Solar Panel ROI Calculator
Estimate your payback period and long-term savings from solar energy.
Net Installation Cost:
$0.00
Estimated Payback Period:
0 Years
Total 25-Year Savings:
$0.00
Total Return on Investment:
0%
How to Calculate Solar Panel ROI
Investing in solar panels is a major financial decision. To understand the Return on Investment (ROI), you must look beyond the initial price tag. The primary calculation involves determining the Net Cost (Total cost minus the Federal Solar Tax Credit and local rebates) and dividing it by your Annual Savings.
Key Factors in the Calculation
- Federal Tax Credit (ITC): As of 2024, the federal government offers a 30% credit on residential solar installations, significantly reducing the upfront cost.
- Payback Period: This is the time it takes for your cumulative energy savings to equal the net cost of the system. Most residential systems pay for themselves within 6 to 10 years.
- Utility Inflation: Electricity prices typically rise by 2-4% annually. A solar ROI calculation should account for this, as your savings grow every time the utility company raises rates.
Example Calculation
If you install a system for $20,000 and receive a 30% tax credit ($6,000), your net cost is $14,000. If that system saves you $150 per month ($1,800/year), your simple payback period would be roughly 7.7 years ($14,000 / $1,800).
Maximizing Your Solar Investment
To ensure the highest ROI, consider your roof's orientation (South-facing is best in the Northern Hemisphere) and ensure there is minimal shading. Additionally, check if your state offers Net Metering, which allows you to sell excess energy back to the grid at retail rates.