Solar payback calculator

How solar payback is worked out

Production comes from the system size, your state’s average peak sun hours and the standard PVWatts allowance for losses (about 17%). Savings grow each year with electricity prices and shrink by about 0.5% a year as the panels age.

An 8 kW system at $2.60 per watt costs $20,800. At the U.S. average of 4.5 sun hours and 18.19¢ per kWh it makes about 10,906 kWh in its first year, worth $1,984, and pays for itself in about 9.4 years with full net metering and prices rising 3% a year.

How much do solar panels save per month?

In the first year, the 8 kW example saves about $165 a month at the U.S. average rate. Savings grow as electricity prices rise, so the monthly figure averages about $225 over 25 years. What you save each month depends on how much of your bill the system covers: size it to your use with the solar panel calculator, then enter that size above.

The 30% tax credit is gone for systems you own

The federal Residential Clean Energy Credit (Section 25D) paid 30% of the cost of solar a homeowner bought. Under the 2025 budget law it ended for systems installed after 31 December 2025, so a system bought outright or with a loan in 2026 gets no federal credit. Many calculators online still take 30% off, which makes payback look about a third shorter than it really is.

Leased systems and power purchase agreements are different: the installer owns the panels and can still claim a business credit under Section 48E until its own deadlines, and may pass some of that on in a lower price. If you are comparing a lease with buying, compare the monthly cost of each against your current bill rather than the payback period.

Net metering decides more than the panels do

With full net metering, every kWh you send to the grid is credited at the retail rate, so each kWh the panels make is worth a full kWh off your bill. Many utilities now credit exported power at a lower rate. California’s NEM 3.0 is the best known: exports earn a fraction of the retail price, so what matters is how much of your solar you use as it is made. If your utility does this, pick “Partial” or “Low export credit” above, or ask the installer for your expected bill savings in writing.

What the payback period leaves out

• Inverter replacement. String inverters typically last 10 to 15 years and cost $1,500 to $3,000 to replace; microinverters usually carry 25-year warranties.
• Loan interest. The figures here assume cash. A solar loan at 7–9% can add several years.
• Home value and roof work. Owned panels can add to resale value; panels that must come off for a re-roof cost money.
• Fixed charges. Solar does not remove the monthly customer charge on your bill.

Solar payback by state

An 8 kW system at $2.60 per watt with no incentives, full net metering, prices rising 3% a year and 0.5% panel degradation, using each state’s average sun hours and January–July 2026 electricity rate. Among states with full net metering, the fastest is Massachusetts at 6.3 years. Local prices, incentives and net metering rules change these a lot, so use the calculator for your own numbers.

* California (NEM 3.0) and Hawaii no longer offer full retail net metering to new systems, so their real payback is longer than shown unless most of the power is used as it is made or stored in a battery. Pick “Low export credit” in the calculator for a more realistic figure.

Sources: electricity rates, U.S. EIA Electric Power Monthly Table 5.6.B; sun hours, NREL state averages; installed cost, EnergySage 2026 national average; Section 25D termination, Public Law 119-21 (2025).