Solar Panel Payback Period
System cost / annual savings = years to break even on a residential solar install.
Result
Payback period
8.3 years
Year-1 savings: $1,944.
- System cost$18,000
- Year 1 savings$1,944
- Cumulative savings (10y, 3% infl.)$22,286
- Payback (with infl.)8.3 years
- 25-year savings$70,877
Step-by-step
- Year 1 savings = $180/mo × 12 × 90% = $1,944.
- Each year savings grow by 3.0% (rate inflation).
- Payback ≈ 8.3 years.
How to use this calculator
- Enter post-incentive system cost.
- Enter monthly electric bill.
- Pick offset % (typical 80-100% of usage).
- Default 3% inflation reasonable for US.
About this calculator
Residential solar pays back in 7-12 years in most US markets at typical electricity rates and after federal/state incentives. Including rate inflation (electricity prices typically rise 3% / year), payback is faster than a flat-rate calculation suggests. Panels last 25-30 years, so solar is generally a 15-20-year cash-positive investment.
Frequently asked
30% federal ITC + state-specific (varies). $30k gross → $21k after federal alone. Use the post-incentive figure.
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