Solar Payback & ROI Calculator
Solar payback is how long bill savings take to repay your system. For a typical 8 kW system at $3/W with no federal credit in 2026, payback ranges from about 5–7 years in high-rate, sunny states to 15+ years where power is cheap. Enter your own numbers below.
Source: EIA & NREL. Data as of June 2026.
How does the calculator work?
Enter your system size, install cost, local production and electricity rate to see your simple payback period and cumulative 25-year savings. It models 3%/yr rate escalation and 0.5%/yr panel degradation, and defaults the federal tax credit to 0% because the residential 25D credit expired on December 31, 2025.
- Annual production = system size (kW) × production factor (kWh per kW per year). The production factor comes from local sun hours and a standard ~80% system derate (NREL PVWatts default).
- Year-1 savings = annual production × your electricity rate.
- Escalation grows the rate each year; degradation shrinks output ~0.5%/yr.
- Simple payback is the year your running savings cross the up-front net cost.
This is a simple-payback model: it ignores financing interest, inverter replacement (~year 12–15), maintenance, and the time-value of money, so treat the output as a planning estimate, not a financial guarantee. See the full methodology.
What's a good payback in your state?
Production and electricity prices vary widely by location. Pick your state for a version of this calculator pre-filled with real EIA rates and NREL sun data:
- California
- Texas
- Florida
- New York
- Arizona
- Nevada
- Colorado
- Massachusetts
- New Jersey
- Georgia
- North Carolina
- Illinois
- Pennsylvania
- Washington
- Hawaii
Frequently asked questions
How is the solar payback period calculated?
Payback is the number of years until your cumulative electricity-bill savings equal the up-front net cost of the system. The calculator multiplies your system size by a local production factor (kWh per kW per year) to get annual output, values that output at your electricity rate, escalates the rate each year, and reduces output by about 0.5% a year for panel degradation.
Does this include the federal solar tax credit?
By default no. The federal residential clean energy credit (Section 25D) expired for systems placed in service after December 31, 2025, so 2026 installs get 0%. You can set the credit field to 30% to model a system that was already in service in 2025 or earlier.
What install cost per watt should I use?
Typical 2025–2026 residential cash prices run roughly $2.50–$3.50 per watt before any incentives, varying by state, installer and system size. Use the number from an actual quote when you have one.
Is this calculator free and private?
Yes. It runs entirely in your browser, with no sign-up, and none of your inputs are sent to a server.
Last updated: 2026-06-14