Renewable Energy calculator
Solar ROI Calculator
This solar ROI calculator separates net installed cost, self-consumed energy value, exported energy credit, maintenance, degradation, and future inverter replacement so a PV payback estimate does not treat every solar kWh as equally valuable.
Updated July 16, 2026
A 7.5 kWdc system that costs $22,500, produces 10,500 kWh in year 1, uses 70% on site at $0.18/kWh, exports 30% at $0.08/kWh, enters a 30% user-verified incentive, and carries $150 O&M screens at about $1,425 first-year net savings and 11.1 years simple payback.
First-year net savings = self-consumed kWh x retail rate + exported kWh x export credit - O&M | Simple payback = net installed cost / first-year net savings.
Enter production, self-consumption, export credit, user-verified incentives, O&M, degradation, and replacement assumptions for a solar payback screen
Example Calculations
How to Use
Solar ROI and payback planning
Solar payback is the time it takes for the net cost of a PV system to be recovered by electricity savings and credited exported energy. A useful payback estimate should not treat every solar kWh as equal. Energy used directly in the building is usually valued at the avoided retail rate, while exported energy may be credited under a different utility program.
Start with a production estimate, then split that production into energy consumed on site and energy exported to the grid. Enter confirmed incentives separately from the installed cost so the calculation can show both gross project cost and net project cost. Keep maintenance, module degradation, and future inverter replacement visible because these assumptions often explain why two solar quotes with similar system sizes can produce different long-term cash-flow estimates.
For the broader solar workflow, start at the solar planning hub, then move to the solar system sizing calculator when you need a physical array size and to the solar ROI payback chart when you want a worksheet-style cash-flow record.
Inputs that should stay visible
| Input | Why it matters |
|---|---|
| Installed system cost | Sets the gross investment before rebates, tax credits, or other confirmed incentives. |
| Annual production | Defines the first-year kWh value before degradation and utility-credit assumptions. |
| Self-consumption share | Separates solar kWh that offsets on-site use from kWh exported to the grid. |
| Utility retail rate and export credit | Prevents exported energy from being valued automatically at the same rate as consumed energy. |
| Degradation and maintenance | Shows why first-year savings and long-term cash flow are not the same value. |
Formula path
Year 1 production = annual kWh estimate
Year n production = year 1 production x (1 - degradation rate)^(n - 1)
Consumed solar value = consumed solar kWh x retail electricity rate
Exported solar value = exported solar kWh x export credit
Annual net savings = consumed value + exported value - O&M cost - scheduled replacement cost
Simple payback = net installed cost / first-year net savings
Worked example
A 7.5 kWdc system costs USD 22,500 before incentives and is expected to produce 10,500 kWh in the first year. If 70% of production offsets electricity at USD 0.18/kWh, 30% is exported at USD 0.08/kWh, annual maintenance is USD 150, and confirmed incentives reduce the net cost to USD 15,750, the first-year net savings are about USD 1,425.
Consumed value = 10,500 x 70% x 0.18 = 1,323
Export value = 10,500 x 30% x 0.08 = 252
Gross value = 1,575
Net first-year savings after O&M = 1,425
Simple payback = 15,750 / 1,425 = 11.1 years
What this page does not claim
- It does not provide tax advice, financial advice, or a guaranteed solar return.
- It does not assume exported energy always receives the retail electricity rate.
- It does not assume any federal tax credit by default; verify current IRS Form 5695 eligibility, placed-in-service date, state programs, utility programs, and local incentive terms before entering incentive values.
- It does not replace installer production modeling, utility interconnection review, or signed project documents.
Common Applications
More applications. Open to review 2 additional use cases.
Frequently Asked Questions
Is solar payback the same as ROI?
No. Payback estimates how long it takes to recover the net project cost. ROI compares return against investment over a defined period.
Should incentives be included?
Include only incentives that are confirmed for the project, owner, location, and placed-in-service date. The calculator does not assume a federal credit by default; keep every incentive separate from gross cost so the assumption is visible.
Should exported energy use the retail electricity rate?
Not automatically. Many utility programs credit exported energy differently from energy consumed on site, so the calculator should keep a separate export-credit field.
Does degradation matter?
Yes. Even a small annual degradation assumption changes lifetime production and cash flow over a long analysis period.
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