Estimate your potential savings and calculate how many years it will take for your solar investment to pay for itself.
Net System Cost (after incentives):$0.00
Estimated Annual Production:0 kWh
Estimated Annual Savings:$0.00
Payback Period:0 Years
How to Calculate Solar ROI
Calculating the Return on Investment (ROI) for solar panels involves understanding four primary factors: the net cost of the system, the energy production of your panels, your local utility rates, and available government incentives like the Federal Solar Tax Credit (ITC).
The formula for the payback period is simple: Net Cost / Annual Savings = Payback Period. However, calculating the annual savings requires knowing your local sunlight exposure and system efficiency.
Key Factors Explained
Gross System Cost: The total price paid to the installer before any rebates.
Federal Tax Credit: Currently, the US federal government offers a 30% tax credit on solar installations, significantly reducing the "Net Cost."
Peak Sun Hours: This isn't just daylight hours, but the intensity of the sun. Most areas in the US range between 3.5 to 6.0 peak sun hours per day.
Electricity Rate: The more you pay per kWh to your utility company, the faster your solar panels will pay for themselves.
Real-World Example
Scenario
Input Details
Payback Period
Standard Home
$18,000 cost, 30% credit, 6kW system, 4.5 sun hours
~7.8 Years
Sunny State (AZ/CA)
$15,000 cost, 30% credit, 5kW system, 6.0 sun hours
Do solar panels increase home value? Yes, studies by Zillow and Lawrence Berkeley National Laboratory show that solar panels can increase a home's value by an average of 4.1% or roughly $9,000 for a median-valued home.
What is the average lifespan of solar panels? Most modern Tier-1 solar panels are warrantied for 25 years but can continue producing electricity for 30 to 40 years at a slightly reduced efficiency.
function calculateSolarROI() {
var cost = parseFloat(document.getElementById('systemCost').value);
var incentivePercent = parseFloat(document.getElementById('taxCredit').value);
var size = parseFloat(document.getElementById('systemSize').value);
var sunHours = parseFloat(document.getElementById('sunHours').value);
var rate = parseFloat(document.getElementById('elecRate').value);
var bill = parseFloat(document.getElementById('monthlyBill').value);
if (isNaN(cost) || isNaN(incentivePercent) || isNaN(size) || isNaN(sunHours) || isNaN(rate) || isNaN(bill)) {
alert("Please enter valid numerical values in all fields.");
return;
}
// 1. Calculate Net Cost
var netCost = cost * (1 – (incentivePercent / 100));
// 2. Calculate Annual Production (kW * hours * 365 days * 0.85 efficiency factor)
var annualProduction = size * sunHours * 365 * 0.85;
// 3. Calculate Annual Savings
// Savings is based on production vs utility rate
var annualSavings = annualProduction * rate;
// 4. Payback Period
var paybackYears = netCost / annualSavings;
// Display results
document.getElementById('netCostDisplay').innerText = "$" + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('annualProdDisplay').innerText = Math.round(annualProduction).toLocaleString() + " kWh";
document.getElementById('annualSavingsDisplay').innerText = "$" + annualSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('paybackDisplay').innerText = paybackYears.toFixed(1) + " Years";
document.getElementById('solarResult').style.display = "block";
}