Calculate your potential savings and break-even point for solar energy.
Calculation Summary
Net System Cost:
Estimated Payback Period:
Total 25-Year Savings:
Estimated ROI:
Understanding Your Solar Panel ROI
Investing in solar energy is one of the most effective ways to reduce your carbon footprint while securing long-term financial stability. However, the "Return on Investment" (ROI) for solar involves more than just looking at your monthly bill reduction. It requires understanding the interplay between up-front costs, government incentives, and the rising cost of utility power.
How the Payback Period is Calculated
The payback period is the time it takes for your cumulative energy savings to equal the net cost of your solar system. To calculate this precisely, our tool follows these steps:
Determine Net Cost: We take the gross cost of the system and subtract the Federal Investment Tax Credit (ITC) and any local rebates.
Calculate Annual Savings: Based on your monthly bill and how much of it the solar panels will cover (offset), we determine your Year 1 savings.
Account for Inflation: Utility companies typically raise rates by 2% to 5% annually. Our calculator factors this in, showing that your savings actually increase every year as electricity becomes more expensive.
Factors That Influence Your Solar ROI
Sunlight Exposure: Homes in sunnier climates like Arizona or California will see a faster ROI than those in cloudier regions.
Local Utility Rates: The more your utility company charges per kilowatt-hour (kWh), the more money your solar panels save you.
Net Metering Policies: Some states allow you to sell excess energy back to the grid at retail rates, which significantly boosts your ROI.
System Maintenance: Solar panels are incredibly durable, but you should factor in the cost of a potential inverter replacement after 10-15 years.
Example ROI Scenario
Imagine a $25,000 solar system. With the 30% Federal Tax Credit, the cost immediately drops to $17,500. If your monthly bill is $200 and the system covers 100% of your usage, you save $2,400 in the first year. With a 4% annual utility rate increase, your payback period would be approximately 6.5 years. Over a 25-year system lifespan, your total savings could exceed $80,000.
function calculateSolarROI() {
var cost = parseFloat(document.getElementById('solarSystemCost').value);
var taxCreditPct = parseFloat(document.getElementById('solarTaxCredit').value);
var otherIncentives = parseFloat(document.getElementById('solarIncentives').value);
var monthlyBill = parseFloat(document.getElementById('solarMonthlyBill').value);
var coverage = parseFloat(document.getElementById('solarCoverage').value) / 100;
var rateIncrease = parseFloat(document.getElementById('solarRateIncrease').value) / 100;
if (isNaN(cost) || isNaN(monthlyBill) || cost <= 0) {
alert("Please enter valid numbers for system cost and monthly bill.");
return;
}
// Calculation Logic
var netCost = cost – (cost * (taxCreditPct / 100)) – otherIncentives;
if (netCost < 0) netCost = 0;
var yearlySavingsFirstYear = monthlyBill * 12 * coverage;
var cumulativeSavings = 0;
var yearsToPayback = 0;
var totalSavings25Years = 0;
var currentYearSavings = yearlySavingsFirstYear;
for (var year = 1; year <= 25; year++) {
totalSavings25Years += currentYearSavings;
if (cumulativeSavings = remainingBeforeThisYear) {
// Fraction of the year it took to break even
yearsToPayback = (year – 1) + (remainingBeforeThisYear / currentYearSavings);
}
cumulativeSavings += currentYearSavings;
}
// Increase the value of electricity for the next year
currentYearSavings *= (1 + rateIncrease);
}
if (cumulativeSavings < netCost) {
yearsToPayback = "Over 25 Years";
} else {
yearsToPayback = yearsToPayback.toFixed(1) + " Years";
}
var totalProfit = totalSavings25Years – netCost;
var roiPercent = (totalProfit / netCost) * 100;
// Display Results
document.getElementById('resNetCost').innerText = "$" + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resPayback').innerText = yearsToPayback;
document.getElementById('resTotalSavings').innerText = "$" + totalSavings25Years.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resROI').innerText = roiPercent.toFixed(1) + "%";
document.getElementById('solarResult').style.display = "block";
}