Solar Payback Calculator: How Many Years Until Solar Pays for Itself

A solar payback calculator shows how many years your bill savings take to cover what you paid for the system. With the default inputs, a $23,100 system saving $1,890 in year one pays for itself in about 11.3 years and leaves you roughly $38,833 ahead after 25 years. Price, savings and rate growth drive the answer.

How to use the solar payback calculator

You need three numbers: what the system costs, what you will get back, and what it saves in year one.

1. System price before incentives. The total contract price, including any battery. The default, $23,100, is a 7.7 kW system at $3.00 per watt, the 2025 median cash price for host-owned systems reported from LBNL's data.
2. Rebates and credits you will receive. State or utility rebates only. Leave out the federal 25D credit for systems finished in 2026.
3. First-year bill savings. If you do not know it, get it from the solar savings calculator.
4. Yearly utility price increase (default 3%) and Panel output loss per year (default 0.5%).
5. Advanced fields. Yearly upkeep and reserve ($100), Amount financed (0 = cash), Loan APR (7.99%), Loan term (20 years) and Discount rate for NPV (5%).

Results include a break-even line chart that starts at minus your up-front cost, a bar chart of yearly savings against loan and upkeep costs, and a 25-year schedule (savings, upkeep, loan payments, net cash flow, running total) you can download as CSV. The scenario table compares paying cash, financing the whole net cost, and paying cash with utility rates rising 2 points slower than your input.

How the calculation works

Each year's savings start from your first-year figure, grow with utility prices and shrink slightly as panels age. Upkeep and loan payments are subtracted, and the running total starts at the cash you paid up front.

Net cost         = price − rebates
Up-front cash    = net cost − amount financed
Savings, year n  = year-1 savings × (1 + escalation)^(n−1) × (1 − degradation)^(n−1)
Net cash, year n = savings − upkeep − loan payments (12 × monthly payment while the loan runs)
Running total    = −up-front cash + sum of net cash to date
Payback          = point where the running total crosses from negative to positive
NPV              = sum of each year's cash flow ÷ (1 + discount rate)^year
IRR              = the yearly rate that makes NPV equal zero

Assumptions: savings are applied as yearly lump sums, payback is interpolated within the crossing year, the loan is a standard fixed-payment loan, and the period is 25 years. The 0.5% degradation default is the median from NREL's review of field measurements (Jordan and Kurtz, 2012 (opens in a new tab)). IRR is not shown when the whole cost is financed, because there is no up-front cash to earn a return on.

Worked example

Default inputs: $23,100 price, $0 rebates, $1,890 first-year savings, 3% escalation, 0.5% degradation, $100 upkeep, cash.

The default scenario table shows how the choices compare:

Second example: a $27,700 system (7.7 kW at the $3.60 per watt 2025 median across all host-owned systems in LBNL's data), a $2,000 utility rebate and $2,300 first-year savings, other inputs at default. Net cost is $25,700. Payback is 10.3 years, the 25-year net gain is $50,210 (195.4% of cost), NPV is $14,457 and IRR is 9.4%. Financing all of it moves payback to 13 years and the net gain to $24,357.

What your result means

Payback answers "how long is my money tied up." NPV and IRR answer "is this a better use of money than the alternative." An IRR above your loan APR or savings rate is a good sign.

If payback runs past 15 years, the price may be high for your savings. Compare quotes on price per watt and read our guide to how much solar panels cost. For the bigger picture, see are solar panels worth it.

Rules that change the answer

• The 25D credit ended. Under P.L. 119-21, the 30% Residential Clean Energy Credit does not apply to expenditures made after December 31, 2025, and the IRS treats an expenditure as made when installation is completed (IRS FAQ (opens in a new tab)). As of October 2026, do not count it for new installs.
• Leases and PPAs. The owner of a third-party-owned system may claim a business credit under §48E, subject to construction and sourcing deadlines. You do not, so a lease has no "payback" of your own cash; compare it with the solar lease vs buy calculator and our guide to lease vs PPA vs loan.
• Export credits set your first-year savings. Net billing in California or Arizona lowers them compared with full retail net metering in Florida.
• Loan fees. CFPB found hidden dealer fees often add 10% to 30% to the financed price (CFPB, 2024 (opens in a new tab)). Enter the cash price as the system price and model the loan in the solar loan calculator.

Common mistakes

• Subtracting a 30% federal credit for a system completed in 2026.
• Entering a financed price that includes dealer fees as if it were the cash price.
• Using a sales proposal's savings figure without checking it.
• Ignoring upkeep and inverter replacement.
• Comparing a loan's payback with a cash payback without noticing the different starting points.
• Ignoring the red flags covered in our guide to solar sales scams.

Limits of this calculator

This is an educational estimate, not financial or tax advice. It uses yearly cash flows, a constant escalation rate and a fixed-rate loan, and it does not model tax effects, home-value changes, re-amortizing loans, rate-design changes or the cost of removing panels for a roof replacement. Use it to compare options, then confirm with written quotes and, for tax questions, a tax professional.