Solar Panel Payback Calculator

The 30 percent federal solar credit ended on December 31, 2025, and the payback question changed with it. Solar no longer starts with a subsidy. It starts with three numbers that belong to your house: what you pay for electricity, how much sun your roof sees, and what an installer charges per watt. Enter those below and the ledger prices the system, the first year of bill savings, the year it breaks even, and what 25 years of sunshine is worth after the cost is repaid.

Sources: EnergySage Home Electrification Marketplace Report, first half of 2026 (median quoted residential price $2.57 a watt, $2.62 a watt solar-only, median system about 12 kW at $30,712 before incentives, average estimated payback 10.9 years); U.S. Energy Information Administration, Electric Power Monthly (average residential price 18.16 cents a kilowatt-hour in August 2026; 2025 annual average 17.30 cents; Short-Term Energy Outlook expects 18.2 cents for 2026 and 18.7 cents for 2027); NREL PVWatts (default total system losses 14 percent; long-term degradation about 0.5 percent a year); One Big Beautiful Bill Act, Public Law 119-21 (section 25D residential credit terminated for expenditures after December 31, 2025). Model: annual use equals the monthly bill times 12 divided by the rate; year-one production equals kilowatts times peak sun hours times 365 days times 0.86; system cost equals kilowatts times 1,000 times dollars per watt, minus incentives you enter; each year, production falls 0.5 percent, the rate rises by the escalation you enter, the kilowatt-hours you use yourself are valued at the full rate, exported kilowatt-hours at the export credit you enter, and a $2,500 inverter replacement is charged in year 12. Payback is the first year the running total turns positive, interpolated within the year. Financing, fixed bill charges, shading, batteries, and home value effects are excluded. This is a planning estimate, not a quote, tax advice, or financial advice.

Step 1 — Your electric bill

The defaults use the national picture: $180 a month at 18.2 cents a kilowatt-hour, or 11,868 kilowatt-hours a year. Use the rate from your own bill, all charges included, not the advertised supply rate. A California household at 33.61 cents uses only 6,427 kilowatt-hours on the same $180 bill, which is why the same system looks so different there.

Step 2 — The system

The default system, 8.4 kW, is sized to the default bill at 4.5 sun hours: it makes 11,865 kilowatt-hours in year one, just under the 11,868 used. Press the button and the calculator sizes the system to your bill and sun hours instead. Peak sun hours are not hours of daylight; they are the equivalent hours at full sun, about 3.5 in Seattle, 4.5 in Chicago, 5.0 in Denver, and 5.8 in Phoenix, before shading. The $2.57 default is the EnergySage median quoted price in the first half of 2026, before incentives, with the federal credit already gone.

Step 3 — What the power is worth

The most valuable solar kilowatt-hour is the one you use yourself, because it displaces a kilowatt-hour at the full retail rate. Exported power is worth whatever your utility pays for it: 100 percent under traditional one-to-one net metering, about 24 percent in California under net billing at roughly 8 cents against a 33.61-cent rate, and 50 percent at the default. If you are home during the day, or you run a dishwasher, laundry, and an electric car on sunshine hours, raise the self-use share. The 3 percent escalation default follows the EIA outlook, 18.2 cents in 2026 to 18.7 cents in 2027. Set it to zero to see the payback with flat rates: 14.42 years instead of 12.12.

The itemized ledger

Every size, side by side

The same bill, rate, sun, and price per watt at five system sizes. Larger systems spread the year-12 inverter cost over more production, so payback shortens slightly with size in this model, until exported power dominates. Size for your use, not for the table.

The years ahead, net of the system cost

Step 4 — Before you sign, check these

One: get three itemized quotes, cash price and financed price separately, and check that no quote still subtracts the ended 30 percent federal credit. Two: confirm your state or utility incentive in writing, and your utility's export credit, because the export rate is the second biggest lever after your retail rate. Three: ask what the roof needs first; a roof replacement under new panels is the expensive surprise. Four: check shading, orientation, and the inverter warranty, and confirm who replaces the inverter in year 12 and at what price. The arithmetic above answers the payback question. These four checks answer whether the quote in your hand matches the arithmetic.