Solar Panel ROI Calculator
Net System Cost (After Tax Credit):
$0.00
Year 1 Savings:
$0.00
Estimated Payback Period:
0 Years
Total 25-Year Savings (Profit):
$0.00
How to Calculate Your Solar Return on Investment
Investing in solar panels is not just an environmental decision; it's a financial strategy. To determine your ROI, you must consider the gross installation cost, available incentives like the Federal Investment Tax Credit (ITC), and your local utility rates.
Understanding the Key Metrics
- Gross System Cost: The total price paid to the installer before any rebates.
- Solar Offset: The percentage of your electricity usage covered by the panels. A 100% offset means you produce as much as you consume.
- Payback Period: The amount of time it takes for your cumulative energy savings to equal the net cost of the solar system.
Example Calculation
If you install a system for $20,000 and qualify for a 30% Federal Tax Credit, your net cost is $14,000. If your monthly electric bill is $160 ($0.16/kWh at 1000 kWh), you save $1,920 in the first year. Without considering utility inflation, your payback period would be approximately 7.3 years. Over 25 years, accounting for a 3% annual utility price hike, you could save over $55,000 in avoided electricity costs.
Factors That Affect Your Savings
Your ROI can vary based on roof orientation, local shading, and state-specific incentives like SRECs (Solar Renewable Energy Certificates) or net metering policies. Net metering allows you to "sell" excess energy back to the grid at retail rates, significantly accelerating your ROI.