Estimate only. Use the price from your own installer quote, and check how your utility credits the energy you send back to the grid.
How the payback is calculated
- System cost: system size × 1,000 × price per watt, before any incentive.
- Yearly production: system size × how much 1 kW of panels produces in a year in your state.
- Yearly savings: production × your state's average residential electricity price × the value of each solar kWh.
- Simple payback: cost ÷ yearly savings.
The 25-year figure is yearly savings × 25 minus the cost. It does not include panel degradation, future rate increases, maintenance or financing.
What price per watt to use
Use your quote. For reference, Lawrence Berkeley National Laboratory's Tracking the Sun (2024 edition) found that most residential systems installed in 2023 cost between $3.20 and $5.50 per watt before incentives (20th to 80th percentile). Loan-financed systems often include dealer fees.
The value of each solar kWh
Leave 100% if your utility credits every exported kWh at the full retail rate (classic net metering). Many utilities now pay less for exported energy under net billing; in that case use a lower value. Energy you use at home while the panels produce is always worth the full rate.
Data and the federal tax credit
- Electricity prices: EIA Electric Power Monthly, Table 5.6.B.
- Solar production: PVWatts, standard 1 kW roof system facing south at a 20° tilt with 14% losses.
- The federal Residential Clean Energy Credit does not apply to systems placed in service after December 31, 2025 (IRS), so the cost here is the full price.