Estimate how many years it will take for your solar investment to pay for itself.
Results
What is the Solar Payback Period?
The solar payback period is the time it takes for the savings on your electricity bills to equal the initial cost of installing a solar panel system. Once you hit this break-even point, your solar panels are essentially providing free electricity for the remainder of their lifespan, which is typically 25 to 30 years.
How to Calculate Solar ROI
To calculate your payback period, we use the following variables:
Gross System Cost: The total price of equipment and labor.
Incentives: Deduct the Federal Solar Tax Credit (currently 30%) and any local rebates.
Annual Savings: Calculate how much electricity you produce multiplied by your local utility rate.
Utility Inflation: Most electricity rates rise by about 2-4% annually, which actually shortens your payback period over time.
Real-World Example:
Imagine a system costing $20,000. After the 30% federal tax credit, your net cost is $14,000. If you currently spend $150/month ($1,800/year) on electricity and your solar system covers 100% of your usage:
Year 1 Savings: $1,800 Payback Period: ~$14,000 / $1,800 = 7.7 years.
Factors That Influence Your Results
Several factors can speed up or slow down your return on investment:
1. Sunlight Hours: Homeowners in Arizona will see a faster payback than those in Washington due to higher solar irradiance.
2. Local Electricity Rates: The more your utility charges per kilowatt-hour (kWh), the more money you save by producing your own power.
3. Financing: If you take out a solar loan, the interest payments will extend the payback period, though you may still be "cash-flow positive" from month one.
function calculateSolarPayback() {
var cost = parseFloat(document.getElementById('solar_cost').value);
var bill = parseFloat(document.getElementById('solar_bill').value);
var offset = parseFloat(document.getElementById('solar_offset').value) / 100;
var inflation = parseFloat(document.getElementById('solar_inflation').value) / 100;
var resultBox = document.getElementById('solar_result_box');
var summary = document.getElementById('solar_summary');
if (isNaN(cost) || isNaN(bill) || isNaN(offset) || isNaN(inflation) || cost <= 0 || bill <= 0) {
summary.innerHTML = "Please enter valid positive numbers for cost and monthly bill.";
resultBox.style.display = 'block';
return;
}
var annualSavingsYear1 = bill * 12 * offset;
var cumulativeSavings = 0;
var years = 0;
var maxYears = 50; // Safety break
// Iterate through years to find break-even including inflation
while (cumulativeSavings < cost && years 0 && years < maxYears) {
var prevYearSavings = cumulativeSavings – (annualSavingsYear1 * Math.pow(1 + inflation, years – 1));
var neededInFinalYear = cost – prevYearSavings;
var finalYearIncome = annualSavingsYear1 * Math.pow(1 + inflation, years – 1);
var fractionalYear = neededInFinalYear / finalYearIncome;
var preciseYears = (years – 1) + fractionalYear;
} else {
var preciseYears = years;
}
var totalSavings25Years = 0;
for (var i = 1; i <= 25; i++) {
totalSavings25Years += annualSavingsYear1 * Math.pow(1 + inflation, i – 1);
}
var netProfit = totalSavings25Years – cost;
var output = "Estimated Payback Period:" + preciseYears.toFixed(1) + " Years";
output += "First Year Savings: $" + annualSavingsYear1.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + "";
output += "Total 25-Year Savings: $" + totalSavings25Years.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + "";
output += "Net Lifetime Profit (25yrs): $" + netProfit.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + "";
if (years >= maxYears) {
output = "The payback period exceeds 50 years. Please check your inputs (e.g., your system cost may be too high relative to your electricity bill).";
}
summary.innerHTML = output;
resultBox.style.display = 'block';
}