Rates and Taxes Calculator

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Solar Panel ROI & Payback Calculator

Calculate your estimated savings, payback period, and 25-year return on investment for a solar PV system.

Net System Cost: $0.00
Estimated Annual Production: 0 kWh
Year 1 Electricity Savings: $0.00
Payback Period: 0 Years
Total 25-Year Net Profit: $0.00

Understanding Your Solar Investment Return

Deciding to switch to solar energy is a significant financial decision. To accurately determine if solar is worth it for your home, you must look beyond the initial price tag and focus on the Solar Return on Investment (ROI) and the Payback Period.

How the ROI is Calculated

Our calculator uses several key data points to provide an estimate of your financial gains:

  • Net Cost: This is the gross price of the installation minus the federal solar tax credit (ITC) and any local utility rebates.
  • Annual Energy Production: Solar panels don't produce at 100% capacity all day. We use "Peak Sun Hours" (which accounts for the intensity of the sun) and a standard system efficiency factor of 85% to estimate yearly kilowatt-hours (kWh).
  • Electricity Savings: By multiplying the kWh produced by your local utility rate, we find out how much money stays in your pocket instead of going to the power company.
  • Payback Period: This is the number of years it takes for your cumulative energy savings to equal the net cost of the system.

Example Calculation

Imagine you install a 7kW system in a region with 5 peak sun hours per day. Your gross cost is $21,000, but you receive a 30% federal tax credit ($6,300), making your net cost $14,700.

The system generates roughly 10,800 kWh per year. If your electricity rate is $0.16/kWh, you save $1,728 in the first year. In this scenario, your payback period would be approximately 8.5 years. Since solar panels are warrantied for 25 years, you would enjoy over 16 years of essentially "free" electricity.

Factors That Influence Your Results

Keep in mind that factors like roof orientation (south-facing is best in the Northern Hemisphere), shading from trees or chimneys, and your local utility's net metering policies will affect these numbers. If your utility offers 1-to-1 net metering, you get full credit for the excess energy you send back to the grid during the day.

function calculateSolarROI() { var size = parseFloat(document.getElementById('solarSystemSize').value); var grossCost = parseFloat(document.getElementById('solarTotalCost').value); var incentives = parseFloat(document.getElementById('solarIncentives').value); var rate = parseFloat(document.getElementById('solarElecRate').value); var sunHours = parseFloat(document.getElementById('solarSunHours').value); var degradation = parseFloat(document.getElementById('solarDegradation').value) / 100; if (isNaN(size) || isNaN(grossCost) || isNaN(incentives) || isNaN(rate) || isNaN(sunHours)) { alert("Please enter valid numerical values in all fields."); return; } // 1. Net Cost var netCost = grossCost – incentives; // 2. Annual Production (kWh) // Logic: Size * Sun Hours * Days * Efficiency (standard derate factor of 0.85) var annualGen = size * sunHours * 365 * 0.85; // 3. Year 1 Savings var year1Savings = annualGen * rate; // 4. Payback Period and 25-Year ROI var totalSavings25Years = 0; var currentAnnualGen = annualGen; var cumulativeSavings = 0; var paybackYear = 0; var foundPayback = false; for (var i = 1; i = netCost) { paybackYear = i – 1 + ((netCost – (cumulativeSavings – savingsThisYear)) / savingsThisYear); foundPayback = true; } // Account for solar panel degradation currentAnnualGen = currentAnnualGen * (1 – degradation); } var totalProfit = totalSavings25Years – netCost; // Display Results document.getElementById('solarResults').style.display = 'block'; document.getElementById('resNetCost').innerText = '$' + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resAnnualGen').innerText = Math.round(annualGen).toLocaleString() + ' kWh'; document.getElementById('resYear1Savings').innerText = '$' + year1Savings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); if (foundPayback) { document.getElementById('resPayback').innerText = paybackYear.toFixed(1) + ' Years'; } else { document.getElementById('resPayback').innerText = 'Over 25 Years'; } document.getElementById('resTotalROI').innerText = '$' + totalProfit.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); }

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