How solar payback is calculated
Payback is the year your cumulative savings catch up with what you paid. Start with the net cost — system size × price per watt, plus any battery, minus credits and rebates. Then add up each year's savings: the kWh the panels make × what each kWh is worth on your bill. That value rises as utility rates climb (3%/yr is EIA's 20-year nominal average) and falls slightly as panels age (about 0.5%/yr).
Worked example (U.S. typical): an 874 kWh/month home needs 7.92 kW to cover its use at 1,340 kWh per kW a year. At $2.57/W that costs $20,354 with no federal credit. Year one: 10,613 kWh × 18.19¢ = $1,908. With rates up 3% a year the system breaks even in about 9.5 years and is $45,418 ahead after 25 years.
The 2026 federal tax credit: what changed
- Buying (cash or loan): 0%. The 30% residential clean energy credit (25D) ended for systems whose installation is completed after December 31, 2025. The date that counts is when installation is finished, not when you signed or paid a deposit.
- Lease or PPA: maybe. The company that owns the panels can still claim the commercial 48E credit (normally 30% for home-size systems) if construction began by July 4, 2026 or the system is placed in service by December 31, 2027. EnergySage found lease quotes about 39% and prepaid PPAs about 57% cheaper than cash in early 2026 — compare the total you will pay over the contract, including the escalator.
- Old schedules showing 26% in 2033 and 22% in 2034 no longer apply; that phase-down was repealed.
Net metering vs. net billing
How your utility pays for the power you send back matters as much as sunshine. Under 1:1 net metering every exported kWh offsets a kWh you buy later, so sizing to 100% of use makes sense. Under net billing exports earn a lower rate and only the solar you use as it's made saves the full price — size to roughly 70% and consider shifting loads to midday.
| State | Retail price | Export credit (2026) |
|---|---|---|
| California | 32.6¢ | net billing, exports earn 4.1¢/kWh |
| Arizona | 15.4¢ | net billing, exports earn 6.857¢/kWh |
| Utah | 13.2¢ | net billing, exports earn 5¢/kWh |
| Georgia | 15.5¢ | net billing, exports earn 3.7¢/kWh |
| Nevada | 13.4¢ | exports earn ~75% of retail |
| North Carolina | 14.9¢ | exports earn ~42% of retail |
| New Jersey | 24.1¢ | 1:1 net metering |
| Massachusetts | 30.2¢ | 1:1 net metering |
Solar payback by state, 2026
Average-home numbers at each state's EIA Jan–Aug 2026 price and EnergySage price per watt, no federal credit, state incentives included. Open a state for the details.
| State | ¢/kWh | kWh per kW | $/W | Payback |
|---|---|---|---|---|
| Alabama | 16.5 | 1,340 | 3.82 | 25+ yr |
| Alaska | 27.3 | 883 | 2.57 | 9.7 yr |
| Arizona | 15.4 | 1,755 | 2.26 | 10.8 yr |
| Arkansas | 13.7 | 1,362 | 2.38 | 15.7 yr |
| California | 32.6 | 1,677 | 2.52 | 8.9 yr |
| Colorado | 16.8 | 1,595 | 2.63 | 9.2 yr |
| Connecticut | 27.5 | 1,271 | 2.68 | 8.4 yr |
| Delaware | 18 | 1,319 | 2.63 | 7.8 yr |
| Washington, D.C. | 24.9 | 1,313 | 3.15 | 8.9 yr |
| Florida | 15.3 | 1,455 | 2.12 | 8.7 yr |
| Georgia | 15.5 | 1,362 | 2.5 | 18.6 yr |
| Hawaii | 46.4 | 1,715 | 3.46 | 3.9 yr |
| Idaho | 13 | 1,560 | 2.99 | 17.1 yr |
| Illinois | 19.2 | 1,265 | 2.94 | 13.3 yr |
| Indiana | 17 | 1,302 | 2.64 | 14.4 yr |
| Iowa | 14.6 | 1,389 | 3.26 | 13.7 yr |
| Kansas | 15.3 | 1,505 | 2.65 | 10.3 yr |
| Kentucky | 14.2 | 1,301 | 2.48 | 11.7 yr |
| Louisiana | 13.3 | 1,410 | 2.31 | 15.4 yr |
| Maine | 30.2 | 1,317 | 2.92 | 7.3 yr |
| Maryland | 21.3 | 1,302 | 2.56 | 8.4 yr |
| Massachusetts | 30.2 | 1,302 | 2.9 | 6.1 yr |
| Michigan | 21.7 | 1,320 | 2.88 | 12.4 yr |
| Minnesota | 16.4 | 1,311 | 3.24 | 13 yr |
| Mississippi | 15.1 | 1,366 | 2.29 | 14.1 yr |
| Missouri | 14.3 | 1,390 | 2.49 | 11.1 yr |
| Montana | 14.1 | 1,485 | 2.53 | 10.7 yr |
| Nebraska | 12.9 | 1,433 | 2.57 | 12.1 yr |
| Nevada | 13.4 | 1,753 | 2.36 | 10.5 yr |
| New Hampshire | 26.9 | 1,259 | 2.88 | 9 yr |
| New Jersey | 24.1 | 1,305 | 2.59 | 6.2 yr |
| New Mexico | 15.3 | 1,780 | 2.51 | 7.7 yr |
| New York | 29.3 | 1,291 | 2.77 | 5.4 yr |
| North Carolina | 14.9 | 1,446 | 2.45 | 15 yr |
| North Dakota | 12.5 | 1,325 | 2.57 | 13.5 yr |
| Ohio | 18.8 | 1,286 | 2.58 | 9.6 yr |
| Oklahoma | 13.8 | 1,494 | 2.59 | 11.1 yr |
| Oregon | 15.5 | 1,165 | 2.42 | 11.8 yr |
| Pennsylvania | 21.1 | 1,308 | 2.59 | 8.6 yr |
| Rhode Island | 29.1 | 1,267 | 2.79 | 3.2 yr |
| South Carolina | 15.9 | 1,444 | 2.57 | 7.9 yr |
| South Dakota | 14.6 | 1,421 | 2.57 | 11 yr |
| Tennessee | 13.8 | 1,312 | 3.49 | 25+ yr |
| Texas | 16 | 1,421 | 2.25 | 12.2 yr |
| Utah | 13.2 | 1,666 | 2.35 | 15.3 yr |
| Vermont | 23.9 | 1,192 | 2.78 | 9 yr |
| Virginia | 17 | 1,433 | 2.55 | 9.6 yr |
| Washington | 14.4 | 1,077 | 2.49 | 13.7 yr |
| West Virginia | 15.6 | 1,256 | 2.9 | 12.9 yr |
| Wisconsin | 19.1 | 1,338 | 3.05 | 14.4 yr |
| Wyoming | 14 | 1,669 | 3.73 | 13.7 yr |
What moves payback the most
- Your quote. Berkeley Lab found installer prices from $2.4 to $6.3/W in 2025. Every $0.25/W on an 8-kW system is $2,000.
- Your rate and how exports are credited. A 30¢ rate with net metering pays back several times faster than a 13¢ rate with 3–4¢ exports.
- Rate growth. Prices rose 5.55%/yr in 2020–2025 versus about 3% over 20 years; test both in the calculator.
- Batteries. At about $1,130/kWh before incentives, a battery mostly pays for itself only where exports earn little and evening rates are high.
Common mistakes
- Using your all-in average rate. EIA averages include fixed monthly charges that solar can't erase. California's $24.15/month Base Services Charge, for example, lowered the per-kWh price solar actually offsets.
- Comparing different price-per-watt numbers. Marketplace quotes ($2.57/W) run below surveyed installed prices ($3.36–$3.60/W), and loan-financed systems averaged $4.50/W.
- Ignoring the inverter. String inverters are often replaced once, around year 12–15; microinverters usually carry 25-year warranties.
- Counting the 30% credit. Quotes or blogs written before 2026 may still include it.
Need the system size first? Use the solar panel calculator. Check your state's price on electricity rates by state, or see what an EV adds with the EV charging cost calculator.