Solar Payback & ROI Calculator

For a cash purchase without the federal credit (which ended for installations completed after December 31, 2025), 9 to 13 years is the typical range in most US states at 2026 install prices. High-rate states like California, Massachusetts, and Hawaii often see 5 to 8 year payback.

Low-rate, low-sun states like Washington can stretch past 16 years. Anything that pays back inside the 25-year warranty life still earns a positive return on the remaining years, and the IRR figure above tells you how that return compares to other investments.

Cash gives the shortest payback and highest total return: you avoid paying interest. A loan adds 1 to 3 years to payback depending on APR, but keeps your cash free for other investments.

If your loan rate is below your alternative-investment return (an index fund at 7 to 10 percent), the loan can come out ahead on a pure-return basis. Leases transfer ownership, and any remaining federal credit value, to the leasing company. Total savings over 25 years are typically 40 to 60 percent lower than owning.

Not for homeowner-owned systems. The 30% Residential Clean Energy Credit (Section 25D), which also covered home batteries, was terminated by the One Big Beautiful Bill Act for installations completed after December 31, 2025, with no step-down schedule.

Third-party-owned systems (leases and PPAs) can still carry the commercial 48E credit through 2027, claimed by the leasing company rather than the homeowner. The tax credit field in this calculator defaults to 0%; use it for state-level credits if your state offers one, and put utility or state rebates in the rebate field.

IRR (internal rate of return) is the annualized return your solar investment generates over its life, comparable to the yield on a stock portfolio or bond. Mid-rate states typically land between 7 and 12 percent; a sunny, high-rate state can clear 15 percent.

IRR is more useful than simple payback because it accounts for the timing of cash flows. A system that pays back in year 10 but produces strong savings for 15 more years has a much higher IRR than that 10-year payback number suggests.

LCOE (levelized cost of energy) divides total all-in cost (net of incentives, plus 25-yr O&M) by every kWh the system will produce. The result is your effective cost per kWh from solar.

If your LCOE is 9¢/kWh and your utility charges 18¢/kWh, you save 9¢ on every kWh of self-consumption. Without the federal credit, most residential systems land between 8¢ and 13¢/kWh, still below grid rates in most of the US.

Production math is solid: panel degradation is well-characterized (0.4 to 0.6 percent per year for monocrystalline) and 25-year warranties guarantee at least 85% output at year 25.

The biggest uncertainty is rate escalation. Projecting 3 percent per year is the historical average, but actual rates can spike (post-2022 inflation pushed some utilities to 6 to 8 percent per year) or stall in regulated markets. A conservative approach: run the calculator at 2 percent as a floor and your local average as a likely case.