Solar Panel ROI & Savings Calculator
Estimate your potential savings and payback period for a residential solar system.
How to Calculate Your Solar Savings
Switching to solar energy is one of the most effective ways to reduce your carbon footprint and eliminate monthly utility bills. To understand the financial viability of a solar installation, you must look at four key factors: System Size, Sunlight Exposure, Utility Rates, and Net Cost.
Our calculator uses a standard efficiency derate factor of 75% to account for real-world conditions like inverter losses, wiring resistance, and panel temperature. The formula for daily production is:
Daily kWh = System Size (kW) × Peak Sun Hours × 0.75 (Efficiency Factor)
Understanding Solar ROI
The "Payback Period" represents the number of years it takes for your cumulative energy savings to equal the initial cost of the system. Most residential systems in the United States currently see a payback period between 6 and 10 years, depending on local incentives and electricity prices.
| System Size | Avg. Daily Gen (4.5 hrs sun) | Estimated Monthly Savings (@ $0.15) |
|---|---|---|
| 4 kW | 13.5 kWh | $60.75 |
| 6 kW | 20.25 kWh | $91.13 |
| 8 kW | 27.0 kWh | $121.50 |
| 10 kW | 33.75 kWh | $151.88 |
Example Calculation
If you install a 7 kW system in a location that receives 5 peak sun hours per day, and your utility charges $0.18 per kWh:
- Daily Production: 7 kW * 5 hours * 0.75 = 26.25 kWh
- Monthly Savings: 26.25 kWh * 30 days * $0.18 = $141.75
- Yearly Savings: $141.75 * 12 = $1,701.00
If the system cost $14,000 after federal tax credits, your payback period would be approximately 8.2 years.