Calculate the true return on your solar investment — total lifetime profit, ROI percentage and payback, with the 30% federal credit and panel degradation built in.
SCReviewed by Sarah Chen, Energy AnalystUpdated May 28, 2026Sources: DSIRE, NREL, IRS
Owned solar typically returns 150–300% over a 25-year warranty period — an inflation-protected, effectively tax-free return. Photo: American Public Power Association / Unsplash
Quick answerA typical owned solar system returns 150–300% over 25 years — roughly a 6–9% tax-free annual return. After the 30% federal credit, a $21,000 system on a $150/month bill nets about $33,500 lifetime profit on a $14,700 net cost (228% ROI).
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Your numbers
$
Average 7 kW system at $3.00/W = $21,000.
$
%
25 yrs
Most panels carry a 25-year power warranty.
25-year return on investment
228%
total ROI
Net cost
$14,700
Lifetime profit
$33,500
Payback
8.2 yr
ROI = lifetime profit ÷ net cost. Profit = total electricity savings minus net cost. Assumes 0.5% yearly degradation.
How this calculator works
1
Find your net cost
System price minus the 30% federal credit (and any state incentives).
2
Project lifetime savings
Each year's bill savings grow with rate inflation and shrink slightly with degradation.
3
Subtract net cost
Lifetime savings minus net cost equals your total profit.
4
Express as ROI
Profit divided by net cost, shown as a percentage of your investment.
How to read your solar ROI
Return on investment tells you how much profit your solar system generates relative to what you paid. A 228% ROI means that over the system's life you get back more than three times your net cost — your original money, plus 2.28× on top in saved electricity.
Solar is unusual as an "investment" because the return is effectively tax-free (you're avoiding a bill, not earning taxable income) and largely inflation-protected (as electricity prices rise, your savings rise with them). That's why a 6–9% effective annual return on solar often beats what the same cash earns in a savings account after tax.
A typical owned system returns 150–300% over 25 years. Anything above 100% means you more than doubled your money in saved power.
Cash vs financed ROI
Paying cash gives the highest total ROI because you avoid loan interest. Financing lowers your ROI slightly but can still be strongly positive if your monthly savings beat your loan payment — check that with the Solar Loan Calculator. To compare every payment method at once, use the Financing Calculator.
Questions
Frequently asked questions
What is a good ROI for solar panels?
A good 25-year solar ROI is 150–300% for an owned system. That means your lifetime electricity savings are 2.5–4× your net cost after the 30% federal credit. Expressed annually, that's roughly a 6–9% effective return — and because you're avoiding a bill rather than earning income, it's effectively tax-free.
How is solar ROI calculated?
ROI = (lifetime electricity savings − net cost) ÷ net cost × 100. Net cost is your system price after the 30% federal credit and any state incentives. Savings are summed year by year, growing with electricity inflation and shrinking slightly with panel degradation.
Is solar a better investment than the stock market?
They're different. Solar offers a predictable, inflation-protected, tax-free return tied to your electricity use, typically 6–9% annually. The stock market may return more on average but with volatility and taxes. Many homeowners treat solar as the safe, guaranteed slice of their portfolio.
Does panel degradation hurt my ROI?
Only slightly. Modern panels degrade about 0.5% per year, so after 25 years they still produce ~88% of their original output. Our calculator factors this in, so your ROI already reflects realistic long-term performance.
Does adding a battery change ROI?
Usually it lowers pure financial ROI because batteries add cost without always adding bill savings — their value is backup power and time-of-use arbitrage. See the Solar Battery Calculator to weigh it up.
Sarah has spent 12 years modeling US residential solar economics, including 4 years contributing to NREL's Distributed Generation Market Demand model. She holds a BS in Mechanical Engineering from UC Berkeley and reviews every calculator and state guide on GreenCalcs against current IRS, DSIRE and EIA data. Read our methodology →
