Solar ROI Calculator
Calculate your solar investment returns and payback period with precision
Solar ROI Calculator
Professional Solar Investment Analysis Tool
Investment Analysis
How to Use the Solar ROI Calculator
System Information
- Enter your planned solar system size in kilowatts (kW)
- Input the cost per watt (typically $2.50-$4.50)
- Set system lifespan (usually 25-30 years)
- Verify peak sun hours for your location
Incentives & Credits
- Enter federal tax credit percentage (currently 30%)
- Add any state or local rebates/incentives
- Check with local utility for additional programs
- Consider net metering policies in your area
Electricity Details
- Enter your current monthly electric bill
- Input your electricity rate ($/kWh)
- Set expected annual rate increase (typically 2-4%)
- Consider time-of-use rates if applicable
Performance Factors
- Set annual system degradation (typically 0.5%)
- Verify peak sun hours for accurate calculations
- Consider shading and orientation factors
- Account for seasonal variations
How to Calculate Solar ROI
Step 1: Calculate Total System Cost
Formula: System Size (kW) × Cost per Watt × 1,000
Example: 8 kW × $3.50 × 1,000 = $28,000
Step 2: Apply Incentives
Federal Tax Credit: $28,000 × 30% = $8,400
Net Cost: $28,000 - $8,400 = $19,600
Step 3: Calculate Annual Production
Formula: System Size × Peak Sun Hours × 365
Example: 8 kW × 5 hours × 365 = 14,600 kWh/year
Step 4: Calculate Annual Savings
Formula: Annual Production × Electricity Rate
Example: 14,600 kWh × $0.12 = $1,752/year
Real-Life Calculation Example
Scenario: Residential Solar Installation
- Location: Phoenix, Arizona
- System Size: 8 kW
- Cost per Watt: $3.50
- Monthly Electric Bill: $180
- Electricity Rate: $0.12/kWh
- Peak Sun Hours: 6.5 hours/day
Step-by-Step Calculation:
8 kW × $3.50 × 1,000 = $28,000
$28,000 × 0.30 = $8,400
$28,000 - $8,400 = $19,600
8 kW × 6.5 hours × 365 days = 18,980 kWh/year
18,980 kWh × $0.12 = $2,278/year
$19,600 ÷ $2,278 = 8.6 years
Considering 3% annual rate increase and 0.5% degradation:
Total Savings: $75,450
Net Profit: $75,450 - $19,600 = $55,850
($55,850 ÷ $19,600) × 100 = 285% ROI
ROI Calculation Formulas
Basic ROI Formula:
ROI = (Total Savings - Net Cost) ÷ Net Cost × 100
Payback Period:
Payback = Net Cost ÷ Annual Savings
Annual Production:
kWh = System Size × Peak Sun Hours × 365
Net Present Value:
NPV = Σ(Cash Flow ÷ (1 + Discount Rate)^Year)
Factors Affecting ROI
- Location: Solar irradiance and peak sun hours
- Electricity Rates: Higher rates = better ROI
- System Quality: Efficiency and degradation rates
- Incentives: Federal, state, and local programs
- Net Metering: Utility buyback rates
- Financing: Cash vs. loan impacts
- Maintenance: Ongoing system costs
- Home Value: Property value increase