Solar Panel Payback Period Calculator
Your estimated solar payback period is:
0 Years
Total 25-Year Savings: $0
ROI: 0%
How to Calculate Your Solar ROI
Understanding the solar payback period is essential for any homeowner considering renewable energy. This metric represents the time it takes for the electricity bill savings to equal the initial net cost of the solar power system.
The Simple Formula:
Net Cost = (Total Installation Cost) – (Tax Credits + Rebates)
Annual Savings = (Monthly Electricity Savings × 12)
Payback Period = Net Cost / Annual Savings
Net Cost = (Total Installation Cost) – (Tax Credits + Rebates)
Annual Savings = (Monthly Electricity Savings × 12)
Payback Period = Net Cost / Annual Savings
Key Factors Influencing Your Results
While the simple formula provides a baseline, a professional-grade calculation (like the one above) accounts for several variables:
- The Federal Investment Tax Credit (ITC): Currently, this allows homeowners to deduct a significant percentage of their solar installation costs from their federal taxes.
- Electricity Rate Inflation: Utility companies typically raise rates by 2-4% annually. As electricity becomes more expensive, your solar savings actually increase over time.
- Panel Degradation: Solar panels slightly lose efficiency (roughly 0.5% per year). This means your production in year 20 will be slightly lower than year 1.
- Net Metering: If your state allows net metering, you can sell excess energy back to the grid, accelerating your payback period.
What is a "Good" Payback Period?
In the United States, most residential solar systems have a payback period between 6 and 10 years. Given that most high-quality solar panels are warrantied for 25 years, you can expect 15 to 19 years of essentially "free" electricity after the system has paid for itself.