What is a typical return on investment for solar panels?

Solar panels typically deliver an annual ROI of 6–12% over 25 years at current full installed costs (without the federal ITC, which expired December 31, 2025 for residential owner-purchased systems). Annual savings of $1,500–$2,500 are typical. This outperforms savings accounts and bonds, and is comparable to stock market historical returns, but with much less volatility since electricity prices always trend up.

How do you calculate solar ROI?

Simple solar ROI = (Total lifetime savings − Net system cost) ÷ Net system cost × 100. For example: $40,000 savings over 25 years minus $16,000 net cost = $24,000 profit on a $16,000 investment = 150% total ROI, or about 6% annually. For a more precise calculation, use internal rate of return (IRR) which accounts for the time value of money.

What is a good ROI for solar panels?

A solar ROI of 10–20% annually is typical for homeowners in average US markets, comparable to or better than stock market average returns. High-electricity-rate states like California, Hawaii, and Massachusetts can yield 15–25% effective ROI. The ROI is essentially guaranteed (unlike market investments) since it's tied to your own electricity consumption.

How does solar ROI compare to other investments?

Solar ROI is unique because it's a risk-free return tied to a commodity (electricity) with historically consistent price increases. Unlike stocks, solar doesn't fluctuate with market sentiment — your roof produces electricity every sunny day. The main risk factors are changes to net metering policy and potential need for inverter replacement (~15 years, $1,000–3,000).

Solar ROI Calculator

Calculate the return on investment your solar system will deliver over its lifetime. Compare solar ROI against other investments using total revenue generated, net profit, and approximate IRR.

System Cost ($)

Production (kWh/yr)

Electricity Rate (¢/kWh)

Rate Escalation (%/yr)

About This Calculator

The Solar ROI Calculator measures your solar investment the same way you would evaluate a stock or bond: as a percentage return on capital deployed. ROI is calculated as total profit (revenue minus net cost) divided by net system cost, expressed as a percentage. For most U.S. homeowners, solar ROI over 25 years ranges from 100% to 300%, equivalent to 3–10% annualized — often outperforming savings accounts, CDs, and many bond investments while also hedging against electricity price increases.

Annual energy production and electricity rate are the two inputs that most directly drive revenue. A system producing 10,000 kWh per year at $0.14/kWh generates $1,400 in year one, growing every year as utility rates rise. The approximate IRR shown here uses a simplified annual cash flow model — it is a useful directional metric but not a precise discounted cash flow IRR. A simple payback period below 10 years combined with an ROI above 100% typically indicates a strong solar investment for your specific situation.

To get accurate production numbers, ask your installer for a PVWatts or similar simulation report for your specific roof, orientation, and location. The national average for a south-facing roof is about 1,100–1,400 kWh per kW of system size per year. Your actual electricity rate should come from your most recent utility bill — look for the effective rate (total bill divided by total kWh), not just the base rate, since delivery charges and fees are also eliminated by solar production.

Solar ROI should be evaluated alongside payback period and lifetime value. An ROI of 150% spread over 25 years means you tripled your investment — but the timing matters too. Pair this calculator with the Payback Period Calculator to understand when you cross into profit, and with the Lifetime Solar Value Calculator for a complete picture.

Calculations based on NREL solar modeling data and industry-standard assumptions, built and maintained by the independent SolarToolsOnline research team.

Estimates only — not financial, tax, or legal advice. Verify important results with a licensed solar installer or financial professional before making decisions.