Solar Panel ROI & Savings Calculator
Estimate your payback period and 25-year financial return on solar investment.
Your Solar Estimates
How Solar Panel ROI is Calculated
Deciding to go solar is a significant financial commitment. To understand the Solar Return on Investment (ROI), you must look beyond the initial installation cost and focus on the long-term energy savings and incentives like the Federal Solar Tax Credit.
1. Calculating System Size
The calculator first determines your energy consumption. If your monthly bill is $150 and your rate is $0.14/kWh, you consume approximately 1,071 kWh per month. To cover this with solar, we factor in your local "Peak Sun Hours"—the amount of usable sunlight your roof receives daily. A higher sun hour rating means you need fewer panels to achieve the same energy output.
2. The Payback Period
The payback period is the time it takes for your cumulative energy savings to equal the net cost of the system. In the United States, the average solar payback period ranges from 6 to 10 years. Our calculator uses the formula: Net System Cost / Annual Energy Savings.
Factors Affecting Your Solar Savings
- The Federal Tax Credit (ITC): Currently, homeowners can deduct 30% of the cost of installing a solar energy system from their federal taxes. Our calculator assumes you will utilize this credit to reduce your "Total System Cost."
- Net Metering: This allows you to send excess energy back to the grid in exchange for credits on your bill, maximizing your ROI even when the sun isn't shining.
- Electricity Price Inflation: Utility rates typically rise by 2-3% annually. Solar "locks in" your rate, making your savings even more valuable over time.
Realistic Example
Imagine a homeowner in Florida with a $200 monthly bill. They install a 10kW system for $25,000. After the 30% tax credit ($7,500), their net cost is $17,500. If the system saves them $2,400 a year, the payback period is approximately 7.3 years. Over 25 years (the standard warranty for panels), they would save $60,000, resulting in a net profit of over $42,000.