How this calculator works
Each year the panels produce a little less (degradation) while electricity usually costs a little more. Solar you use at home saves your full electricity price; solar you export earns your utility’s export credit. Savings add up year by year until they cover the net cost of the system — the payback year. With a loan, the yearly loan payment is subtracted from savings instead of paying the cost up front.
Assumptions and tips
- No maintenance, inverter replacement or insurance costs are included — budget roughly $1,000–$2,500 for an inverter replacement around year 10–15.
- Taxes on savings, financing fees and changes to your utility’s rate plan are not modeled.
Worked example
Using the default values in the calculator above:
| Input | Value |
|---|---|
| System size | 7 kW |
| Installed cost | 2.8 $/watt |
| Battery cost (optional) | $0 |
| Tax credit | 0 % |
| Rebates and incentives | $0 |
| Production per kW | 1,300 kWh/kW/yr |
| Electricity price | 0.17 $/kWh |
| Electricity price increase | 3 %/yr |
| Solar used in your home | 70 % |
| Export credit | 0.08 $/kWh |
| Panel degradation | 0.5 %/yr |
| Payment | Cash |
| Result | Value |
|---|---|
| Payback period | 13.3 years |
| Net system cost | $19,600 |
| First-year savings | $1,301 |
| Total bill savings over 25 years | $42,062 |
| First-year production | 9,100 kWh |
| Net savings over 25 years | $22,462 |
Every 5 years:
- Year 5: saved $1,409 this year, cumulative net $-12,828
- Year 10: saved $1,559 this year, cumulative net $-5,341
- Year 15: saved $1,731 this year, cumulative net $2,961
- Year 20: saved $1,925 this year, cumulative net $12,187
- Year 25: saved $2,145 this year, cumulative net $22,462
Step by step:
- Gross cost = 7 kW × 1,000 × $2.8 + battery $0 = $19,600
- Net cost = gross − 0% credit − $0 rebates = $19,600
- Year-1 production = 7 × 1,300 = 9,100 kWh
- Year-1 savings = 9,100 × (70% × $0.17 + 30% × $0.08) = $1,301
- Each later year: production falls by the degradation rate, the electricity price rises by the increase
Common mistakes to avoid
- Assuming every kWh exported earns the full retail price — many utilities now credit exports at a much lower rate.
- Leaving out inverter replacement and roof work in the payback.
Frequently asked questions
Is there still a federal solar tax credit?
Not for systems homeowners buy: the 30% residential clean energy credit ended for systems installed after December 31, 2025. Leased and PPA systems may still benefit through the installer’s credit. Check state incentives.
What is a good solar payback period?
Many US homes see 8–14 years. Shorter paybacks come from high electricity prices, sunny locations and full net metering.