Solar Panel ROI Calculator
Start from your electric bill and state to see the system size, payback, lifetime savings and ROI, paying cash or with a loan.
California average rate; use the one on your bill if you know it.
Pay with
More options6 kW (auto), $3/W
Sized to your ~8,900 kWh a year
Roof faces
Best near 30°
Paid for power you send back
The 30% homeowner credit ended for systems installed after 31 Dec 2025.
Pays for itself in
6.9 yrs
then saves $61,149 over 25 years, after the $18,000 it costs.
Your electric bill, year 1
- System cost
- $18,000
- Saves in year 1
- $2,475
- Return over 25 yrs
- 340%
An estimate from the numbers you enter; real loan terms, fees and taxes vary. Not financial advice. Get installer quotes before buying. Terms
Year by yearSavings and where you stand after the cost
Cost and incentives$18,000 before incentives
- 6 kW at $3/W
- $18,000
- Federal credit (0%)
- —
- State credits
- —
- Local rebates
- —
- System cost (no incentives)
- $18,000
9,000 kWh a year in year 1; return over 25 years 340% of the net cost.
How it’s worked outBill → usage → system size → savings
Your yearly use is the bill × 12 ÷ the rate (≈ 8,914 kWh). Each kW of panels makes about 1,500 kWh a year here, after orientation and tilt, so the system is sized to cover your use makes 9,000 kWh.
70% of the solar is used at home (never more than your whole use) and saves the full rate; the rest is exported at the export credit. Savings grow with the rate increase and shrink with panel degradation each year.
Payback is the year your savings have covered the net cost. Inverter replacement and maintenance aren’t included.
How this works: Method, 2 sources,
How this works
Method
Your yearly use is your monthly bill × 12 ÷ your electricity rate, and the system is sized to cover it from a per-state yield (kWh per kW a year) adjusted for roof direction and tilt. Solar used at home (70%, or 90% with a battery) saves the full rate and the rest earns the export credit; savings rise with the rate increase and fall with panel degradation each year. Payback is the year savings cover the net cost after credits (with a loan, the down payment and payments so far); maintenance and inverter replacement aren’t included.
Sources
- U.S. Energy Information Administration (EIA), average residential electricity prices by state
- US Internal Revenue Code, Section 25D homeowner solar credit
Limits
An estimate from the numbers you enter; real loan terms, fees and taxes vary. Not financial advice. Get installer quotes before buying.
Changes
- Added a printable payback report with the year-by-year savings table.
- Redesigned: start from your monthly bill and state, the system is sized to your use, pay cash or with a loan, and a curve shows when it pays for itself.
- The federal credit now starts at 0%, as the 30% homeowner credit ended for systems installed after 2025; a battery now raises the solar you use at home.
- Fixed the savings maths: output now follows your state’s sun, roof direction and tilt, and exported power earns the export credit rather than the full rate.
- First published.
Frequently Asked Questions
How do you calculate solar ROI?
Solar ROI is calculated by dividing the net system cost (after tax credits and incentives) by the annual savings. The payback period is the year cumulative savings first equal the net cost. With a loan, it is the year your savings have covered the down payment and every loan payment so far.
What is a good solar payback period?
A good solar payback period is typically 6-10 years. The 30% federal tax credit for homeowner-owned systems ended for systems placed in service after 31 December 2025, so paybacks are now longer than the 5-8 years often quoted; high electricity rates and state or local incentives still bring many systems under 10 years.
How much can I save with solar?
Average savings range from $1,000-$3,000 per year, depending on electricity rates, system size, sun exposure, and local incentives. Over 25 years, total savings often exceed $30,000.
What size solar system do I need?
Divide a year of electricity use (in kWh) by what one kW of panels produces where you live: about 1,200 kWh a year in New York up to about 1,650 in Arizona. This calculator works your yearly use out from your monthly bill and your electricity rate, and sizes the system to cover it; you can set the size yourself under More options.
Do I need batteries for solar?
Batteries are optional but useful for backup power during outages and for maximizing self-consumption. They add $10,000-$20,000 to system cost and usually lengthen payback. They pay back faster where exported power earns far less than retail (such as California under NEM 3.0), because a battery lets you use about 90% of your solar at home instead of about 70%.
How does net metering work?
Net metering credits you for surplus solar exported to the grid. This calculator values on-site consumption at your full retail rate and exported surplus separately at your net-metering credit rate.
What happens after 25 years?
Panels typically last 25-30+ years with gradual degradation (about 0.5% per year). After 25 years they still produce roughly 85-90% of original capacity.
How much roof space do I need?
Typically 100-120 square feet per kW. A 6kW system needs about 600-720 sq ft, enough for most homes. Orientation and tilt affect how much that area actually produces.