Solar & battery
ROI Calculator
Works return on a solar investment, where the period and the assumptions have to be stated.
Result
Simple payback, with no discounting and no financing cost. For anything large or long, money now is worth more than money later and a lender will want interest, both of which make the real return lower than this.
Get a Free Business AuditHow the calculation works
Cumulative savings over the analysis period less the net cost, divided by the net cost, with degradation, rate escalation and component replacement applied. Stating the period matters because a long period produces a large return and tells you little about the early years.
What moves the number
- Analysis period chosen.
- Net cost after incentives actually available.
- Rate escalation assumed.
- Component replacement within the period.
Where this one goes wrong
Return over twenty-five years on an asset with a twenty-five year warranty is a figure that depends entirely on assumptions holding for a quarter century, which no tariff or rate escalation assumption reliably does. Present the shorter horizon alongside it. The incentive assumption remains the input that most changes the result, and because federal availability has been amended by legislation it has to be confirmed rather than applied from memory.
Before you quote
- State the analysis period and show a shorter one too.
- Confirm incentive availability rather than assuming it.
- Include component replacement within the period.
Questions
About this calculator
What period should a solar return be measured over?
Whichever is stated, with a shorter horizon shown alongside. A twenty-five year return depends on assumptions holding for a quarter century, which no tariff or escalation assumption reliably does, so the long figure alone overstates confidence.
Which assumption matters most?
The incentive, followed by the export credit rate and the rate escalation. Federal incentive availability has been amended by legislation, which means it has to be confirmed for the placed-in-service date rather than applied from memory.
Does return include the system's residual value?
It can, and a system still producing at the end of the analysis period has value that a simple return calculation ignores. Noting it is more honest than either omitting it silently or assuming a figure that cannot be supported.
The formula
payback = cost / (monthly gain - monthly running cost)
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How to use this calculator
- Up-front cost ($). Enter your own figure; the page starts at $12,000.
- Extra gross profit per month ($). Enter your own figure; the page starts at $1,400.
- Extra running cost per month ($). Enter your own figure; the page starts at $220.
- Period to judge it over. Enter your own figure; the page starts at 36.
The result updates as you type, so you can try a figure, see what it does to payback period, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Up-front cost | $12,000 |
| Extra gross profit per month | $1,400 |
| Extra running cost per month | $220 |
| Period to judge it over | 36 |
What comes out
| Result | Value |
|---|---|
| Payback period main result | 10.2 |
| Net gain per month | $1,180 |
| Net return over the period | $30,480 |
| Return on investment | 254% |
It pays for itself in 10.2 months and returns $30,480 over 36 months, a 254% return.
How sensitive the answer is
Holding everything else steady and changing only up-front cost, this is what happens to payback period. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Up-front cost ($) | Payback period |
|---|---|
| $6,000 | 5.1 |
| $9,000 | 7.6 |
| $12,000 example above | 10.2 |
| $18,000 | 15.3 |
| $24,000 | 20.3 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Up-front cost ($)
- A money amount, starting at $12,000.
- Extra gross profit per month ($)
- A money amount, starting at $1,400.
- Extra running cost per month ($)
- A money amount, starting at $220.
- Period to judge it over
- A number, between 0 and 240, starting at 36.
What the results tell you
| Result | What it is |
|---|---|
| Payback period | The headline result. A decimal figure. |
| Net gain per month | A money figure. |
| Net return over the period | A money figure. |
| Return on investment | A percentage. |
A design still needs a site visit
Output and sizing figures use the assumptions you enter, not measured irradiance, shading or roof orientation at your address. Real production depends on all three, plus inverter behaviour and local interconnection rules.
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.