US Solar Panel Payback Calculator

How to use this calculator

1. Enter the system size in kW and the installed cost from your quote.
2. Add any state, utility or local rebate you are sure of. Leave the federal homeowner credit out: it ended for systems placed in service after 31 December 2025.
3. Check the yearly output per kW. A tool such as PVWatts gives a better figure for your address than the starting value.
4. Enter the electricity price on your bill and the credit your utility pays for exports. If your state has full 1:1 net metering, the two are the same.
5. Set the share of the electricity you use at home. The payback period, the year-by-year table and the working appear straight away.

The result is a planning estimate, not a quote or financial advice. The starting figures were reviewed on 12 October 2026; prices and export credits change, so replace them with your own.

What do I need to enter?

• System size — the DC size on your quote, 0 to 100 kW. Output scales directly with it.
• Installed cost — the total on your quote before any rebate. It is the sum the savings have to win back.
• Grants and rebates — optional one-off money you will definitely receive. It is taken off the installed cost and cannot exceed it.
• Yearly output per kW — kWh each kW makes in year 1, 0 to 3,000. It varies with state, roof angle and shade.
• Share used at home — 0% to 100% of the output you use yourself; the rest is exported.
• Electricity price you avoid — cents per kWh, 0 to 200. It values each unit you generate and use.
• Export credit — optional, cents per kWh, 0 to 200. It values each unit sent to the grid and is held flat for the 25 years.
• Yearly electricity price rise — optional, 0% to 20%. It raises the price you avoid each year; 0 keeps today's price.
• Yearly panel degradation — optional, 0% to 5%. The output lost each year as the panels age.
• Inverter replacement cost and Inverter replaced in — the cost, and the year (1 to 25) it is deducted from the savings. Enter 0 as the cost for no replacement.

What do the results show?

• Payback period — years until the total saved stays above the net cost, or Over 25 years if it never does.
• Payback in years and months — the same figure in whole years and months.
• Net cost after grants — installed cost less rebates.
• Saving in year 1 — bill saving plus export income in the first year.
• Total saved over 25 years — the running total after the inverter bill.
• Output in year 1 and Installed cost per kW — your system's first-year output and cost per kW.
• Table and Summary tabs — the year-by-year savings, and year 1, the cost and payback at other shares used at home.

How is the solar payback period calculated?

Add up what the panels save each year until the total passes what the system cost. The payback is the point after which the savings stay ahead, so an inverter bill that puts a paid-back system back in the red moves the answer to when it recovers.

Take the calculator's defaults: an 8 kW system costing $24,000 ($3.00 per watt), making 1,400 kWh per kW a year. That is 11,200 kWh in year 1. With 40% used at home at 18.3¢ per kWh, the bill saving is $820; the rest is exported at 18.3¢ per kWh for $1,230, so year 1 saves $2,050. The electricity price rises 2% a year and the panels lose 0.5% of their output a year, and a $2,000 inverter replacement falls in year 12. The total saved stays above the $24,000 cost from year 13, after 12 years 5 months. Over 25 years it saves $51,584, a net gain of $27,584.

The $2,000 inverter replacement in year 12 is what moves the default payback from 11.5 years without it to 12.4 years with it. Set the cost to 0 to see the payback without it.

How long do solar panels take to pay for themselves in the US?

EnergySage says its average solar shopper breaks even in about 10 years, and gives the simple version of the sum: total system cost divided by annual savings. Real paybacks vary a great deal with the electricity price, because each unit you generate is worth what you would otherwise pay for it.

The homeowner tax credit that used to take 30% off the cost has ended, which lengthens paybacks for anyone buying their own system. The calculator therefore starts with no incentive. Enter any rebate you are sure of and watch the payback shorten.

Is the 30% federal solar tax credit still available?

Not for homeowners buying their own system. The IRS says the Residential Clean Energy Credit (Section 25D) equals 30% of the cost of qualified property, but "is not available for any property placed in service after December 31, 2025". Unused credit from an earlier year can be carried forward, and Form 5695 is used to claim it.

Leased systems and power purchase agreements work differently, because the provider owns the panels and may claim a separate business credit under Section 48E. SEIA's Q3 2026 report describes that credit as closing for projects placed in service after 31 December 2027, and notes that the homeowner credit expired at the end of 2025. Whether any saving reaches you depends on the contract, and this calculator is for systems you own.

State and utility incentives are separate and still exist. The DSIRE database lists them by state. Put one-off rebates in the grants field.

How does net metering change the payback?

Under traditional net metering, the EIA explains, you deduct the surplus your panels send to the grid from the electricity you buy, usually at the same retail rate. The split between what you use and what you export then barely matters.

Some states pay less. The EIA describes New York moving new systems to a rate closer to wholesale and Arizona using an avoided-cost method, and California's Net Billing Tariff applies to interconnection applications from 15 April 2023. The CPUC's fact sheet says it was designed to pay for exports by the avoided cost to the utility.

The rules keep changing: the NC Clean Energy Technology Center counted 53 actions on distributed generation compensation rules across 24 states and Puerto Rico in the second quarter of 2026 alone, in its 50 States of Solar report. Check your own utility's current terms.

The default export credit is the full retail price, as under 1:1 net metering. Cut it to 4¢ per kWh, roughly what a net billing tariff can pay, and the same system takes 21 years 5 months to pay back instead of 12 years 5 months.

The calculator holds the export credit flat for 25 years. Where your credit follows the retail price, that understates the savings in later years.

How much of my solar electricity should I assume I use?

It depends on when you are at home and on what your utility pays for exports. With the default export credit equal to the retail price, using more at home changes nothing; with a lower credit it matters a lot. The table runs the default inputs at five different shares.

Set the export credit lower, as under net billing, and the rows spread out: each unit used at home then saves the full price while each unit exported earns much less.

What do solar panels cost and what is a unit worth?

EnergySage's marketplace data shows an average of about $2.59 per watt before incentives. The calculator starts at $24,000for 8 kW, which is $3.00 per watt, a mid-range figure. Replace it with a real quote.

The EIA's Electric Power Monthly puts the national residential average at 18.31¢ per kWh in July 2026, up from 17.45¢ a year earlier. Your own bill is the better guide, because prices differ a lot between utilities.

For the yearly output, PVWatts, a free calculator from the National Laboratory of the Rockies, estimates the production of a grid-connected system at your address from its size, array type, tilt and direction.

When does the inverter need replacing?

String inverters often have a shorter life than the panels, so the calculator deducts a replacement in year 12 by default. Check your inverter's warranty and ask your installer when it is likely to need replacing, or set the cost to 0 if you do not expect to replace it.

Panels also lose a little output each year. A review of field studies by NREL researchers, Photovoltaic Degradation Rates, found a median of 0.5% a year, which is the starting value.

What does this calculator not include?

• Roof direction, tilt and shading. They are inside the yearly output you enter.
• A battery, an electric car, or a time-of-use rate plan.
• Yearly income such as SRECs, property tax or sales tax exemptions.
• Loan interest or the return you could earn by investing the money instead.
• Maintenance, insurance, or any change in the value of your home.

To compare solar with another use of the money, use the ROI Calculator or the Compound Interest Calculator. Living in the UK? Use the UK Solar Panel Payback Calculator, which covers the Smart Export Guarantee and VAT.

Sources for the figures on this page

• IRS: Residential Clean Energy Credit. The 30% credit and its end for property placed in service after 31 December 2025.
• SEIA: Solar Market Insight Report Q3 2026. The expiry of the homeowner credit and the 31 December 2027 deadline for Section 48E.
• EnergySage: Solar payback period. The payback formula, the roughly 10-year average and the $2.59 per watt average.
• EIA: Electric Power Monthly, average retail price of electricity. The 18.31¢ per kWh residential average for July 2026.
• EIA: Lower compensation rates for residential solar PV generation could reduce adoption. How net metering credits exports, and states moving to lower rates (March 2020).
• CPUC: Net Billing Tariff. California's successor to NEM 2.0, from 15 April 2023.
• NC Clean Energy Technology Center: The 50 States of Solar, Q2 2026. The count of state compensation-rule actions.
• PVWatts Calculator (National Laboratory of the Rockies). Estimating yearly output for an address.
• Jordan and Kurtz (NREL, 2013): Photovoltaic degradation rates, an analytical review. The 0.5% a year median.

This is general information, not tax or financial advice. Incentives, export credits and prices change, so check the linked pages, your utility and a tax professional.

Frequently asked questions