Solar Panel Savings & ROI Calculator
Rooftop solar usually pays back in roughly 7–12 years and then delivers free electricity for the rest of its 25-year life. Enter your system size, electricity use and price, the installed cost and your incentive to see your payback period, 25-year net savings, ROI, levelised cost of energy and how much of your bill the system offsets.
Using US averages. Set your state or ZIP for local electricity, fuel, sun and grid figures. Stays on your device.
A typical home system is 5–10 kW.
US average is roughly 10,800 kWh/yr.
Before incentives; often $2.5–3.5/W.
Federal tax credit is 30% at time of writing.
Assumptions
Location-dependent; US average ~4.5.
Inverter, soiling and wiring losses; ~84%.
Module output decline; median ~0.5%/yr.
An assumption — no single authoritative rate.
25-year net savings
$37,805
Lifetime electricity savings minus the net up-front cost.
Verdict: This system pays back in about 8.3 years, then nets roughly $37,805 over 25 years (ROI 257%).
Get a shareable image- Payback
- 8.3 years
- Year-1 savings
- $1,642
- Annual production
- 9,658 kWh
- ROI
- 257%
- LCOE
- $0.065/kWhvs your grid price
- Bill offset
- 89%Year-1 production
Assumes savings are valued at your retail rate up to your own use (net metering / self-consumption). Excludes financing and maintenance. Estimate only; not financial advice.
Save & compare
Save the current inputs and compare up to 4 side by side. Stored on this device only.
How it works
This calculator estimates the lifetime value of a rooftop solar system and the year it pays back its net up-front cost.
- System size, peak sun hours and derate set how much electricity the array produces in its first year.
- Your electricity use and price turn that production into a dollar saving — valued at your retail rate up to the amount you actually consume.
- Degradation and price inflation adjust each later year: output falls slightly while the value of each kWh rises.
- Cost and incentive give the net up-front cost the savings must repay.
The headline figure is your net savings over the system life. The chart shows cumulative savings climbing past the flat system-cost line — where they cross is your payback point.
Methodology & assumptions
Results combine the inputs you provide with these representative defaults. Each is editable in the calculator and tied to a dated source — except price inflation, which is a stated planning assumption. Financing, maintenance and export credits are excluded.
| Assumption | Default | Source |
|---|---|---|
| Electricity priceEditable; varies by state and changes monthly. | $0.17 /kWh | U.S. Energy Information Administration (EIA) |
| Peak sun hoursUS-wide representative value; depends on location. | 4.5 h/day | National Renewable Energy Laboratory (NREL) |
| System derateInverter, soiling and wiring losses (~14% loss). | 0.84 (84%) | National Renewable Energy Laboratory (NREL) |
| Installed costBefore incentives; commonly $2.5–3.5/W. | $3.00 /W | National Renewable Energy Laboratory (NREL) |
| Up-front incentiveFederal tax credit; eligibility and rate can change. | 30% | U.S. Department of Energy / IRS (energy.gov) |
| Annual degradationMedian module output decline per year. | 0.5 %/yr | National Renewable Energy Laboratory (NREL) |
| Electricity price inflationPlanning assumption — no single authoritative rate. | 2.5 %/yr | — |
Full formula, every default and its source: Solar savings & ROI methodology.
Worked example
Take a 7 kW system on a home using 10,800 kWh/year, paying $0.17/kWh, at $3.00/W with a 30% incentive and 4.5 peak sun hours:
- Net cost: $3.00 × 7,000 W × (1 − 0.30) = $14,700.
- Year-one production: 7 × 4.5 × 365 × 0.84 ≈ 9,658 kWh, offsetting about 89% of the bill → roughly $1,642 saved in year one.
- Over 25 years, with 0.5%/yr degradation and 2.5%/yr price inflation, savings total about $52,500.
- Net 25-year value ≈ $37,800, an ROI of about 257%, with payback near 8.3 years and an LCOE around $0.065/kWh — well below the grid price.
Swap in your own roof, prices and incentive above to see how the payback moves.
Frequently asked questions
Is solar worth it?
For most owner-occupied homes with decent sun and retail-rate net metering, yes — over its 25-year life a system typically returns several times its net cost. The honest test is the payback period and ROI for your own roof, prices and incentives, which is exactly what this calculator estimates. Shading, a small bill, or no net metering can change the answer.
What is the payback period?
It is the number of years until your cumulative electricity savings equal the net up-front cost of the system (after incentives). We add up each year’s savings, let them grow with assumed price inflation, and find the point where they cross the system cost — interpolating within the year. If they never cross within the system life, we say so rather than show a misleading number.
What is LCOE?
Levelised cost of energy is the net cost of the system divided by all the electricity it produces over its life — roughly what each kWh of solar costs you. Compare it to your grid price: if your LCOE is well below what you pay the utility, the system is producing power more cheaply than you can buy it.
Are incentives included?
Yes — the up-front incentive percentage (30% by default, the federal tax credit at time of writing) is subtracted from the gross cost to get the net cost used everywhere in the result. Eligibility and the rate can change, and state or utility rebates are not modelled, so adjust the percentage to match your actual situation.
What if I produce more electricity than I use?
This calculator values savings at your retail rate only up to your own annual consumption — effectively assuming full-retail net metering or self-consumption. Excess production beyond what you use is not credited, because export rates vary enormously (from full retail down to a low wholesale rate or nothing). If you export a lot, treat the result as a ceiling.
How does degradation affect output?
Panels make slightly less power each year. We apply a constant annual degradation (0.5%/yr by default, the industry median), so year-25 output is about 11% below year one. This lowers later savings and lengthens payback a little compared with assuming flat output.
How accurate is this estimate?
It is a planning estimate, not a quote. Real production depends on your roof orientation and tilt, shading, local weather and the specific equipment, and savings depend on future electricity prices and net-metering rules — all of which we simplify. Use your own numbers and treat the output as a well-grounded ballpark.
Related calculators
Related guides
- Are solar panels worth it?Solar usually pays back in 7-12 years, then powers your home near-free for ~20 more. See when it is worth it, when it is not, and how to get your own number.
- Solar panel payback period explainedHow long solar panels take to pay for themselves, the simple formula behind payback, what shortens or lengthens it, and how to estimate yours.
- Solar panel cost: what you will actually payResidential solar runs about $3 per watt installed — roughly $18,000–$30,000 for a 6–10 kW system before the 30% federal credit. Here is the real breakdown.
By EnergyTally Team · Editorial & analysis team
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