Calculate your solar payback period and long-term savings.
Your Solar Financial Outlook
Net System Cost:$0.00
Estimated Year 1 Production:0 kWh
Estimated Year 1 Savings:$0.00
Solar Payback Period:0 Years
Total 25-Year Profit (ROI):$0.00
Understanding Solar ROI: Is It Worth the Investment?
Switching to solar energy is one of the most significant financial decisions a homeowner can make. Beyond the environmental benefits, the Return on Investment (ROI) often exceeds traditional stock market returns over a 25-year period. Our Solar Panel ROI Calculator helps you break down the complexity of installation costs, tax incentives, and energy production to see exactly when your system pays for itself.
How the Calculation Works
The financial viability of a solar system depends on several key variables:
Net Cost: This is your total out-of-pocket expense after applying the Federal Solar Tax Credit (currently 30% via the Inflation Reduction Act) and any local utility rebates.
Solar Irradiance: Not all sunlight is equal. "Peak Sun Hours" refers to the intensity of sunlight in your specific geographic location.
Electricity Displacement: Every kilowatt-hour (kWh) your panels produce is a kWh you don't have to buy from the grid at rising utility rates.
Panel Degradation: Most solar panels lose about 0.5% efficiency per year. A professional ROI calculation must account for this decline in production over time.
Example Scenario: The 7kW System
Consider a typical residential setup in a sunny state like Arizona or California:
Component
Value
System Size
7 kW
Gross Cost
$21,000
Federal Tax Credit (30%)
-$6,300
Annual Energy Production
~10,500 kWh
Payback Period
~6.5 Years
Factors That Accelerate Your Payback
Your solar payback period can be shortened if utility rates in your area increase faster than the national average (usually 2-3% annually). Additionally, Net Metering policies allow you to sell excess energy back to the grid during the day, effectively using the utility company as a giant battery. If your state offers Solar Renewable Energy Certificates (SRECs), you can earn additional income for every megawatt-hour your system generates, further boosting your ROI.
function calculateSolarROI() {
var cost = parseFloat(document.getElementById('sysCost').value);
var size = parseFloat(document.getElementById('sysSize').value);
var incentives = parseFloat(document.getElementById('taxIncentives').value);
var rate = parseFloat(document.getElementById('elecRate').value);
var sun = parseFloat(document.getElementById('sunHours').value);
var degradation = parseFloat(document.getElementById('degradation').value) / 100;
if (isNaN(cost) || isNaN(size) || isNaN(rate) || isNaN(sun)) {
alert("Please enter valid numbers in all fields.");
return;
}
// 1. Net Cost
var netCost = cost – incentives;
// 2. Year 1 Production (Size * Sun Hours * 365 * 0.78 System Efficiency Factor)
var year1Prod = size * sun * 365 * 0.78;
var year1Savings = year1Prod * rate;
// 3. 25 Year Analysis
var totalProduction = 0;
var currentYearProd = year1Prod;
var cumulativeSavings = 0;
var paybackYear = 0;
var foundPayback = false;
for (var i = 1; i = netCost) {
paybackYear = i – 1 + ((netCost – (cumulativeSavings – (currentYearProd * rate))) / (currentYearProd * rate));
foundPayback = true;
}
currentYearProd = currentYearProd * (1 – degradation);
}
var totalROI = cumulativeSavings – netCost;
// Display results
document.getElementById('solarResults').style.display = 'block';
document.getElementById('resNetCost').innerText = '$' + netCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resYear1Prod').innerText = Math.round(year1Prod).toLocaleString() + ' kWh';
document.getElementById('resYear1Save').innerText = '$' + year1Savings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
if (foundPayback) {
document.getElementById('resPayback').innerText = paybackYear.toFixed(1) + ' Years';
} else {
document.getElementById('resPayback').innerText = 'Over 25 Years';
}
document.getElementById('resTotalROI').innerText = '$' + totalROI.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
// Scroll to results
document.getElementById('solarResults').scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}