How the solar payback calculator works
Solar pays for itself through the electricity you no longer buy. Each year the calculator multiplies production by your rate, lowers production slightly for panel aging and raises the rate for utility price increases, until the savings add up to the net cost.
Payback = years until cumulative savings ≥ cost − incentives
NREL's PVWatts tool gives a free production estimate for your address. Note that the 30% federal residential clean energy credit (Section 25D) ended for systems placed in service after December 31, 2025, so enter only state, utility or local incentives that still apply to you. The model assumes you use or are credited for all the power at the full retail rate; net metering rules that pay less for exported power will lengthen the payback.
Worked example
An 8 kW system producing 1,400 kWh per kW makes 11,200 kWh in its first year, worth $1,904 at 17 cents. At a $25,000 installed cost with no incentives, 3% yearly rate increases and 0.5% degradation, it pays for itself in about 11.5 years and saves roughly $40,000 more than it cost over 25 years.
Frequently asked questions
How long do solar panels take to pay off?
Often 7 to 15 years in the US, depending on cost, sunshine, electricity prices and incentives.
Is the federal solar tax credit still available?
The residential credit under Section 25D does not apply to home systems placed in service after December 31, 2025. Leased systems and some state programs work differently.
How much do solar panels degrade?
Quality panels lose about 0.3% to 0.8% of output a year and are often warrantied for 80% to 90% output after 25 years.
How much does a home solar system cost?
Installed prices commonly run about $2.50 to $3.50 per watt before incentives, so roughly $20,000 to $28,000 for 8 kW.
Updated October 2026. Results are estimates for education, not financial or medical advice. All math runs in your browser; nothing you type is sent anywhere.