Estimate your break-even point and long-term savings from switching to solar energy.
Net System Cost (After Tax Credit):$0.00
Estimated Annual Production:0 kWh
Year 1 Electricity Savings:$0.00
Payback Period (Break-Even):0 Years
25-Year Net Profit:$0.00
How to Calculate Your Solar ROI
Investing in solar panels is not just an environmental decision; it is a significant financial investment. Understanding your Solar Return on Investment (ROI) helps you determine if the upfront cost is worth the decades of reduced utility bills.
Key Factors in the Calculation
System Size: Measured in kilowatts (kW), this is the capacity of your solar array. Most residential systems range from 5kW to 10kW.
Federal Investment Tax Credit (ITC): As of 2024, the federal government offers a 30% tax credit on the total cost of solar installation, significantly reducing the net cost.
Sun Hours: This isn't just daylight; it refers to "peak sun hours" where the sun's intensity reaches 1,000 watts per square meter.
Electricity Rate: The more you pay your utility company per kWh, the more money you save by producing your own power.
Example Calculation
If you install a 6kW system for $18,000:
Apply the 30% Tax Credit: $18,000 – $5,400 = $12,600 Net Cost.
If your system produces 9,000 kWh per year and your rate is $0.15/kWh, you save $1,350 annually.
Your payback period would be $12,600 / $1,350 = 9.33 Years.
Maximizing Your Savings
To improve your payback period, consider your roof's orientation. South-facing roofs in the northern hemisphere typically produce the highest yield. Additionally, keep your panels clean and monitor for shading from growing trees, as even a small amount of shade can significantly drop the voltage of a string of panels.
function calculateSolarROI() {
var systemSize = parseFloat(document.getElementById("systemSize").value);
var totalCost = parseFloat(document.getElementById("totalCost").value);
var taxCredit = parseFloat(document.getElementById("taxCredit").value);
var elecRate = parseFloat(document.getElementById("elecRate").value);
var sunHours = parseFloat(document.getElementById("sunHours").value);
var annualIncrease = parseFloat(document.getElementById("annualIncrease").value) / 100;
if (isNaN(systemSize) || isNaN(totalCost) || isNaN(taxCredit) || isNaN(elecRate) || isNaN(sunHours)) {
alert("Please enter valid numbers in all fields.");
return;
}
// 1. Calculate Net Cost
var netCost = totalCost – (totalCost * (taxCredit / 100));
// 2. Calculate Production (System Size * Sun Hours * 365 * efficiency factor of ~0.78)
var annualProduction = systemSize * sunHours * 365 * 0.78;
// 3. Year 1 Savings
var year1Savings = annualProduction * elecRate;
// 4. Payback Period Calculation (including energy inflation)
var currentSavings = 0;
var paybackYears = 0;
var totalSavings25 = 0;
var yearlySavingTracker = year1Savings;
for (var i = 1; i <= 25; i++) {
totalSavings25 += yearlySavingTracker;
if (totalSavings25 < netCost) {
paybackYears = i;
}
// Increase electricity rate for next year
yearlySavingTracker *= (1 + annualIncrease);
}
// Fractional payback calculation for accuracy
var simplePayback = netCost / year1Savings;
// 5. Final Net Profit over 25 years
var netProfit25 = totalSavings25 – netCost;
// Display Results
document.getElementById("results").style.display = "block";
document.getElementById("netCostDisplay").innerText = "$" + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("annualProdDisplay").innerText = Math.round(annualProduction).toLocaleString() + " kWh";
document.getElementById("year1SavingsDisplay").innerText = "$" + year1Savings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("paybackDisplay").innerText = simplePayback.toFixed(1) + " Years";
document.getElementById("profit25Display").innerText = "$" + netProfit25.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}