Will solar panels pay off on your roof?
A home solar system is a large upfront purchase that pays you back a little every month on your electric bill. Whether it is a good deal depends on three things: how much sun your roof gets, what you pay for electricity, and what the system costs to install. This calculator puts those together to estimate production, savings and the number of years it takes to recover the investment.
The formulas
- Yearly production (kWh) = system size in kW × peak sun hours per day × 365 × (1 − losses).
- Yearly savings = production × electricity price.
- Net cost = size in watts × installed cost per watt × (1 − incentives).
- Simple payback = net cost ÷ yearly savings.
- 25-year savings assume electricity prices rise 2.5 percent a year while the panels lose 0.5 percent of their output a year.
Peak sun hours are the daily equivalent of full-strength sunshine, not hours of daylight. A sunny day in June may have 14 hours of daylight but only 6 or 7 peak sun hours.
Worked example: a 6 kW system
With 4.5 peak sun hours, 14 percent losses, electricity at $0.17 per kWh and an installed cost of $3.00 per watt:
- Production: 6 × 4.5 × 365 × 0.86 = 8,475 kWh a year, about 80 percent of what a typical American home uses.
- Savings: 8,475 × $0.17 = $1,441 a year.
- Net cost: 6,000 W × $3.00 = $18,000, with no incentive.
- Payback: 18,000 ÷ 1,441 = 12.5 years.
- Over 25 years the system saves about $46,076, a net gain of about $28,076.
Sunshine changes everything
| Peak sun hours | Production | Savings per year | Payback |
|---|---|---|---|
| 3.5 | 6,592 kWh | $1,121 | 16.1 years |
| 4 | 7,534 kWh | $1,281 | 14.1 years |
| 4.5 | 8,475 kWh | $1,441 | 12.5 years |
| 5 | 9,417 kWh | $1,601 | 11.2 years |
| 5.5 | 10,359 kWh | $1,761 | 10.2 years |
| 6 | 11,300 kWh | $1,921 | 9.4 years |
What changed in 2026
The 30 percent federal residential clean energy credit ended for systems installed after December 31, 2025, which lengthened payback periods for homeowners who buy their panels. Some states, cities and utilities still offer rebates, performance-based payments, sales tax or property tax exemptions. Enter the total value of any incentive as a percentage of the system cost.
Limits of a quick estimate
- Export credits. The calculator values every kWh at the retail price, which holds under full net metering. Many utilities now credit power sent to the grid at a lower rate, so homes that use more of their solar power during the day come out ahead.
- Roof orientation and shade. A south-facing roof without shade produces the most. East or west roofs typically lose 10 to 20 percent. NREL’s free PVWatts tool gives an estimate for your exact address.
- Financing. A loan adds interest to the cost and stretches the payback, while a lease or power purchase agreement changes the comparison entirely.
- Maintenance. Panels need little care, but an inverter may need replacing once during the system’s life.
Get at least three quotes, compare them per watt, and use the payback figure to judge whether a quote is reasonable for your area.