Solar payback calculator

How solar payback is worked out

Payback is the number of years it takes for the money solar saves you to equal what you paid for it. Everything after that is profit. Here is the math the calculator runs, with its starting values: a Texas home using 900 kWh a month.

1. 1

   Find what 1 kW of panels makes in your state

   Multiply peak sun hours by 365 days, then by 0.77 for real-world losses (heat, wiring, inverter, dust). Texas gets 5.4 sun hours: 5.4 × 365 × 0.77 = 1,518 kWh per kW per year.

2. 2

   Size the system to your use

   900 kWh × 12 months = 10,800 kWh a year. 10,800 ÷ 1,518 = 7.1 kW. With 400-watt panels that rounds up to 18 panels, or 7.2 kW, making about 10,927 kWh in year one.

3. 3

   Price it and subtract incentives

   7,200 watts × $3.00 per watt = $21,600. With no rebate and no federal credit, that is your net cost.

4. 4

   Value the power at your rate

   Under full net metering, the 10,800 kWh you would have bought are worth 16.03¢ each, or $1,731. The 127 kWh of surplus earn the lower export credit (30% of retail here), for about $1,737 in year one.

5. 5

   Run it year by year

   Rates rise 3% a year and the panels lose 0.5% of output a year. The running total crosses $21,600 at about 10.9 years. Over 25 years the system saves about $59,700, or $38,100 after its cost.

What happened to the 30% solar tax credit

For years, the federal Residential Clean Energy Credit (tax code section 25D) took 30% off the cost of home solar. That changed with the budget law signed on July 4, 2025, often called the One Big Beautiful Bill Act. It moved the end date from 2034 to December 31, 2025. The IRS now says the credit "is not available for any property placed in service after December 31, 2025," and that you claim it for the year the system is installed, not merely purchased.

In plain terms: if your system was installed and working by the end of 2025, claim it on your 2025 return with Form 5695. If it goes up in 2026 or later, there is no federal credit to claim, even if you signed or paid a deposit earlier. That is why this calculator starts with no federal credit. On the example above, the old credit would have cut the price by $6,480 and the payback to about 7.9 years.

Leases and power purchase agreements are a separate case. There the installer owns the panels, and the business tax credit it may claim follows different rules and deadlines. If a lease looks cheap, ask the company to put the monthly price and the yearly escalator in writing and compare it with the payback here.

Sun hours, rates and payback by state

Peak sun hours are the daily solar energy on a south-facing roof tilted 20°, expressed as hours of full sun, for each state's largest metro. Rates are the average residential price for January to August 2026. Payback assumes 900 kWh a month, $3.00 per watt, no incentives, 3% rate growth and full net metering, except where marked. Tap a state to load it.

* California, Arizona and Hawaii credit exports for new customers at less than retail, so their payback uses partial net billing (50% used at home, exports at 30% of retail). Large states vary a lot: Seattle and Spokane, or El Paso and Houston, are far apart. Edit the sun hours if you live far from the main metro.

Net metering vs. net billing

Panels make most of their power at midday, when many homes are empty. The surplus flows to the grid. How your utility pays for it matters as much as how sunny you are.

Under full net metering, each exported kWh offsets a kWh you buy at night, at the full retail rate. Under net billing, exports earn a lower credit, often based on the utility's avoided cost. California moved new customers to a net billing tariff in 2023, and several other states and utilities pay less than retail for exports. With net billing, the power you use yourself is worth several times more than what you send out, so payback depends on how much you use while the sun is up.

Pick "Partial" and set two numbers. "Used at home as it's made" is the share of production you consume on the spot. Without a battery it is often less than half, and it goes up if you run the AC, dishwasher or EV charger at midday. "Export credit" is what your utility pays for the rest, as a share of your retail rate. Your utility's rate sheet or the installer's proposal should show it.

What a fair solar quote looks like

Quotes on marketplace sites averaged about $2.60 per watt in 2026, while the national lab's median for homeowner-owned systems installed in 2025 was about $3.60 per watt. Most cash quotes fall between those, which is why the calculator starts at $3.00. A 7.2 kW system at that range costs $18,700 to $25,900.

Compare quotes on price per watt, not on the total, because each installer sizes the system a little differently. Check the panel and inverter warranties, who handles the permit and the utility interconnection, and whether the price includes a main panel upgrade if your home needs one.

Tips and common mistakes

• Use a full year of bills. One summer or winter month can be 50% off your average. Add the 12 monthly kWh numbers and divide by 12.
• The "$ bill" mode is a shortcut. Most bills include a fixed monthly charge that solar can't erase, so entering kWh is more accurate.
• Fix the roof first. If your shingles have less than 10 years left, replace them before the panels go up. Removing and reinstalling an array later costs thousands.
• Shade and direction matter. The sun hours here assume a south-facing roof with no shade. East or west roofs make roughly 10% to 20% less; heavy shade can cut much more.
• Plan for one inverter. A central string inverter often needs replacing once in 25 years. Microinverters usually carry 25-year warranties. The payback here does not include that cost.
• Don't oversize for credit. Power beyond your yearly use usually earns only the export credit, so going past 100% rarely pays.

DIY or hire an installer?

Most homeowners hire a licensed installer. Roof work, a grid-tied inverter and a connection to your main panel all require permits and inspection under the National Electrical Code, and the utility must approve the hookup before you turn it on. Experienced DIYers can save the labor share of the cost by buying a kit and hiring an electrician for the final connection, but check your local permit rules and your utility's interconnection process first. Never work on a live panel, and remember that panels produce voltage whenever light hits them.

Sources and assumptions

• Federal credit status: IRS, Residential Clean Energy Credit (page updated July 4, 2026), which states the credit is not available for property placed in service after December 31, 2025.
• Peak sun hours: solar radiation on a 20° south-facing surface from the National Solar Radiation Database of NREL (renamed the National Laboratory of the Rockies in December 2025), read through PVWatts and the EU JRC PVGIS tool (NSRDB data set), for each state's largest metro, October 2026. The two tools agree within about 3%.
• Production losses: 0.77 performance factor, calibrated against PVWatts results (14% system losses plus inverter and heat losses) for nine states.
• Electric rates: EIA Electric Power Monthly, Table 5.6.B, residential average price, year to date through August 2026 (released October 23, 2026). U.S. average: 18.19¢.
• Rate increase: U.S. residential prices rose from 12.55¢ in 2016 to 17.23¢ in 2025, about 3.6% a year (EIA Table 5.3). The calculator uses a more conservative 3%.
• Typical use: EIA FAQ, about 899 kWh a month per U.S. home.
• Installed price: EnergySage marketplace, about $2.60/W before incentives (updated June 2026), and Berkeley Lab's Tracking the Sun, median about $3.60/W for host-owned residential systems in 2025.
• Panel degradation: NREL's review of nearly 2,000 field measurements found a median of 0.5% a year (Jordan and Kurtz, Photovoltaic Degradation Rates).
• Net billing: California Public Utilities Commission net billing tariff (Decision 22-12-056). The 50% on-site and 30% export defaults are placeholders: set them from your utility's tariff.
• Not included: batteries, financing interest, inverter replacement, insurance, property tax effects and the time value of money. Prices checked October 2026.

Common questions