What this calculator does
Find out how many years home solar panels take to pay for themselves. The calculator sizes a system to cover the share of your electricity use you choose. It prices that system at an installed cost per watt and takes off any rebates. Then it adds up your savings year by year until they match what you paid.
Savings don't stay flat. Electricity prices tend to rise, which makes each kilowatt-hour (kWh, the unit on your power bill) from your panels worth more over time. Meanwhile, panels slowly lose a little output each year. The calculator includes both, along with how your utility credits the power you produce. It shows the running total in a year-by-year table.
Where it's used
Why this math matters outside the classroom:
- Home energy decisions. A household using 900 kWh a month finds an 8.22 kW system at $3.00 a watt pays back in about 12.7 years.
- Comparing quotes. A homeowner turns two quotes into cost per watt, $2.80 and $3.20, and compares the payback of each.
- Growth and decay. Students model savings as 1,728 × (1.025 × 0.995)^(t−1) and sum the series to find the total over 25 years.
- Utility policy. Analysts show that crediting solar power at 50% instead of 100% halves the yearly savings, which at flat prices doubles the payback.
- School projects. A school weighs rooftop solar by comparing the net cost with the cumulative savings in each year.
Grade level and standards: Grades 11–12; Common Core State Standards for Mathematics HSF.LE.A.1.c, HSA.SSE.B.4. © Copyright 2010. National Governors Association Center for Best Practices and Council of Chief State School Officers. All rights reserved.
How to use it
- Enter your average monthly electricity use and how much of it you want solar to cover.
- Enter your site's peak sun hours and the system efficiency. Then enter the installed cost per watt and any rebates.
- Enter your electricity price and what each solar kWh is worth to you. Then enter how fast prices rise and how fast panel output falls.
- Read the payback period, the first-year savings and the net gain over the years you chose.
What the inputs mean
- Electricity use per month
- A 12-month average from your bills smooths out the seasons.
- Peak sun hours per day
- The yearly average number of hours of full-strength sun per day where you live, often between about 3 and 6. Solar resource maps and installer quotes give this figure.
- System efficiency (derate)
- The share of rated output left after inverter, wiring, heat and soiling losses.
- Installed cost
- The total installed price divided by the system's rating in watts. A $24,000 quote for an 8 kW (8,000-watt) system is $3.00 per watt.
- Rebates and incentives
- Rebates and incentives you'll actually receive. The US federal residential clean energy tax credit isn't available for systems placed in service after December 31, 2025. So enter only state, local or utility programs that apply to you.
- Value of each solar kWh
- Under full net metering, every solar kWh is worth the full retail price. (Net metering means the utility credits power you send to the grid.) Some utilities credit that exported power at a lower rate. If part of your output is exported at a lower credit, enter a blended percentage.
- Electricity price increase
- How fast you expect electricity prices to rise. Try 0% for a cautious estimate.
- Panel output decline
- Panels usually lose a small fraction of their output each year. The panel warranty states the rate that's guaranteed.
Formula and method
yearly target = monthly use × 12 × share covered system size (kW) = yearly target ÷ (365 × peak sun hours × efficiency) net cost = size × 1,000 × cost per watt − incentives savings in year y = target × (1 − decline)^(y − 1) × price × (1 + increase)^(y − 1) × credit − maintenance payback = the year in which cumulative savings reach the net cost (interpolated within that year)
kW (kilowatt) is the size of the system, and 1 kW is 1,000 watts. y is the year number, starting at 1. Decline is how much output panels lose each year, and increase is how much prices rise each year, both as decimals.
The sizing rule is the same one used to size a system for your usage. One kilowatt of panels makes about peak sun hours × efficiency kilowatt-hours a day.
Each year's savings are the energy produced times what it's worth. Output shrinks a little as the panels age, and the price grows with the rate increase. So, before upkeep, each year's savings change by the same percentage as the year before.
Payback is found by adding savings year by year. In the year the total passes the net cost, the amount still needed is divided by that year's savings. That gives the part of the year it takes ("interpolated").
Worked example
A home uses 900 kWh a month and wants to cover all of it, with 4.5 peak sun hours and 80% efficiency. Installation costs $3.00 per watt with no rebates. Power costs $0.16 per kWh, rising 2.5% a year. Every solar kWh is credited in full, and panels lose 0.5% a year. Look 25 years ahead.
- Yearly target: 900 × 12 = 10,800 kWh.
- System size: 10,800 ÷ (365 × 4.5 × 0.8) ≈ 8.22 kW.
- Cost: 8,219.18 W × $3.00 ≈ $24,657.53.
- First-year savings: 10,800 × $0.16 = $1,728.00, growing by about 2% a year after price rises and output decline.
- Cumulative savings pass $24,657.53 during year 13, for a payback of about 12.7 years.
Result: The system pays for itself in about 12.7 years. Over 25 years it saves $55,260.09, a net gain of $30,602.56 over its cost.
Understanding the result
A payback well inside the panels' expected life means the system should more than pay for itself under these assumptions. A payback near or beyond it means the numbers are borderline.
The result depends most on cost per watt, the electricity price and how your utility credits solar power. Check your utility's current rules before counting on 100% credit.
Payback ignores the time value of money (the idea that a dollar today is worth more than a dollar later). If you'd pay with a loan, the interest adds to the cost. If you'd otherwise invest the cash, compare the net gain with what that investment might earn.
Assumptions and limitations
- Output each year follows the sizing rule, falling by the decline rate. Weather is the yearly average.
- Every kWh produced is worth the electricity price times the credit percentage you enter.
- Prices change at a steady yearly rate. Maintenance is a flat yearly amount.
- You pay in cash up front, with no loan interest. Future savings aren't shrunk to today's value.
- It doesn't include inverter replacement, roof work, insurance changes or fixed utility charges, unless you add them to maintenance.
- Time-of-use rates (prices that change with the time of day), batteries and seasonal swings in output aren't modeled.
- Incentives change often. Enter only those you've confirmed apply to you.
- This is an estimate under your assumptions, not an installer's quote or financial advice.
Frequently asked questions
What is a good solar payback period?
Panels often come with a warranty of about 25 years. So a payback well under that leaves many years of savings. Shorter paybacks come from high electricity prices, good sunshine, low installed costs and full credit for exported power.
Is there still a federal tax credit for home solar?
The IRS states that the residential clean energy credit isn't available for property placed in service after December 31, 2025. State, local and utility incentives may still exist. Enter any you've confirmed in the rebates field.
What does the value of each solar kWh mean?
With full net metering, power you send to the grid earns the same credit as power you buy. So each solar kWh is worth 100% of the price. Where exports earn less, the average value of your solar output is lower, and the payback takes longer.
Why size the system to my usage?
Making much more than you use often earns little if exports are credited at a low rate. Covering your own use is the usual starting point. But you can enter a smaller or larger share to compare.
Sources
- IRS: Residential clean energy credit (checked 2026-10-19)
How this calculator is checked
Method: Peak-sun-hour sizing with a derate factor; simple (undiscounted) payback on yearly savings that grow with electricity prices and shrink with panel degradation. The calculation is covered by automated tests with known reference values and edge cases. Last updated 2026-10-18. Found a problem? Tell us.
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