Understanding Your Solar Panel Return on Investment (ROI)
Deciding to switch to solar energy is a major financial decision. Our Solar ROI Calculator helps you determine how long it will take for your system to pay for itself through energy savings and what your total financial gain will be over the 25-year lifespan of a typical PV system.
Key Factors in Solar Calculations
System Size (kW): The total capacity of your solar panels. Most residential systems range from 5kW to 10kW.
Sunlight Hours: This isn't just daylight; it's "peak sun hours" where the sun's intensity reaches 1,000 watts per square meter. Most US regions average 3.5 to 5.5 hours.
Net Cost: This is your total installation price minus the Federal Solar Tax Credit (currently 30% via the Inflation Reduction Act) and any local utility rebates.
Efficiency Factor: No solar system is 100% efficient. Our calculator assumes a standard 75% efficiency to account for inverter losses, wiring, and panel degradation over time.
Example Calculation
If you install a 6kW system at a cost of $18,000, and receive a 30% federal tax credit ($5,400), your Net Cost is $12,600. If your region receives 4.5 hours of sun daily, your system produces roughly 7,391 kWh per year. At $0.15 per kWh, you save $1,108 annually. Your payback period would be 11.4 years ($12,600 / $1,108).
Is Solar Worth It?
With electricity prices rising an average of 2-3% annually, solar provides a hedge against inflation. After the payback period, the electricity generated by your panels is essentially free. Over 25 years, a well-maintained system can often provide a 200% to 300% return on the initial investment.
function calculateSolarROI() {
var monthlyBill = parseFloat(document.getElementById("monthlyBill").value);
var rate = parseFloat(document.getElementById("electricityRate").value);
var size = parseFloat(document.getElementById("systemSize").value);
var cost = parseFloat(document.getElementById("totalCost").value);
var incentives = parseFloat(document.getElementById("incentives").value);
var sunHours = parseFloat(document.getElementById("sunlightHours").value);
if (isNaN(monthlyBill) || isNaN(rate) || isNaN(size) || isNaN(cost) || isNaN(incentives) || isNaN(sunHours)) {
alert("Please enter valid numbers in all fields.");
return;
}
// Calculation Logic
var netCost = cost – incentives;
// Formula: Size (kW) * Peak Sun Hours * Days in Year * System Efficiency (Standard 0.75)
var annualProductionKwh = size * sunHours * 365 * 0.75;
// Potential savings based on current rate
var annualSavings = annualProductionKwh * rate;
// Limit savings to not exceed the actual bill if system is oversized (simple estimation)
var actualBillAnnual = monthlyBill * 12;
if (annualSavings > actualBillAnnual) {
annualSavings = actualBillAnnual;
}
var paybackPeriod = netCost / annualSavings;
// 25 Year ROI (assuming no degradation for simplicity in this display)
// A more complex calc would include 0.5% degradation per year
var totalSavings25 = annualSavings * 25;
var netProfit = totalSavings25 – netCost;
// Display results
document.getElementById("results-area").style.display = "block";
document.getElementById("netCostDisplay").innerText = "$" + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("annualSavingsDisplay").innerText = "$" + annualSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("paybackDisplay").innerText = paybackPeriod.toFixed(1) + " Years";
document.getElementById("totalProfitDisplay").innerText = "$" + netProfit.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
// Scroll to results
document.getElementById("results-area").scrollIntoView({behavior: 'smooth', block: 'nearest'});
}