What you need before you start
Pull up 12 months of electric bills and average the kWh used each month — not the dollar total. A single summer or winter bill can be off by half. Then work out your all-in rate: divide a bill’s total charges by its kWh. That figure includes delivery fees and is usually higher than the “energy charge” line.
The other number that matters is the installed price per watt on your quotes. Divide the quoted price before incentives by the system size in watts (a $20,000 quote for 8 kW is $2.50/W). The calculator defaults to the EnergySage marketplace average of $2.58/W. LBNL’s Tracking the Sun puts the 2024 median at $4.00/W, with the middle 60% of installs between $3.00 and $5.20/W, so quotes vary widely. Get at least three.
Worked example: 900 kWh a month in the Southeast
| Step | Calculation | Result |
|---|---|---|
| Annual use | 900 kWh × 12 | 10,800 kWh |
| System size | 10,800 ÷ 1,450 kWh per kW | 7.45 kW |
| Cost | 7,448 W × $2.58 | $19,217 |
| Year 1 savings | 10,800 kWh × $0.182 | $1,966 |
| Payback | cumulative savings pass $19,217 | about 8.9 years |
| 25-year net savings | total savings − cost | about $47,794 |
Each year the panels lose 0.5% of their output and electricity prices rise 3%, so savings grow from $1,966 in year 1 to about $3,543 in year 25. The cumulative position is −$8,888 after year 5, turns positive during year 9 and reaches about $15,992 after year 15.
Change one input at a time to see what drives the result:
| Change from the example | Net cost | Payback | 25-year net |
|---|---|---|---|
| None | $19,217 | 8.9 yr | $47,794 |
| $4.00/W (LBNL median) | $29,793 | 13.0 yr | $37,217 |
| Midwest/Northeast sun | $22,291 | 10.1 yr | $44,719 |
| Cover 80% of use | $15,373 | 8.9 yr | $38,235 |
Price per watt moves payback the most. A cloudier region needs a bigger system to make the same energy, so it costs more for the same savings. Covering less of your use keeps payback the same in this model — but in real life it often shortens payback, because the last kWh you produce are the ones most likely to be exported at a low credit rate.
The federal tax credit is gone for 2026 installs
The Residential Clean Energy Credit (25D) paid 30% of system cost, but it was terminated for any property placed in service after December 31, 2025. That is why the incentive field defaults to 0%. Leased systems and power purchase agreements follow separate commercial rules, so a lease quote may still reflect a tax benefit to the installer — read the terms carefully. Enter any state rebate or utility incentive as a share of system cost.
Net metering can make or break payback
The calculator values every kWh your panels produce at your retail rate. That is only true under full net metering. Panels produce most at midday, and if you are away, much of that power is exported. Many utilities now credit exports at a lower “avoided cost” or time-varying rate. If a third of your output earns half the retail rate, your savings drop by about a sixth and payback stretches accordingly. Ask your utility exactly how exports are credited before signing.
What’s not included
Battery storage, financing interest, inverter replacement (string inverters often need one partway through a 25-year life), roof repairs before installation, monitoring fees, and any property tax or insurance changes. If your roof needs replacing within the next decade, do it first — removing and reinstalling panels later is expensive. Check that with the roof replacement cost calculator.
Related calculators
Shrinking your load can shrink the system: compare appliance running costs with the electricity cost calculator, and see what a more efficient AC saves with the HVAC replacement cost calculator.
How this calculator works
- System size (kW) = annual use × target offset ÷ annual production per kW.
- Net cost = size × 1000 × price per watt × (1 − incentive %).
- Year n production = year-1 production × (1 − degradation)^(n−1). Year n savings = production × rate × (1 + rate increase)^(n−1).
- Cumulative net starts at −net cost and adds each year’s savings. Payback is the first year it reaches zero, interpolated within that year.
Assumptions and limitations
- Annual production per kW uses region midpoints: Southwest 1,700, Southeast/Texas 1,450, Midwest/Northeast 1,250 and Pacific Northwest 1,100 kWh. These are editorial estimates from PVWatts-style runs; roof angle and shade change them.
- The default price is the EnergySage marketplace average of $2.58/W. LBNL's median installed price for 2024 was $4/W (20th–80th percentile $3–$5.2).
- The federal 25D credit is set to 0% because it ended for systems placed in service after 2025. State and utility incentives are entered as a share of system cost.
- Every kWh produced is valued at your retail rate, rising by the annual increase you enter. Batteries, financing interest, inverter replacement and maintenance are not included.
These results are planning estimates, not quotes. Local prices, site conditions and building codes vary, so get written estimates from licensed contractors before you commit to a budget.
Try your own numbers. Every price and assumption above is editable in the estimator.
Back to the solar payback estimatorFrequently asked questions
Can I still get the 30% federal solar tax credit?
What size solar system do I need?
Why does net metering matter so much?
Sources and data
- EnergySage (2026) — solar panel cost
- LBNL Tracking the Sun, 2025 Data Update (Oct 2025)
- IRS — residential clean energy credit
- EIA Short-Term Energy Outlook (Sept 2026) — elec coal renew.php
- EnergySage — house watts
Prices are US national ranges reviewed October 2026 (data version 2026.10). A few values are editorial estimates where no single published source exists; the Cost Index marks each one. Read our methodology and editorial policy.