Calculate your solar payback period and long-term savings.
Total price before incentives.
Standard US federal credit is 30%.
One-time local utility rebates.
Your average utility bill today.
Percentage of bill covered by solar.
National average is approx. 2-4%.
Net Investment
$0
Payback Period
0 Years
First Year Savings
$0
25-Year Profit
$0
Understanding Your Solar Return on Investment (ROI)
Investing in solar panels is not just an environmental decision; it's a significant financial maneuver. Calculating your ROI involves understanding the "Payback Period"—the length of time it takes for your utility savings to cover the initial cost of the system.
Key Factors That Influence ROI
Gross System Cost: The total price of hardware (panels, inverters), permitting, and installation labor.
Tax Credits and Rebates: The Federal Investment Tax Credit (ITC) currently allows you to deduct 30% of your solar installation costs from your federal taxes. State rebates and Performance-Based Incentives (PBIs) can further slash the net cost.
Energy Production vs. Offset: Not every system covers 100% of a home's electricity needs. Your ROI depends on your "offset ratio"—how much of your utility bill the panels eliminate.
The Cost of Electricity: The more your utility company charges per kilowatt-hour (kWh), the more money you save by producing your own power.
The Solar Payback Formula
To calculate the ROI manually, we use the following logic:
Net Cost = (Gross Cost – Rebates) – (Gross Cost * Federal Tax Credit %)
Annual Savings = (Monthly Bill * 12) * Energy Offset %
Payback Period = Net Cost / Annual Savings
Realistic Example
Let's say you buy a solar system for $20,000. You receive a 30% Federal Tax Credit ($6,000) and a $1,000 state rebate. Your net cost is $13,000.
If your monthly electric bill was $200 and the solar panels cover 100% of it, you save $2,400 per year. In this scenario, your system pays for itself in roughly 5.4 years. Considering most solar panels are warrantied for 25 years, you would enjoy nearly 20 years of essentially "free" electricity.
function calculateSolarROI() {
var grossCost = parseFloat(document.getElementById('systemCost').value);
var taxCreditPercent = parseFloat(document.getElementById('taxCredit').value) / 100;
var rebates = parseFloat(document.getElementById('rebates').value);
var monthlyBill = parseFloat(document.getElementById('monthlyBill').value);
var offset = parseFloat(document.getElementById('offset').value) / 100;
var inflation = parseFloat(document.getElementById('utilityIncrease').value) / 100;
if (isNaN(grossCost) || isNaN(monthlyBill)) {
alert("Please enter valid numbers for cost and monthly bill.");
return;
}
// Calculations
var taxCreditAmount = grossCost * taxCreditPercent;
var netCost = grossCost – taxCreditAmount – rebates;
var yearOneSavings = (monthlyBill * 12) * offset;
// Calculate Payback Period with inflation
var cumulativeSavings = 0;
var years = 0;
var maxYears = 50; // Safety break
var tempSavings = yearOneSavings;
while (cumulativeSavings < netCost && years < maxYears) {
cumulativeSavings += tempSavings;
tempSavings *= (1 + inflation);
years++;
}
// 25 Year Total Savings
var totalSavings25 = 0;
var runningSavings = yearOneSavings;
for (var i = 0; i < 25; i++) {
totalSavings25 += runningSavings;
runningSavings *= (1 + inflation);
}
var totalProfit = totalSavings25 – netCost;
// Display Results
document.getElementById('netCostDisplay').innerText = "$" + netCost.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('paybackDisplay').innerText = years + " Years";
document.getElementById('yearOneSavings').innerText = "$" + yearOneSavings.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('totalProfit').innerText = "$" + totalProfit.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('results').style.display = 'block';
}