Deciding to switch to solar energy is a major financial decision. This calculator helps you determine the Solar Payback Period, which is the time it takes for the energy bill savings to cover the initial out-of-pocket cost of the installation.
Key Factors in Solar ROI
Federal Solar Tax Credit (ITC): As of 2024, the federal government offers a 30% tax credit on residential solar systems, significantly reducing the net cost.
Utility Inflation: Electricity rates typically rise by 2% to 5% annually. This makes solar more valuable over time as you "lock in" your energy rates.
Net Metering: This allows you to sell excess energy back to the grid, accelerating your savings.
How the Calculation Works
To find your payback period, we first subtract the Federal Tax Credit from your gross system cost. We then calculate your cumulative savings year-over-year, accounting for energy price inflation. The point where your cumulative savings equal your net cost is your payback year.
Example Calculation
If you purchase a system for $25,000 and qualify for a 30% tax credit ($7,500), your net cost is $17,500. If you save $200 per month ($2,400/year) and utility costs rise by 3% annually, your payback period would be approximately 6.5 years. Over 25 years, that same system could save you over $85,000 in avoided utility costs.
function calculateSolarROI() {
var cost = parseFloat(document.getElementById('systemCost').value);
var taxCreditPct = parseFloat(document.getElementById('taxCredit').value) / 100;
var monthlySavings = parseFloat(document.getElementById('monthlySavings').value);
var inflation = parseFloat(document.getElementById('utilityInflation').value) / 100;
if (isNaN(cost) || isNaN(taxCreditPct) || isNaN(monthlySavings) || isNaN(inflation)) {
alert("Please enter valid numerical values.");
return;
}
var netCost = cost * (1 – taxCreditPct);
var annualSavingsInitial = monthlySavings * 12;
// Calculate Payback Period with Inflation
var cumulativeSavings = 0;
var year = 0;
var paybackYear = 0;
var total25YearSavings = 0;
for (var i = 1; i = netCost && paybackYear === 0) {
// Linear interpolation for more accurate fractional year
var prevYearSavings = cumulativeSavings – savingsThisYear;
var needed = netCost – prevYearSavings;
paybackYear = (i – 1) + (needed / savingsThisYear);
}
if (i === 25) {
total25YearSavings = cumulativeSavings;
}
}
var roi = ((total25YearSavings – netCost) / netCost) * 100;
// Update Results
document.getElementById('resNetCost').innerText = "$" + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resPayback').innerText = paybackYear > 0 ? paybackYear.toFixed(1) + " Years" : "Over 25 Years";
document.getElementById('resSavings').innerText = "$" + total25YearSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resROI').innerText = roi.toFixed(1) + "%";
document.getElementById('solar-results').style.display = 'block';
}