Solar Panel Savings & ROI Calculator
Estimate your potential savings, required system size, and payback period.
How to Calculate Your Solar Potential
Switching to solar energy is a significant financial decision. To accurately estimate your return on investment (ROI), you must consider your current energy consumption, your local solar resources (peak sun hours), and the available federal and state tax incentives. This calculator simplifies the complex physics and financial modeling into actionable data.
Understanding the Key Metrics
System Size: This is measured in kilowatts (kW). It represents the peak power your panels can produce. Most residential systems range from 5kW to 10kW. We calculate this by taking your monthly kWh usage and dividing it by the average daily sunlight hours in your region.
Sunlight Hours: This doesn't mean "daylight." It refers to "peak sun hours" — the intensity of sunlight that produces 1,000 watts of energy per square meter. In the US, this typically ranges from 3 to 6 hours depending on your latitude.
Realistic Example
Suppose you spend $150 per month on electricity at a rate of $0.14 per kWh. This means you use approximately 1,071 kWh per month. If you live in an area with 4.5 peak sun hours:
- Your required system size would be roughly 7.9 kW.
- At a cost of $3.00 per Watt, the gross cost is $23,700.
- After a 30% Federal Tax Credit, your net cost drops to $16,590.
- With $1,800 in annual savings, your break-even point is roughly 9.2 years.
Why Solar is a Long-Term Investment
Solar panels typically come with a 25-year warranty. While the initial cost seems high, the "levelized cost of energy" (LCOE) is often much lower than what utility companies charge. Furthermore, solar panels increase property value and protect you against future utility rate hikes, which historically increase by 2-3% annually.