Estimate how many years it will take for your solar energy system to pay for itself through electricity savings.
Results Summary
Net System Cost (after incentives):
Year 1 Savings:
Estimated Payback Period:
25-Year Total Savings:
How to Calculate Your Solar ROI
Investing in solar panels is a significant financial decision. Understanding the "payback period"—the time it takes for the savings on your utility bills to equal the cost of the installation—is key to evaluating the return on investment (ROI).
Key Factors Influencing Your Payback Time
Gross System Cost: This includes equipment (panels, inverters, racking), labor, permitting, and sales tax.
Incentives: The Federal Investment Tax Credit (ITC) currently allows you to deduct 30% of your system cost from your federal taxes. State rebates and Performance-Based Incentives (PBIs) further reduce the net cost.
Electricity Rates: The higher your utility charges per kilowatt-hour (kWh), the faster your system pays for itself.
Solar Exposure: Systems in sunny regions like Arizona produce more energy (and save more money) than the same system in cloudy regions.
Realistic Example Calculation
Let's look at a typical scenario:
Imagine a homeowner installs a system for $20,000. They receive a 30% Federal Tax Credit ($6,000) and a $1,000 state rebate. Their net cost is $13,000. If their solar panels save them $150 per month ($1,800 per year), and utility rates rise by 3% annually, the payback period would be roughly 6.5 to 7 years.
Why Utility Rate Increases Matter
Most people forget to account for inflation. Utility companies historically increase electricity prices by 2% to 5% every year. Because solar "locks in" your energy cost, your savings actually grow every year as grid power becomes more expensive. This calculator accounts for that annual increase to give you a more accurate financial forecast.
function calculateSolarPayback() {
var grossCost = parseFloat(document.getElementById("systemCost").value);
var taxCreditPercent = parseFloat(document.getElementById("taxCredit").value);
var rebates = parseFloat(document.getElementById("rebates").value);
var monthlyBill = parseFloat(document.getElementById("monthlyBill").value);
var offset = parseFloat(document.getElementById("billOffset").value);
var annualIncrease = parseFloat(document.getElementById("utilityIncrease").value);
// Validate inputs
if (isNaN(grossCost) || isNaN(monthlyBill)) {
alert("Please enter valid numbers for cost and monthly bill.");
return;
}
// Calculations
var taxCreditAmount = grossCost * (taxCreditPercent / 100);
var netCost = grossCost – taxCreditAmount – rebates;
if (netCost < 0) netCost = 0;
var annualSavingsY1 = (monthlyBill * 12) * (offset / 100);
// Dynamic Payback Calculation (Iterative to account for annual rate increases)
var cumulativeSavings = 0;
var years = 0;
var currentYearSavings = annualSavingsY1;
var totalSavings25 = 0;
for (var i = 1; i <= 100; i++) {
if (cumulativeSavings < netCost) {
var needed = netCost – cumulativeSavings;
if (needed < currentYearSavings) {
years += (needed / currentYearSavings);
cumulativeSavings = netCost;
} else {
cumulativeSavings += currentYearSavings;
years = i;
}
}
// Track 25 year savings (standard panel warranty)
if (i <= 25) {
totalSavings25 += currentYearSavings;
}
// Increase savings for next year based on utility inflation
currentYearSavings *= (1 + (annualIncrease / 100));
if (i === 100 && cumulativeSavings < netCost) {
years = "Over 100";
break;
}
}
// Display results
document.getElementById("netCostDisplay").innerText = "$" + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("yearOneSavings").innerText = "$" + annualSavingsY1.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var paybackDisplay = typeof years === 'string' ? years : years.toFixed(1) + " Years";
document.getElementById("paybackYears").innerText = paybackDisplay;
document.getElementById("totalSavings").innerText = "$" + totalSavings25.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById("solarResult").style.display = "block";
// Scroll to result on mobile
document.getElementById("solarResult").scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}