How to Calculate the Cost of Direct Materials Used

Estimate your solar ROI, annual energy production, and net installation costs.

Financial Summary

Net System Cost

$0

Annual Production

0 kWh

Annual Savings

$0

Payback Period

0 Years

Understanding Your Solar Investment

Switching to solar energy is one of the most significant ways homeowners can reduce their carbon footprint while simultaneously lowering monthly utility bills. However, understanding the financial metrics—like system size vs. production—is crucial before signing a contract.

How This Calculator Works

The Solar Savings Calculator uses five primary data points to estimate your return on investment:

• System Size: Measured in kilowatts (kW), this is the maximum capacity of your solar panels.
• Sun Hours: Not just daylight hours, but "Peak Sun Hours" where the sun's intensity is strong enough to generate maximum power.
• Electricity Rate: Your local utility cost per kilowatt-hour (kWh). The higher this rate, the faster your solar panels pay for themselves.
• Incentives: The Federal Investment Tax Credit (ITC) allows you to deduct 30% of the installation cost from your federal taxes.

Realistic Example

Let's look at a typical scenario in a sunny state like Arizona or California:

Suppose you install an 8 kW system at a cost of $24,000. If you live in an area with 5.5 sun hours per day and pay $0.18 per kWh, your calculations would look like this:

1. Net Cost: After the 30% federal tax credit, your cost drops to $16,800.
2. Production: 8kW * 5.5 hours * 365 days = 16,060 kWh per year.
3. Annual Savings: 16,060 kWh * $0.18 = $2,890 saved per year.
4. Payback Period: $16,800 / $2,890 ≈ 5.8 years.

Factors That Influence Your ROI

While this calculator provides a solid estimate, several real-world variables can affect your results:

• Roof Orientation: South-facing roofs generate the most energy in the Northern Hemisphere.
• Shading: Trees, chimneys, or neighboring buildings can reduce output significantly.
• Degradation: Solar panels lose about 0.5% efficiency per year, though most are warrantied for 25 years.
• Net Metering: Policies vary by state, determining if the utility company "buys back" your excess energy at retail or wholesale rates.

function calculateSolarResults() { var systemSize = parseFloat(document.getElementById('systemSize').value); var sunHours = parseFloat(document.getElementById('sunHours').value); var elecRate = parseFloat(document.getElementById('elecRate').value); var grossCost = parseFloat(document.getElementById('grossCost').value); var incentive = parseFloat(document.getElementById('incentivePercent').value); if (isNaN(systemSize) || isNaN(sunHours) || isNaN(elecRate) || isNaN(grossCost) || isNaN(incentive)) { alert("Please enter valid numbers in all fields."); return; } // Calculation Logic var netCost = grossCost – (grossCost * (incentive / 100)); var annualProduction = systemSize * sunHours * 365; // kWh per year var annualSavings = annualProduction * elecRate; var paybackPeriod = annualSavings > 0 ? (netCost / annualSavings) : 0; var lifetimeSavings = (annualSavings * 25) – netCost; // Display Results document.getElementById('resNetCost').innerText = "$" + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resProduction').innerText = Math.round(annualProduction).toLocaleString() + " kWh"; document.getElementById('resAnnualSavings').innerText = "$" + annualSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); if (paybackPeriod > 0) { document.getElementById('resPayback').innerText = paybackPeriod.toFixed(1) + " Years"; } else { document.getElementById('resPayback').innerText = "N/A"; } document.getElementById('resLifetime').innerText = "Estimated 25-Year Net Profit: $" + Math.max(0, lifetimeSavings).toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); // Show Results Section document.getElementById('solar-results').style.display = 'block'; // Scroll to results document.getElementById('solar-results').scrollIntoView({ behavior: 'smooth', block: 'nearest' }); }