Solar Panel Savings & ROI Calculator
Understanding Your Solar Investment
Switching to solar energy is one of the most effective ways to reduce your carbon footprint while locking in long-term financial savings. This calculator helps you estimate the return on investment (ROI) for a residential or small commercial solar photovoltaic (PV) system.
Key Factors in Solar Math
- System Size: Usually measured in kilowatts (kW). An average US home typically requires a 5kW to 10kW system.
- Sunlight Hours: This isn't just daylight, but "peak sun hours" when solar radiation is strong enough to generate maximum power.
- Utility Rates: The more you pay per kWh to your utility company, the more money you save by producing your own power.
- System Efficiency: Our calculator assumes a 78% efficiency rating, accounting for real-world factors like dust, inverter conversion, and wiring resistance.
Solar ROI Example
Imagine a homeowner in a sunny state installing a 6kW system for $18,000. If they receive 5 peak sun hours per day and pay $0.16 per kWh:
- Daily Production: 6kW * 5 hours * 0.78 = 23.4 kWh
- Annual Savings: 23.4 kWh * 365 days * $0.16 = $1,366.56
- Payback Period: $18,000 / $1,366.56 = 13.1 Years
How to Shorten Your Payback Period
The "Payback Period" is the time it takes for your electricity savings to equal the initial cost of the system. You can reduce this time by taking advantage of the Federal Investment Tax Credit (ITC), which currently offers a significant percentage back on installation costs, or by looking for local state-specific rebates and SRECs (Solar Renewable Energy Certificates).