Solar ROI Calculator — 25-Year Return on Investment
Calculate the full 25-year return on investment for solar panels. See IRR, NPV and cumulative savings year by year.
· Free · No signup required
How to use this calculator
- Enter your net system cost after the 30% federal tax credit.
- Enter your first-year annual savings from electricity.
- Set the electricity price escalation rate (how fast electricity prices rise).
- Set the panel degradation rate (how much output declines per year).
- See your cumulative 25-year return, IRR and year-by-year breakdown.
Understanding your results
How IRR is calculated for solar: Internal Rate of Return (IRR) represents the annualised return on your investment accounting for the time value of money. For solar, IRR is calculated by finding the discount rate that makes the net present value of all future savings equal to the upfront net cost. Higher electricity rates, more sun hours and lower system costs all improve IRR.
Why solar IRR typically beats bonds: A 10–15% solar IRR compares favourably to US Treasury bonds (4–5% in 2026), high-yield savings accounts (4.5–5%), and even historical stock market returns (~10% long-term average). Unlike stocks, solar returns are inflation-protected (savings grow as electricity prices rise) and carry no market risk — your electricity savings are guaranteed regardless of economic conditions.
The compounding effect of electricity price escalation: At 3% annual electricity price growth, year-1 savings of $1,500 become $2,154 by year 20 and $2,490 by year 25. Total cumulative savings over 25 years at 3% escalation are approximately 40% higher than a simple $1,500 × 25 = $37,500 calculation. This escalation effect is why long-term solar ROI figures consistently exceed naive linear projections.
Panel degradation impact on ROI: At 0.5%/yr degradation, a system producing $1,500 savings in year 1 produces 12.2% less by year 25 — approximately $1,317 in year-25 savings. The compounding of electricity price escalation (+3%/yr) more than offsets degradation (-0.5%/yr), so savings in nominal dollars still increase each year. The net effect: degradation reduces total 25-year savings by approximately 6–8% compared to a non-degrading system.