How the Solar Panel Simulator Works
This simulator calculates the annual energy production, financial savings, and payback period of a residential solar panel system. It accounts for your geographic region, system size, self-consumption rate, and local electricity prices.
The Production Calculation
Annual production depends on system size and solar irradiation:
Production (kWh) = System size (kWp) x Annual sun hours
Sun hours vary by region: about 1,100 in northern areas, 1,300 in central areas, and 1,500 in southern areas.
Self-Consumption vs. Net Metering
Energy you self-consume saves you the full retail electricity price. Energy you export to the grid earns a lower net metering credit. Higher self-consumption means greater savings. A battery storage system can significantly increase your self-consumption rate.
Payback Period
The payback period is calculated by dividing the total system cost by annual savings. Typical residential solar systems pay for themselves in 6-10 years, after which all savings are pure profit for the remaining 15-20 years of the system's life.
Factors Affecting ROI
- Location: sunnier regions produce more energy and have shorter payback periods
- Self-consumption rate: higher self-consumption means greater savings per kWh
- Electricity price: rising prices improve the economics of solar
- Tax incentives: federal and state tax credits can reduce upfront costs by 30% or more
- Battery storage: increases self-consumption but adds to upfront cost