How solar ROI is calculated
ROI is your profit over 25 years, as a percentage of what you paid. No signup, no email, and nothing leaves your browser — the numbers below are calculated on your device.
Lifetime savings minus cost, divided by cost. The calculator estimates 25-year savings from your year-1 production, electricity rate, 0.5% yearly panel degradation and 3% yearly price rises, then subtracts the system cost. For a typical US example — $24,360 cost, 11,038 kWh a year at $0.17 per kWh — 25-year savings are estimated at $63,971.30, a net profit of $39,611.30 and an ROI of 162.6%.
That is a 25-year return, not a yearly one — roughly 6.5% a year on average for this example, in the same ballpark as long-term stock market returns, but with very different risks. The break-even year is when cumulative savings pass the system cost: year 13 here. After that, the electricity is effectively free apart from small maintenance costs.
ROI is most sensitive to your electricity price and your system cost per watt. A $0.25 rate or a $2.50 per watt install changes the answer far more than a sunnier roof does.
Worked example: a $24,360 system at $0.17 per kWh
Follow the calculator’s own defaults. Year-1 production is 11,038 kWh, and this calculator values all of it at the retail rate of $0.17 per kWh, giving $1,876.46 in the first year. Over 25 years, prices rising 3% a year outweigh panels degrading 0.5% a year, and the savings add up to $63,971.30. Subtract the $24,360 cost for a net profit of $39,611.30, then divide by the cost: $39,611.30 ÷ $24,360 = 162.6% ROI, or about 6.5% a year on average. Cumulative savings pass the cost in year 13. Note that this tool’s year-1 figure is a little higher than the savings calculator’s $1,856.20, because the savings calculator credits exported surplus at half the retail rate while this one values every kilowatt-hour at the full rate — use the savings calculator if your utility pays less for exports.
| ROI worked example | Figure |
|---|---|
| Installed cost | $24,360 |
| Year-1 production | 11,038 kWh |
| Electricity rate | $0.17 per kWh |
| Year-1 savings | $1,876.46 |
| 25-year savings | $63,971.30 |
| Net profit (25-year savings minus cost) | $39,611.30 |
| ROI over 25 years | 162.6% |
| Average yearly return | About 6.5% a year |
| Break-even year | Year 13 |
What changes the answer
Electricity price dominates: at $0.25 per kWh the same system returns far more over 25 years than at $0.17, while at $0.10 it may barely break even. Cost per watt is the other big lever — a $2.50-per-watt install on the same roof lifts ROI by roughly a seventh compared with $2.90, before any difference in sunshine. Degradation and price rises pull against each other over decades, so the 0.5% and 3% assumptions are worth checking against your own utility’s history. Financing changes the picture too: ROI here is a cash return, and loan interest — which this simple calculation ignores — eats into it. And remember that this is a 25-year figure — a system that lasts 30 years keeps earning after the 25-year window closes, while one that needs an inverter replacement at year 12 gives some profit back in repairs.
Check the pieces separately with the savings calculator and the payback calculator.
Sources
- U.S. Department of Energy — solar energy basics, system output and homeowner guidance.
- EnergySage — US solar ROI, costs and electricity rates.
- Solar Energy Industries Association (SEIA) — US solar market data and policy.
By Shehzad Hussain. Published November 9, 2026. Last updated November 11, 2026.