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Solar Panel ROI & Payback Calculator

Calculation Summary

Net Investment:

Annual Generation:

Annual Savings:

Payback Period:

Estimated 25-Year Profit:

function calculateSolarROI() { var size = parseFloat(document.getElementById('systemSize').value); var cost = parseFloat(document.getElementById('grossCost').value); var rate = parseFloat(document.getElementById('elecRate').value); var rebate = parseFloat(document.getElementById('rebatePercent').value); var sun = parseFloat(document.getElementById('sunHours').value); var eff = parseFloat(document.getElementById('efficiency').value) / 100; if (isNaN(size) || isNaN(cost) || isNaN(rate) || isNaN(rebate) || isNaN(sun) || isNaN(eff)) { alert('Please enter valid numerical values in all fields.'); return; } var netCost = cost * (1 – (rebate / 100)); var annualGen = size * sun * 365 * eff; var annualSavings = annualGen * rate; var paybackYears = netCost / annualSavings; var total25YearSavings = (annualSavings * 25) – netCost; document.getElementById('netCostDisplay').innerText = '$' + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('annualGenDisplay').innerText = annualGen.toLocaleString(undefined, {maximumFractionDigits: 0}) + ' kWh'; document.getElementById('annualSavingsDisplay').innerText = '$' + annualSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('paybackDisplay').innerText = paybackYears.toFixed(1) + ' Years'; document.getElementById('longTermDisplay').innerText = '$' + total25YearSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('results-area').style.display = 'block'; }

How to Calculate Solar Panel Return on Investment (ROI)

Deciding to go solar is a significant financial decision. Understanding the Solar Panel Payback Period—the amount of time it takes for your electricity savings to equal the cost of the system—is crucial for homeowners and businesses alike.

Key Factors Influencing Your Solar ROI

  • Gross System Cost: The total price of panels, inverters, racking, and labor.
  • Federal Investment Tax Credit (ITC): Currently, the US federal government offers a 30% tax credit on the total cost of solar installation, which significantly lowers your net investment.
  • Local Utility Rates: The more you pay for electricity per kilowatt-hour (kWh), the more money you save by producing your own power.
  • Solar Irradiance: Your geographic location determines the "Sun Hours" per day. A home in Arizona will typically reach payback faster than one in Seattle due to higher sun exposure.

Real-World Example Calculation

Imagine a typical 7kW system costing $21,000. After the 30% Federal Tax Credit, your Net Cost is $14,700. If that system produces 10,000 kWh per year and your utility rate is $0.15/kWh, you save $1,500 annually.

Calculation: $14,700 (Net Cost) / $1,500 (Annual Savings) = 9.8 Year Payback Period.

System Efficiency and Derate Factors

It is important to note that solar systems do not operate at 100% efficiency. Energy is lost through DC-to-AC conversion, wiring resistance, and soiling (dust on panels). Our calculator uses a default 78% efficiency factor to provide a realistic estimate of your actual generation.

Is Solar a Good Investment?

Most residential solar systems pay for themselves within 6 to 10 years. Given that modern solar panels are warrantied for 25 years, you can expect 15 to 19 years of "free" electricity, often resulting in tens of thousands of dollars in net profit over the life of the system.

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