Solar Panel Payback Calculator
Does rooftop solar pay for itself, and how soon?
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Solar Panel Payback Calculator by TheCalcTools
How the Solar Panel Payback Calculator works
Enter the system size, local peak sun hours and an efficiency factor for inverter and wiring losses.
Annual production is kW × sun hours × 365 × efficiency.
Savings are production × your price per kWh; payback is net cost divided by yearly savings.
The formula
Worked example
Using the default values shown in the calculator:
| System size (kW) | 6 |
|---|---|
| Peak sun hours per day | 4.5 |
| System efficiency (losses applied) | 80 % |
| Electricity price per kWh | $0.16 |
| Installed cost | $15000 |
| Tax credits and rebates | 30 % |
- 6 kW × 4.5 h × 365 × 80% = 7,884 kWh a year.
- Savings of $1,261 a year on a net cost of $10,500 gives a payback of 8.3 years.
Result:
| Annual production (kWh) | 7,884 |
|---|---|
| Annual bill savings | $1,261 |
| Net cost after incentives | $10,500 |
| Simple payback (years) | 8.3 |
| Net savings over 25 years | $21,036 |
Frequently asked questions
What are peak sun hours?
The equivalent hours per day at 1 kW/m² sunlight. Most of the US ranges from about 3.5 to 6 depending on location.
What does this leave out?
Panel degradation (around 0.5% a year), electricity price changes, financing, net-metering rules, maintenance and shading. Get installer quotes for a full model.
Sources and further reading
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This calculator gives estimates for information only. Check important results independently before you rely on them. See our disclaimer.