Is solar worth it?

How the payback figure is built

The calculator starts from the yearly output of your system: kilowatts times the kWh one kilowatt makes in your state, from PVWatts or, for states not run through PVWatts, NASA POWER sunshine scaled to it. It splits that output in two. The part you use at home is worth your retail price; the part sent to the grid is worth the export credit you enter. The sum is the yearly saving on your bill, and the price you were quoted divided by that saving is the payback in years. By default the export share is 0%, which values every kWh at the full rate, and the price is the median quote for the system size you set.

In California, 7.4 kW makes about 12,410 kWh a year. At 33.25¢ per kWh, that saves $4,126 a year, so a quote of $17,020 repays itself in 4.1 years.

The rate you pay matters more than the sun

Output varies by state, but electricity prices vary more. EIA measured 12.36¢ per kWh in North Dakota, the cheapest state, for January to July 2026. Valued at that price, the same California system would save only $1,534 a year and need 11.1 years to repay. That is why a sunny state with cheap power can show a slower payback than a cloudier state with expensive power.

Export credits can stretch the result

Panels produce most at midday, when many homes use little, so part of the output flows to the grid. How your utility credits it is set by state rules and tariffs, which differ widely and change; read your utility's own tariff before you sign. As an illustration only: if half of the California output were exported and credited at half the retail price, the saving would drop to $3,095 and payback would grow to 5.5 years. Batteries and shifting loads such as laundry or car charging to daylight hours raise the share you use yourself.

What simple payback leaves out

The formula assumes today's electricity price forever, panels that never lose output, no loan interest and no repairs. Each of those cuts the other way: rising utility rates shorten the real payback, while slow panel aging, an inverter replacement and interest on a loan lengthen it. A loan with a dealer fee also raises the price itself. For a cash purchase in a state with high rates, the simple figure is a fair first test; for a financed system, ask the lender for the total of all payments and use that as the price.

The missing 30%

The IRS residential clean energy credit returned 30% of the cost, but not for property placed in service after December 31, 2025. Had it still applied, the California example would repay in 2.9 years instead of 4.1. State and utility incentives exist in some places; include one in the calculator by lowering the price, and only once the program has confirmed it in writing.

Is it worth it for you?

Put the payback next to two numbers you know: how long you expect to own the house, and how long the panel and workmanship warranties in your quote last. A payback well inside both is a sound purchase on these assumptions. If it runs close to either, a smaller system sized to your daytime use, from the panel calculator, or a lower price per watt from the state cost table, may change the verdict.