Solar Panel ROI Calculator
Calculate your solar panel return on investment, payback period, and 25-year savings.
Factor in system cost, monthly savings, and incentives.
Solar panel ROI (Return on Investment) measures how long it takes for energy savings to pay back the installation cost, and how much profit you earn over the system’s lifetime.
Payback period formula:
Payback Period (years) = Net System Cost / Annual Energy Savings
Net System Cost = Gross Cost − Incentives − Tax Credits
Annual Energy Savings = kWh Produced per Year × Electricity Rate ($/kWh)
Lifetime ROI formula:
Total Lifetime Savings = Annual Savings × System Life (years)
Net Profit = Total Savings − Net System Cost
ROI (%) = (Net Profit / Net System Cost) × 100
Worked example:
- System size: 8 kW | Cost: $24,000
- Federal tax credit (30%): −$7,200 → Net cost: $16,800
- Annual production: 10,400 kWh (1,300 kWh/kW, typical US average)
- Electricity rate: $0.14/kWh
- Annual savings: 10,400 × $0.14 = $1,456/year
- Payback period: $16,800 / $1,456 = 11.5 years
- 25-year lifetime savings: $1,456 × 25 = $36,400
- Net profit: $36,400 − $16,800 = $19,600 (117% ROI)
Key factors affecting ROI:
| Factor | Effect on ROI |
|---|---|
| High local electricity rates | Dramatically better |
| State rebates/SRECs | Reduces payback by 1–3 years |
| South-facing roof with no shade | +15% production vs. east/west |
| Battery storage added | Adds cost, extends payback 2–4 years |
| Net metering policy | Critical — without it, ROI drops sharply |
Federal Investment Tax Credit (ITC): As of 2025, homeowners get a 30% federal tax credit on the full system cost (panels + installation). This is a dollar-for-dollar credit, not a deduction.
How we build and check this calculator
This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
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