Estimate your savings and break-even point for a home solar installation.
Gross System Cost:$0.00
Net Cost (After Tax Credit):$0.00
Est. Annual Production (kWh):0 kWh
Est. Annual Savings:$0.00
Payback Period (Years):0 Years
25-Year Total ROI:$0.00
How to Use the Solar ROI Calculator
Calculating the Return on Investment (ROI) for solar panels involves understanding your upfront costs versus your long-term energy savings. To get the most accurate estimate, follow these steps:
Monthly Bill: Check your utility statements for your average monthly spend.
System Size: Most residential systems range from 5kW to 10kW. A typical 2,000 sq ft home often requires a 6kW to 8kW system.
Cost Per Watt: The national average is approximately $2.50 to $3.50 per watt installed.
Sun Hours: This varies by location. For example, Arizona averages 5.5+ hours, while Washington state averages around 3.5 hours.
The Math Behind the Savings
The calculation uses the following formulas to determine your financial benefit:
Gross Cost: System Size (kW) × 1000 × Cost Per Watt.
Annual Production: System Size × Peak Sun Hours × 365 days × 0.82 (efficiency factor).
Annual Savings: Annual Production × Your Utility Rate.
Payback Period: Net Cost ÷ Annual Savings.
Example Calculation
If you install a 7kW system at $3.00/watt, your gross cost is $21,000. After the 30% Federal Investment Tax Credit (ITC), your net cost drops to $14,700. If you live in an area with 4.5 sun hours, your system produces roughly 9,400 kWh per year. At a utility rate of $0.15/kWh, you save $1,410 annually, leading to a payback period of approximately 10.4 years.
Factors That Influence Your Payback Period
While this calculator provides a strong estimate, several variables can accelerate your ROI:
Local Incentives: Many states offer additional SRECs (Solar Renewable Energy Credits) or cash rebates.
Net Metering: If your utility company allows net metering, you can sell excess power back to the grid at retail rates.
Utility Inflation: As electricity rates rise (historically 2-3% per year), your solar savings become more valuable over time.
Roof Orientation: South-facing roofs with a 30-degree pitch typically yield the highest energy production.
function calculateSolarROI() {
var monthlyBill = parseFloat(document.getElementById('monthlyBill').value);
var systemSize = parseFloat(document.getElementById('systemSize').value);
var costPerWatt = parseFloat(document.getElementById('costPerWatt').value);
var sunHours = parseFloat(document.getElementById('sunHours').value);
var utilityRate = parseFloat(document.getElementById('utilityRate').value);
var taxCreditPct = parseFloat(document.getElementById('taxCredit').value);
if (isNaN(monthlyBill) || isNaN(systemSize) || isNaN(costPerWatt) || isNaN(sunHours) || isNaN(utilityRate)) {
alert("Please enter valid numerical values.");
return;
}
// 1. Calculate Gross and Net Cost
var grossCost = systemSize * 1000 * costPerWatt;
var taxCreditAmount = grossCost * (taxCreditPct / 100);
var netCost = grossCost – taxCreditAmount;
// 2. Calculate Production
// Standard efficiency derate factor of 0.82 handles inverter loss, wiring, and dirt
var annualProduction = systemSize * sunHours * 365 * 0.82;
// 3. Calculate Annual Savings
var annualSavings = annualProduction * utilityRate;
// Ensure we don't save more than the actual bill (assuming no 1:1 net metering profit)
var maxPossibleSavings = monthlyBill * 12;
var actualAnnualSavings = Math.min(annualSavings, maxPossibleSavings);
// 4. Calculate Payback Period
var paybackYears = netCost / actualAnnualSavings;
// 5. Calculate 25-Year ROI (Standard panel warranty period)
// Includes a conservative 2% annual utility rate increase
var totalSavings25 = 0;
var currentYearSavings = actualAnnualSavings;
for (var i = 0; i < 25; i++) {
totalSavings25 += currentYearSavings;
currentYearSavings *= 1.02; // Energy inflation
}
var totalROI = totalSavings25 – netCost;
// Display Results
document.getElementById('solarResults').style.display = 'block';
document.getElementById('grossCost').innerText = '$' + grossCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('netCost').innerText = '$' + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('annualProduction').innerText = Math.round(annualProduction).toLocaleString() + ' kWh';
document.getElementById('annualSavings').innerText = '$' + actualAnnualSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('paybackPeriod').innerText = paybackYears.toFixed(1) + ' Years';
document.getElementById('totalROI').innerText = '$' + totalROI.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}