Prodigy Finance Interest Rate Calculator

Solar Panel Payback Period Calculator

Calculation Results:

Net System Cost:

Payback Period:

First Year Savings:

25-Year Net Savings:

function calculateSolarPayback() { var cost = parseFloat(document.getElementById('systemCost').value) || 0; var taxCreditPct = parseFloat(document.getElementById('taxCredit').value) || 0; var rebates = parseFloat(document.getElementById('rebates').value) || 0; var monthlyBill = parseFloat(document.getElementById('monthlyBill').value) || 0; var coverage = parseFloat(document.getElementById('coverage').value) || 0; var annualIncrease = (parseFloat(document.getElementById('utilityIncrease').value) || 0) / 100; // Calculate Net Cost var creditAmount = cost * (taxCreditPct / 100); var netCost = cost – creditAmount – rebates; // Calculate Savings var monthlySavings = monthlyBill * (coverage / 100); var annualSavingsYear1 = monthlySavings * 12; // Calculate Payback Period with utility inflation var currentNetCost = netCost; var years = 0; var yearlySavings = annualSavingsYear1; var totalLifetimeSavings = 0; for (var i = 1; i 0) { if (currentNetCost <= yearlySavings) { years += (currentNetCost / yearlySavings); currentNetCost = 0; } else { currentNetCost -= yearlySavings; years++; } } yearlySavings *= (1 + annualIncrease); } // Display results document.getElementById('resultsArea').style.display = 'block'; document.getElementById('netCostDisplay').innerText = '$' + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('paybackDisplay').innerText = years.toFixed(1) + ' Years'; document.getElementById('yearOneSavings').innerText = '$' + annualSavingsYear1.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('lifetimeSavings').innerText = '$' + (totalLifetimeSavings – netCost).toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); }

How to Calculate Your Solar Panel Payback Period

The solar panel payback period is the time it takes for the savings on your electricity bills to cover the initial cost of installing a solar energy system. For most American homeowners, this period typically falls between 6 and 10 years.

The Formula for Solar ROI

To calculate your payback period manually, you can use the following basic formula:

Payback Period = (Gross System Cost – Incentives) / Annual Avoided Electricity Costs

Key Factors That Influence Your Results

• The Federal Investment Tax Credit (ITC): As of 2024, the federal government offers a 30% tax credit on the total cost of your solar system, significantly reducing the "Net Cost."
• Local Electricity Rates: The more you pay your utility company per kilowatt-hour (kWh), the faster your solar panels will pay for themselves.
• State and Local Incentives: Some states offer SRECs (Solar Renewable Energy Certificates), performance-based incentives, or additional cash rebates.
• Energy Consumption: If you offset 100% of your usage, your savings are maximized. Adding a battery backup may increase the upfront cost but can protect against "Time-of-Use" (TOU) peak rates.

Example Calculation

Imagine a homeowner in California installs a system for $25,000.

1. Federal Tax Credit (30%): -$7,500
2. State Rebate: -$500
3. Net Cost: $17,000
4. Monthly Savings: If the bill was $200 and is now $0, annual savings are $2,400.
5. Payback: $17,000 / $2,400 = 7.08 Years.

Is Solar a Good Investment?

Beyond the payback period, solar panels are designed to last 25 to 30 years. Once the system has paid for itself, the electricity generated is essentially free. This leads to tens of thousands of dollars in "net profit" over the life of the system, not to mention the increased property value associated with renewable energy upgrades.