Solar Panel ROI Calculator
Payback Period
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25-Year Savings
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Net Profit
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How to Calculate Your Solar Return on Investment
Deciding to go solar is a significant financial commitment. Understanding the Solar Panel ROI helps you determine if the investment makes sense for your property. Our calculator factors in the gross cost, available tax incentives, and the rising cost of grid electricity to provide a comprehensive financial outlook.
Key Metrics Explained
- Payback Period: This is the number of years it takes for your cumulative electricity savings to equal the net cost of the solar installation. In the US, the average payback period typically ranges from 6 to 10 years.
- 25-Year Net Savings: Solar panels are usually warrantied for 25 years. This figure shows how much money you will keep in your pocket after paying off the initial system cost, accounting for utility price inflation.
- Energy Offset: This represents what percentage of your monthly energy consumption the solar panels will cover. A 100% offset means you produce as much energy as you use annually.
Example ROI Scenario
Suppose you install a system for $20,000. After the 30% Federal Solar Tax Credit (ITC), your net cost is $14,000. If your monthly bill is $150 and your system covers 100% of your usage, you save $1,800 in the first year. Even without utility price increases, your payback would be roughly 7.7 years. However, when factoring in a 4% annual utility rate hike, your total 25-year savings could exceed $60,000.
Factors That Impact Your Results
The accuracy of your ROI depends on several localized factors:
- Net Metering Policies: Some states allow you to sell excess power back to the grid at retail rates, while others offer lower wholesale rates.
- Sunlight Exposure: A house in Arizona will generate more kilowatt-hours than the same system in Washington state.
- Maintenance: While solar requires little maintenance, you should budget for a possible inverter replacement around year 12-15.