Commercial Solar ROI Calculator

ITC, MACRS depreciation, demand charge savings, and 25-year cash flow — free, no signup required.

30%
Federal ITC (Section 48E) — direct tax credit on system cost, active through 2032
100%
Bonus depreciation — full depreciable basis deductible in Year 1 (OBBBA 2025, permanent)
4–6 yrs
Typical tax-adjusted payback for commercial solar, vs. 8–12 years energy-savings-only

1 Your System

Auto-fills commercial electricity rate and peak sun hours.

Typical small commercial: 50–500 kW

Before incentives. Typical: $1.80–$2.50 per watt

Auto-filled from EIA commercial averages. Editable.

Auto-filled from NREL data. Editable.

2 Your Business

Federal flat rate is 21%. Add your state rate for a more accurate combined figure.

3 Incentives

Base rate is 30%. Adders may apply — see tooltip for details.

MACRS Depreciation: Solar is classified as 5-year MACRS property (IRS Pub. 946). The depreciable basis equals your system cost minus 50% of the ITC claimed (the IRS "ITC haircut"). The OBBBA, signed July 4, 2025, permanently restored 100% bonus depreciation — you can deduct the full depreciable basis in Year 1.

4 Demand Charges Optional

What are demand charges? Many commercial utility bills include two separate charges: an energy charge (cents per kWh consumed) and a demand charge (dollars per kW of peak power draw during the month). Demand charges can represent 30–50% of a commercial bill and are often the largest single ROI driver for solar. Leave these fields blank to calculate energy savings only.

Find this on your utility bill under "Demand Charge" or "Capacity Charge."

Shown on your bill as "Peak Demand (kW)" or "Maximum Demand."

The share of your solar output consumed on-site during production hours. Most daytime businesses: 60–90%.

How This Calculator Works

Energy Savings

Annual energy production is calculated from your system size, state peak sun hours (NREL data), and an 80% system derate factor that accounts for real-world losses from wiring, inverter efficiency, and temperature. Year-over-year savings are adjusted for 0.5% annual panel degradation and 3% annual electricity rate escalation.

Federal ITC (Section 48E)

The Investment Tax Credit is a direct reduction in federal tax owed — not a deduction. The base rate is 30% of gross system cost. Enhanced rates of 40% and 50% are available for projects that qualify for energy community or domestic content adders. The ITC is applied in Year 1.

MACRS Depreciation and the ITC Haircut

Solar equipment is 5-year MACRS property under IRS Publication 946. The IRS requires reducing the depreciable basis by 50% of the ITC claimed (IRC Section 50(c)) — this prevents double-counting the same dollar of cost. With 100% bonus depreciation restored by the One Big Beautiful Bill Act (July 4, 2025), the full adjusted basis can be deducted in Year 1 rather than spread over 6 tax years.

Demand Charge Savings

Commercial utility bills often include a separate demand charge based on your highest rate of power consumption during the billing period, measured in dollars per kW per month. Solar can reduce this charge by lowering your peak grid draw during daylight hours. The calculator estimates annual demand savings as: demand charge rate × billable peak demand × self-consumption rate × 12 months. Demand savings are escalated at the same 3%/yr rate as energy savings. This input is optional — leave it blank if your utility does not bill demand separately.

Payback Periods

Simple payback reflects energy savings only against the net cost after the ITC. Tax-adjusted payback reflects the full benefit — energy savings plus MACRS depreciation tax savings — against the gross system cost. For most commercial installations the tax-adjusted payback is 2 to 5 years shorter than the simple payback.