function calculateSolarPayback() {
var systemCost = parseFloat(document.getElementById("systemCost").value);
var taxCreditPercent = parseFloat(document.getElementById("taxCredit").value);
var rebates = parseFloat(document.getElementById("rebates").value);
var monthlyBill = parseFloat(document.getElementById("monthlyBill").value);
var offsetPercent = parseFloat(document.getElementById("offset").value);
if (isNaN(systemCost) || isNaN(monthlyBill) || systemCost <= 0) {
alert("Please enter valid positive numbers for system cost and monthly bill.");
return;
}
var creditAmount = systemCost * (taxCreditPercent / 100);
var netCost = systemCost – creditAmount – rebates;
var monthlySavings = monthlyBill * (offsetPercent / 100);
var annualSavings = monthlySavings * 12;
// Account for 2.5% annual utility rate inflation in total savings
var totalSavings25 = 0;
var currentAnnualSaving = annualSavings;
for (var i = 1; i <= 25; i++) {
totalSavings25 += currentAnnualSaving;
currentAnnualSaving *= 1.025;
}
var paybackPeriod = netCost / annualSavings;
document.getElementById("paybackYears").innerText = paybackPeriod.toFixed(1);
document.getElementById("netCostDisplay").innerText = "$" + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("annualSavingsDisplay").innerText = "$" + annualSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("totalSavingsDisplay").innerText = "$" + totalSavings25.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resultArea").style.display = "block";
}
How to Calculate Your Solar Panel Payback Period
The solar payback period is the time it takes for the savings on your electricity bill to equal the initial cost of installing your solar energy system. Understanding this metric is essential for homeowners looking to determine if solar is a viable financial investment.
The Solar ROI Formula
The calculation follows a straightforward logical path: you take the total out-of-pocket cost and divide it by the amount of money you stop paying the utility company every year.
Payback Period = (Gross System Cost – Incentives & Rebates) / Annual Electricity Savings
Key Factors That Influence Your Results
Federal Solar Tax Credit (ITC): As of 2024, the federal government offers a 30% tax credit on the total cost of your solar installation, significantly reducing the "Net Cost."
Local Electricity Rates: The more your utility charges per kilowatt-hour (kWh), the faster your solar panels will pay for themselves.
Sunlight Exposure: A home in Arizona will naturally reach its payback point faster than a home in Washington due to the total annual energy production potential.
Maintenance Costs: While solar panels have no moving parts, you should account for an inverter replacement around year 10 or 15.
Example Calculation
Item
Value
Gross System Cost
$25,000
30% Federal Tax Credit
-$7,500
Net Investment
$17,500
Annual Electricity Savings
$2,200
Payback Period
7.9 Years
Is Solar Worth It?
Most residential solar systems have a lifespan of 25 to 30 years. If your payback period is 7 to 10 years, you are essentially receiving 15 to 20 years of "free" electricity. Furthermore, solar panels typically increase property value, often by as much as 4%, making the net ROI even higher when you decide to sell your home.