What is a good ROI for solar panels?

A good ROI for solar panels is typically anything over 10% annually. Most homeowners see an average ROI of 10-20%, which is often better than long-term stock market returns. The exact figure depends on your location, electricity rates, and available sunlight.

How is the payback period calculated?

The simple payback period is calculated by dividing the total net cost of the solar system (after subsidies) by the estimated annual electricity savings. For example, a ₹5,00,000 system that saves you ₹50,000 per year would have a payback period of 10 years.

Does this calculator account for panel degradation?

Yes, this calculator includes an input for the annual panel degradation rate. Most solar panels degrade at a rate of about 0.5% per year, meaning they become slightly less efficient over time. Factoring this in provides a more realistic long-term savings estimate.

Solar Panel ROI Calculator

System Investment

Total System Cost

Upfront Subsidies/Rebates

Electricity Savings

Average Monthly Electricity Bill

Percentage of Bill Covered by Solar (%)

Long-Term Factors

Annual Maintenance Cost

Annual Panel Degradation Rate (%)

Financial Summary

Net System Cost

₹0

Annual Savings

₹0

Payback Period

0 Years

25-Year Profit

₹0

How Does This Calculator Work?

This calculator evaluates the financial viability of a solar panel installation by calculating key metrics like the net cost, payback period, and long-term profit. The core calculations are:

Net System Cost: This is the initial investment you make out-of-pocket. It's calculated as:
Total System Cost - Upfront Subsidies/Rebates
Annual Savings: This is the amount you save on your electricity bills each year. The formula is:
(Average Monthly Bill × 12) × (Percentage of Bill Covered / 100) - Annual Maintenance Cost
Simple Payback Period: This tells you how many years it will take for the system to pay for itself through savings. It's found by:
Net System Cost / Annual Savings
25-Year Profit: This estimates your total financial gain over the typical lifespan of a solar panel system, accounting for the gradual decrease in panel efficiency (degradation) over time.

The Quiet Revolution on Our Rooftops

While the idea of harnessing the sun's power has existed for centuries, practical solar panels for home use are a relatively recent phenomenon. The breakthrough came from Bell Labs in 1954 with the invention of the first practical silicon solar cell. However, for decades, the technology remained incredibly expensive, used primarily for niche applications like satellites.

The true revolution began in the early 2000s, driven by government incentives, environmental awareness, and massive advancements in manufacturing, particularly in Germany and later China. This led to a dramatic drop in prices—over 90% in the last two decades. Today, installing solar panels is no longer just an environmental statement; it's one of the smartest financial investments a homeowner can make, turning passive rooftops into active power-generating assets and fundamentally changing our relationship with energy.

Explore More Related Tools

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Frequently Asked Questions (FAQ)

What factors are not included in this calculation?

This calculator provides a financial ROI and does not include factors like increased home value, the cost of a loan (if you finance the system), or potential income from selling excess power back to the grid (net metering), which varies by location and policy.

What is a realistic degradation rate for modern solar panels?

Most high-quality solar panels have a degradation rate of around 0.5% per year. This means after 25 years, they are still guaranteed by the manufacturer to produce at least 85-90% of their original output. The default value of 0.5% in the calculator is a standard and realistic estimate.

Does the 'Total System Cost' include installation?

Yes, the 'Total System Cost' field should include the price of the panels, inverter, mounting hardware, and all associated labor and installation fees for an accurate calculation.