Solar Panel Payback Calculator
Work out how many years rooftop solar takes to pay for itself, with incentives, export rates, panel degradation and rising prices, plus ROI, NPV and IRR.
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About this toolWhat is the Solar Payback Calculator?
The Solar Panel Payback Calculator takes a system size, an installed price and your electricity tariff and shows the year the panels pay for themselves, the savings and net gain over their life, the return on investment, net present value, internal rate of return and the effective cost of every kWh they make. A year-by-year table shows production, savings and the running total.
It handles the details that installer quotes tend to skip: panels lose a little output every year, electricity prices tend to rise, inverters may need replacing, and exported power is often credited at less than the retail price. With the defaults (7 kW at $3.00 a watt, 1,400 kWh per kW a year, 18-cent power, 70% used at home and 30% exported at 8 cents, prices rising 2.5% a year, 0.5% degradation and a $2,000 inverter in year 12) a $21,000 system pays back in 13.8 years and is $24,000 ahead after 25 years.
Change the self-use share to 100% to model full net metering, or enter a tax credit percentage and rebates if you qualify for them.
- Payback year, lifetime savings, net gain and ROI
- NPV, IRR and cost per kWh produced
- Self-use and export valued separately for net billing
- Degradation, price escalation, upkeep and inverter replacement
- Year-by-year table, any currency, shareable link
How to use the Solar Payback Calculator
- Enter the system size in kW DC and the yearly production per kW for your site (from PVWatts or your quote).
- Enter the installed price per watt, or switch to the total quote, plus any tax credit percentage and fixed rebates.
- Enter the price you pay per kWh, the share of solar you expect to use at home, and the credit for exported power.
- Adjust the price rise, degradation, upkeep, inverter replacement, analysis period and discount rate if needed.
- Read the payback, net gain, ROI, NPV, IRR and cost per kWh, and check the year-by-year table.
Worked examples
Default system with net billing
Input
7 kW at $3.00/W; 1,400 kWh/kW; $0.18 retail, 70% self-use, $0.08 export; +2.5%/yr; 0.5% degradation; $2,000 inverter in year 12
Output
Year 1: 9,800 kWh, $1,470 saved; payback 13.8 years; net gain $24,009 over 25 years; ROI 114%; IRR 6.3%; NPV at 4% $5,979
6,860 kWh used at home save $1,235 and 2,940 kWh exported earn $235 in year 1.
Same system with full net metering
Input
Self-use 100% (every kWh worth $0.18)
Output
Year 1 saving $1,764; payback 10.8 years; net gain $33,411
How exports are credited moves payback by three years, more than most equipment choices.
With a 30% credit
Input
Default system, 30% tax credit (for systems that still qualify)
Output
Net cost $14,700; payback 9.2 years
The credit cuts the cost but not the yearly savings, so payback shortens by about a third.
Background and insight
Production is system size times specific yield, the kWh one kW of panels makes in a year at your site. It depends on latitude, roof direction, tilt and shading, so use NREL's free PVWatts calculator for your address. Output then declines each year; NREL's review of field data (Jordan and Kurtz, 2013) put the median degradation of crystalline silicon panels at about 0.5% a year, the default here.
Savings depend on what each kWh is worth. Solar used in the home avoids buying a kWh at the retail price. Exported solar earns whatever the utility credits: the retail price under classic net metering, or a lower avoided-cost or export rate under net billing schemes such as California's. The calculator splits production by your self-use percentage and values each part separately, then grows both values by the price escalation rate. The default retail price is the EIA's October 2026 forecast of about 18 cents per kWh for US residential customers in 2026.
Payback is the year the cumulative cash flow, starting from the net cost, turns positive, interpolated within the year. ROI is the net gain divided by the net cost. NPV discounts each year's cash flow at your discount rate, and IRR is the rate at which NPV is zero, comparable with other investments. The cost per kWh is the net cost plus upkeep divided by lifetime production, undiscounted. In the US, the section 25D residential clean energy credit ended for expenditures after 31 December 2025 under the One Big Beautiful Bill Act, so the credit field defaults to 0%.
Common use cases
Checking an installer quote
Put the quoted price and production in and see if the promised payback holds with realistic export rates.
Comparing quotes
Compare systems of different sizes and prices on payback, IRR and cost per kWh.
Deciding after incentives changed
See how solar looks without the federal credit and with local rebates only.
Sizing for self-use
Test whether a smaller system with higher self-use pays back faster under net billing.
Tips and limitations
- Under net billing, self-use is worth more than export, so batteries, EV charging and daytime appliance use improve the numbers.
- Ask whether the quote's production estimate already includes shading and system losses.
- Inverter warranties vary from 10 to 25 years; set replacement cost to 0 if yours is covered for the full period.
- Price escalation is an assumption. Run a 0% case to see the payback if prices stay flat.
Frequently asked questions
How long do solar panels take to pay for themselves?
Divide the net cost by the yearly savings, then allow for rising prices and falling output. With the defaults, a $21,000 7 kW system saves $1,470 in year 1 and pays back in about 13.8 years; full net metering cuts that to 10.8 years.
How does net metering change solar payback?
Under net metering every exported kWh is credited at the retail price. Under net billing exports earn a lower rate, so only the solar you use yourself saves the full price. The tool values the two parts separately.
Is there still a federal tax credit for home solar?
The section 25D residential clean energy credit ended for expenditures after 31 December 2025. Some states and utilities offer rebates; enter them in the rebates field. Check IRS guidance for the timing of your own installation.
How much do solar panels degrade per year?
NREL's review of field data found a median of about 0.5% a year for crystalline silicon modules. After 25 years at that rate, output is about 89% of the first year.
What is a good IRR for solar?
Compare it with what your money would earn elsewhere at similar risk. An IRR above your mortgage rate or expected investment return means solar is the better use of the money on these assumptions.
How do I find the kWh per kW for my roof?
Use NREL's PVWatts calculator with your address, roof tilt and direction. Divide its yearly AC output by the system size in kW DC.
Does the payback include replacing the inverter?
Yes, if you enter a cost and a year. String inverters often need replacing during a panel's life; microinverters often carry 25-year warranties, in which case set the cost to zero.
Is there an in-depth guide to the Solar Payback Calculator?
Yes. “Solar Panel Payback Period: How to Work It Out Honestly” covers the background, how it works, common pitfalls and worked examples. Read the full guide.
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