Solar Payback Calculator
Enter your net system cost, system size and electricity rate to estimate your yearly savings, how long the system takes to pay for itself and what it may save over 25 years. Every number is editable and everything runs in your browser.
Amounts are in US dollars. The starting values are placeholders, so replace them with your own numbers.
Enter your values and press Calculate.
How to use this solar payback calculator
- Enter the net cost of the system, which is what you pay after any incentives. The Solar Panel Cost Calculator on this site can help you estimate it.
- Enter the system size in kW and the peak sun hours for your location. Peak sun hours vary across the US, roughly from 3.5 to 7 hours a day, so enter your own.
- Enter your electricity rate from your utility bill. The starting value of 0.17 is a placeholder. Add a yearly price increase, output degradation and maintenance cost if you want to include them.
- Press Calculate or Enter. Reset restores the starting values.
How solar payback is calculated
The calculator first estimates year-one production with the common NREL PVWatts-style approach: kW x peak sun hours x 365 x system efficiency / 100. PVWatts’ default system losses are 14%, while this tool uses 80% overall efficiency as a placeholder. Then, for each year from 1 to 25:
- Production = year-one production x (1 – degradation / 100) raised to the power of (year – 1). Panels typically lose about 0.5% of output per year, which is the starting degradation value.
- Savings = production x electricity rate x (1 + price increase / 100) raised to the power of (year – 1), minus the yearly maintenance cost.
- Cumulative savings = the running total of the yearly savings.
Simple payback = net cost / year-one savings. Payback with adjustments is the point where the running total reaches the net cost, with a fraction of the final year: (year – 1) + (net cost – cumulative savings of the previous year) / savings in that year. If it is not reached within 25 years, the tool says so. The 25-year net savings is the cumulative savings after year 25 minus the net cost, and the return on cost is that net figure divided by the net cost.
Worked example
A 6 kW system costs 16,500 after incentives. Year-one production is 6 x 4.5 x 365 x 0.8 = 7,884 kWh. At 0.17 per kWh, year-one savings are 7,884 x 0.17 = 1,340.28, so simple payback is 16,500 / 1,340.28 = 12.31 years. With no degradation and no maintenance, the 25-year total is 33,507, the 25-year net is 17,007 and the return on cost is 103.1%.
Add 200 of yearly maintenance and savings drop to 1,140.28, which lengthens simple payback to 14.47 years. Add 1% yearly degradation instead and payback with adjustments stretches to about 13.07 years.
Incentives
The 30% federal residential solar tax credit (Section 25D) for homeowner-owned systems ended for systems installed after December 31, 2025, so enter your net cost after whatever incentives you actually get. State, utility and local incentives vary, so check your own and ask a tax professional. Leases and power purchase agreements work differently and are not covered here.
Assumptions & limits
- All figures are estimates, not financial, tax or engineering advice.
- Shade, roof direction, tilt and local rules change real results. The calculator uses one overall efficiency figure for all of that.
- Your electricity rate, price increases and rules for selling extra power vary, and the calculator treats every kWh as saving the same rate.
- The model stops at 25 years and does not include inverter replacement, financing costs or taxes unless you add them to the maintenance cost.
Frequently asked questions
What is a solar payback period?
It is the time it takes for your savings to add up to the net cost of the system.
What is the difference between simple payback and payback with adjustments?
Simple payback divides cost by year-one savings only. The adjusted version also includes output degradation, price increases and maintenance year by year.
What electricity rate should I use?
Use the rate on your utility bill. The starting value of 0.17 is only a placeholder.
Why does it say not within 25 years?
With your numbers the cumulative savings do not reach the net cost within the 25 years the model covers. Check the cost, system size and rate.
Why does it say no payback?
Year-one savings are zero or negative, for example when yearly maintenance costs more than the electricity saved.
Does this include the federal tax credit?
No. The 30% residential credit (Section 25D) ended for systems installed after December 31, 2025. Enter your own net cost after any incentives you are eligible for.
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Last updated: October 2026