Solar Panel Savings & Payback Calculator
Estimate your potential return on investment and how long it takes for solar panels to pay for themselves.
Your Solar Investment Summary
Net System Cost (After Tax Credit):
$0.00
Estimated Annual Production:
0 kWh
Year 1 Electricity Savings:
$0.00
Solar Payback Period:
0 Years
Estimated 25-Year Net Savings:
$0.00
Understanding Solar ROI and Payback Period
Investing in solar panels is one of the most effective ways to reduce your long-term living expenses while contributing to a greener planet. However, the primary question for most homeowners is: "When will I break even?"
Key Factors in Solar Calculations
- System Size: Measured in kilowatts (kW), this is the maximum power output of your panels. A typical residential system ranges from 5kW to 10kW.
- The Federal Solar Tax Credit (ITC): As of 2024, the federal government offers a 30% tax credit on the total cost of your solar installation, significantly reducing the "Net Cost."
- Sun Hours: This isn't just daylight hours, but "Peak Sun Hours"—the intensity of sunlight equivalent to 1,000 watts per square meter for one hour.
- Net Metering: Most utilities allow you to send excess energy back to the grid, effectively spinning your meter backward and increasing your savings.
Example Scenario: If you install a 6kW system for $18,000, your 30% tax credit is $5,400, bringing your net cost to $12,600. If that system saves you $1,500 a year on electricity, your payback period is approximately 8.4 years.
How We Calculate Your Savings
Our calculator uses a standard derate factor of 0.78 to account for real-world inefficiencies (such as wiring loss, inverter conversion, and dust). The formula for annual production is:
System Size (kW) × Peak Sun Hours × 365 days × 0.78 (Efficiency Factor)
Why Calculate Your ROI?
Knowing your solar ROI helps you compare the investment against other financial vehicles like stocks or bonds. Most solar systems provide an internal rate of return (IRR) between 10% and 20%, which is significantly higher than traditional savings accounts or even the average S&P 500 return.