Estimate how many years it will take for your solar energy system to pay for itself through energy savings.
Your Results
Estimated Payback Period: 0 years
Net System Cost: $0
Year 1 Savings: $0
25-Year Total Savings: $0
How to Calculate Your Solar ROI
The solar payback period is the time it takes for the cumulative savings on your electricity bill to equal the initial cost of installing a solar panel system. Understanding this metric is crucial for homeowners evaluating whether solar is a viable financial investment.
The Solar Payback Formula
To find your payback period, we use the following calculation logic:
Determine Net Cost: Gross System Cost – (Federal Tax Credits + State Rebates + Local Incentives).
Calculate Annual Savings: (Average Monthly Bill × Percentage Offset by Solar) × 12.
Account for Inflation: Most utility rates increase by 2% to 5% annually. We factor this in to show faster payback.
Divide: Net Cost ÷ Annual Savings (Adjusted for annual rate increases).
Example Calculation
Imagine a typical residential scenario in the United States:
Factor
Value
Gross System Cost (6kW System)
$18,000
Federal Solar Tax Credit (30%)
-$5,400
Net Cost
$12,600
Monthly Savings ($150 Bill × 100% Offset)
$1,800/year
Payback Period
~6.4 Years (considering 3% utility inflation)
Top Factors Influencing Your Payback Time
Local Incentives: The Federal Investment Tax Credit (ITC) currently allows you to deduct 30% of your installation costs. State-specific programs like SRECs can shorten payback significantly.
Sun Exposure: Homeowners in Arizona or Florida will generate more kilowatt-hours (kWh) per panel than those in cloudy regions, leading to higher monthly savings.
Electricity Rates: If your utility charges $0.25 per kWh, your panels are "earning" you more money than if your rates were only $0.11 per kWh.
Financing: Paying cash leads to the fastest payback. If you take out a solar loan, interest payments will extend the time it takes to break even.
Is Solar Worth It?
Most modern solar panels are warrantied for 25 years. If your payback period is 7 to 9 years, you will enjoy 16+ years of essentially "free" electricity. This represents a significant Internal Rate of Return (IRR) that often outperforms traditional stock market investments.
function calculateSolarPayback() {
// Get Input Values
var cost = parseFloat(document.getElementById('solar_cost').value);
var rebates = parseFloat(document.getElementById('solar_rebates').value);
var monthlyBill = parseFloat(document.getElementById('solar_bill').value);
var offset = parseFloat(document.getElementById('solar_offset').value) / 100;
var inflation = parseFloat(document.getElementById('solar_increase').value) / 100;
var maintenance = parseFloat(document.getElementById('solar_maintenance').value);
// Validate inputs
if (isNaN(cost) || isNaN(rebates) || isNaN(monthlyBill) || isNaN(offset)) {
alert("Please enter valid numerical values.");
return;
}
var netCost = cost – rebates;
if (netCost <= 0) {
document.getElementById('res_years').innerHTML = "Immediate";
return;
}
var currentSavings = monthlyBill * offset * 12;
var cumulativeSavings = 0;
var years = 0;
var maxYears = 50; // Safety break
var total25YearSavings = 0;
// Year-by-year calculation to account for utility inflation
for (var i = 1; i <= maxYears; i++) {
var yearlyInflationFactor = Math.pow((1 + inflation), (i – 1));
var savingsThisYear = (currentSavings * yearlyInflationFactor) – maintenance;
if (cumulativeSavings = netCost) {
var overshot = cumulativeSavings – netCost;
var adjustment = overshot / savingsThisYear;
years = (i – adjustment).toFixed(1);
}
}
// Calculate 25 year total for SEO value
if (i <= 25) {
total25YearSavings += savingsThisYear;
}
if (i === maxYears && cumulativeSavings < netCost) {
years = "50+";
}
}
// Update UI
document.getElementById('solar_result_box').style.display = "block";
document.getElementById('res_years').innerHTML = years;
document.getElementById('res_net_cost').innerHTML = "$" + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('res_y1_savings').innerHTML = "$" + (currentSavings – maintenance).toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('res_total_savings').innerHTML = "$" + total25YearSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
// Smooth scroll to result
document.getElementById('solar_result_box').scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}