Deciding to switch to solar energy is a significant financial commitment. This calculator helps you estimate the Solar ROI (Return on Investment) by analyzing how long it will take for your electricity savings to cover the initial cost of the system.
Key Variables Explained
Total System Cost: The gross price of the solar installation including panels, inverters, and labor.
Incentives & Rebates: This includes the Federal Solar Tax Credit (ITC) and any local utility rebates or state-level incentives.
Estimated Bill Offset: The percentage of your current electricity consumption that the solar system is designed to generate. Most systems aim for 80% to 100%.
Annual Utility Rate Increase: Utility prices historically rise between 2% and 5% annually. This factor significantly affects your long-term savings.
Example Calculation
Suppose you purchase a solar system for $25,000 and receive a 30% federal tax credit ($7,500), bringing your net investment to $17,500. If your monthly bill is $200 and you offset 100% of it, you save $2,400 in the first year. With an annual utility price hike of 3%, your payback period would be roughly 6.8 years. Over 25 years, the total savings would exceed $87,000.
Is Solar a Good Investment?
In most regions, a solar payback period under 10 years is considered an excellent investment. Since most solar panels are warrantied for 25 years, you essentially receive 15+ years of "free" electricity after the system has paid for itself.
function calculateSolarPayback() {
var systemCost = parseFloat(document.getElementById('systemCost').value) || 0;
var incentives = parseFloat(document.getElementById('incentives').value) || 0;
var monthlyBill = parseFloat(document.getElementById('monthlyBill').value) || 0;
var offset = (parseFloat(document.getElementById('offset').value) || 0) / 100;
var rateIncrease = (parseFloat(document.getElementById('rateIncrease').value) || 0) / 100;
var degradation = (parseFloat(document.getElementById('degradation').value) || 0) / 100;
var netInvestment = systemCost – incentives;
var initialYearlySavings = monthlyBill * 12 * offset;
var cumulativeSavings = 0;
var year = 0;
var paybackYear = 0;
var total25YearSavings = 0;
var foundPayback = false;
for (var i = 1; i = netInvestment) {
// Linear interpolation for more precise year calculation
var previousSavings = cumulativeSavings – currentYearSavings;
var fraction = (netInvestment – previousSavings) / currentYearSavings;
paybackYear = (i – 1) + fraction;
foundPayback = true;
}
if (i === 25) {
total25YearSavings = cumulativeSavings;
}
}
document.getElementById('solarResult').style.display = 'block';
document.getElementById('netInvestment').innerText = '$' + netInvestment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
if (foundPayback) {
document.getElementById('paybackYears').innerText = paybackYear.toFixed(1) + ' Years';
} else {
document.getElementById('paybackYears').innerText = 'Over 25 Years';
}
document.getElementById('longTermSavings').innerText = '$' + (total25YearSavings – netInvestment).toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('monthlySavings').innerText = '$' + (initialYearlySavings / 12).toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('solarResult').scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}