Salary Calculator Salary Calculator

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Solar Panel ROI Calculator

Net System Cost (after credits): $0.00
Estimated Annual Production: 0 kWh
First Year Savings: $0.00
Solar Payback Period: 0 Years
25-Year Net Profit: $0.00

Understanding Solar Panel ROI: Is Solar Worth It?

Switching to solar energy is a significant financial decision. Understanding your Return on Investment (ROI) involves more than just looking at your monthly bill reduction; it requires analyzing the upfront costs, government incentives, and the long-term appreciation of energy prices.

Key Factors Influencing Solar ROI

  • The Federal Solar Tax Credit (ITC): Currently, the residential clean energy credit allows you to deduct 30% of your solar installation costs from your federal taxes. This significantly lowers the "Net Cost."
  • Peak Sun Hours: This isn't just daylight. It refers to the intensity of sunlight. Areas like Arizona might average 6 hours, while the Pacific Northwest might average 3.5.
  • Electricity Rates: The more you pay your utility company per kilowatt-hour (kWh), the more money you save by producing your own power.
  • System Degradation: Most solar panels are warrantied for 25 years. They typically lose about 0.5% efficiency each year, which is accounted for in long-term ROI projections.

How to Calculate Your Payback Period

To find your payback period manually, you divide your Net System Cost by your Annual Energy Savings. For example, if a system costs $14,000 after credits and saves you $2,000 a year in electricity, your payback period is 7 years. After those 7 years, the electricity generated is essentially free for the remaining life of the system.

Example ROI Scenario

Imagine a typical 8kW system in a region with 4.5 peak sun hours.

  1. Gross Cost: $24,000
  2. 30% Tax Credit: -$7,200
  3. Net Cost: $16,800
  4. Annual Production: 8kW * 4.5 hours * 365 days * 0.78 (derate factor) = ~10,249 kWh/year.
  5. Annual Savings: 10,249 kWh * $0.15/kWh = $1,537.
  6. Payback Period: $16,800 / $1,537 = ~10.9 Years.

function calculateSolarROI() { // Get Inputs var systemSize = parseFloat(document.getElementById("systemSize").value); var totalCost = parseFloat(document.getElementById("totalCost").value); var taxCreditPct = parseFloat(document.getElementById("taxCredit").value); var rate = parseFloat(document.getElementById("electricityRate").value); var sunHours = parseFloat(document.getElementById("sunHours").value); var annualIncrease = parseFloat(document.getElementById("annualIncrease").value) / 100; // Validation if (isNaN(systemSize) || isNaN(totalCost) || isNaN(rate) || isNaN(sunHours)) { alert("Please enter valid numerical values."); return; } // 1. Calculate Net Cost var netCost = totalCost * (1 – (taxCreditPct / 100)); // 2. Calculate Annual Production // Standard derate factor for inverter loss, wiring, and soil is ~0.78 var annualProduction = systemSize * sunHours * 365 * 0.78; // 3. Calculate Savings and Payback var yearOneSavings = annualProduction * rate; // Cumulative Calculation for Payback and 25-Year Profit var cumulativeSavings = 0; var paybackYear = 0; var currentRate = rate; var total25YearSavings = 0; var foundPayback = false; for (var year = 1; year = netCost && !foundPayback) { paybackYear = year – 1 + ((netCost – (cumulativeSavings – yearlySaving)) / yearlySaving); foundPayback = true; } currentRate = currentRate * (1 + annualIncrease); } var net25YearProfit = total25YearSavings – netCost; // Display Results document.getElementById("solar-results").style.display = "block"; document.getElementById("netCostDisplay").innerText = "$" + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById("annualProductionDisplay").innerText = Math.round(annualProduction).toLocaleString() + " kWh"; document.getElementById("yearOneSavingsDisplay").innerText = "$" + yearOneSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); if (foundPayback) { document.getElementById("paybackPeriodDisplay").innerText = paybackYear.toFixed(1) + " Years"; } else { document.getElementById("paybackPeriodDisplay").innerText = "Over 25 Years"; } document.getElementById("totalProfitDisplay").innerText = "$" + net25YearProfit.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); // Scroll to results document.getElementById("solar-results").scrollIntoView({ behavior: 'smooth', block: 'nearest' }); }

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