Arizona installs a 7 kW system at a cost of $21,000. With the 30% federal tax credit, the net cost drops to $14,700. If they receive 5.5 peak sun hours per day and pay $0.14 per kWh, they would save approximately $1,500 in the first year. In this scenario, the system would pay for itself in roughly 9.8 years, leaving over 15 years of "free" electricity.
Factors That Influence Your Savings
While this calculator provides a strong estimate, several variables can impact your final numbers:
- Roof Orientation: South-facing roofs in the northern hemisphere capture the most sunlight.
- Shading: Trees, chimneys, or nearby buildings can reduce efficiency.
- Net Metering Policies: Some utility companies buy back excess energy at full retail rates, while others offer lower wholesale rates.
- Local Incentives: Many states and municipalities offer additional rebates or performance-based incentives (SRECs) on top of the federal credit.