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Solar Panel Calculator

Design your solar system and calculate 25-year savings, payback period, and ROI

25-Year Net Savings

$62,396

Payback

6.8 yr

ROI

383%

System

7.6 kW

°
%
hrs/day
$
$/kWh
kWh
%
100%
25%100% = Full offset150%
System Size

7.6 kW

Panels

19

Year 1 Savings

$2,459

LCOE

$0.062/kWh

Cost Summary

System Cost$23,300
Tax Credit (ITC)-$6,990
Net Cost$16,310

Monthly Production

Jan
867
Feb
1,001
Mar
1,267
Apr
1,467
May
1,628
Jun
1,668
Jul
1,641
Aug
1,548
Sep
1,361
Oct
1,134
Nov
961
Dec
827

Frequently Asked Questions

Q

How many solar panels do I need for my home?

The number of solar panels depends on your monthly electricity usage, local peak sun hours, panel wattage, and roof orientation. A typical US home using 900 kWh/month in a sunny state needs about 16-20 panels (400W each) for a 6-8 kW system to offset 100% of electricity use.

  • Divide annual kWh by (365 × peak sun hours × system efficiency) to get system size in kW
  • Divide system size by individual panel wattage to get panel count
  • Account for roof orientation, shading, and inverter losses
  • Consider 100-110% offset to cover future usage growth
Home SizeMonthly kWhSystem SizePanels (400W)
Small600 kWh4-5 kW10-13
Medium900 kWh6-8 kW15-20
Large1,500 kWh10-12 kW25-30
Very Large2,500 kWh16-20 kW40-50
Q

What is the payback period for solar panels?

The average solar panel payback period in the US is 6-12 years, depending on your state, electricity rate, system cost, and available incentives. States with high electricity rates like California and Hawaii see payback in 5-7 years, while states with lower rates may take 10-15 years.

FactorFaster PaybackSlower Payback
Electricity rate$0.20+/kWhUnder $0.12/kWh
Peak sun hours5.5+ hours/dayUnder 4 hours/day
State incentivesSRECs + rebatesFederal ITC only
Net meteringFull retail creditReduced or no credit
Q

How does the federal solar tax credit (ITC) work?

The federal Investment Tax Credit (ITC) allows you to deduct 30% of the total installed cost of your solar energy system from your federal taxes. This applies to both residential and commercial systems installed through 2032. The credit steps down to 26% in 2033 and 22% in 2034.

  • Covers panels, inverters, battery storage, installation labor, and permits
  • Must be claimed in the tax year the system is placed in service
  • Can be carried forward if your tax liability is less than the credit amount
  • No maximum dollar limit on residential systems
  • Battery storage added to existing systems also qualifies
Q

What is LCOE and why does it matter for solar?

LCOE (Levelized Cost of Energy) is the total lifetime cost of your solar system divided by total lifetime energy production, expressed in $/kWh. It represents your effective cost of solar electricity and allows direct comparison with your utility rate. A lower LCOE than your grid rate means solar saves you money.

For residential solar, typical LCOE ranges from $0.04-$0.08/kWh after incentives, compared to the national average grid rate of $0.16/kWh. This means solar electricity costs 50-75% less than grid electricity over the system lifetime. LCOE accounts for the initial investment, maintenance costs, degradation, and total energy produced over 25 years.

Q

Should I buy or lease solar panels?

Buying solar panels (cash or loan) typically provides the highest long-term savings and ROI because you own the system and receive all incentives including the federal tax credit. Leasing requires no upfront cost but offers lower total savings since the leasing company keeps the tax credits and charges an escalating monthly fee.

FactorCash PurchaseSolar LoanLease/PPA
Upfront costFull price$0 down$0 down
Tax creditYou keep 30%You keep 30%Company keeps
25-yr savingsHighestHighModerate
MaintenanceYour responsibilityYour responsibilityCompany handles
Home valueIncreasesIncreasesNo increase
Q

How much do solar panels degrade over time?

Solar panels typically degrade at 0.3-0.7% per year, meaning they produce slightly less electricity each year. Monocrystalline panels degrade slowest at about 0.4%/year, while thin-film panels degrade faster at 0.7%/year. After 25 years, most panels still produce 82-90% of their original output.

  • Monocrystalline: ~0.4%/year → ~90% output at year 25
  • Polycrystalline: ~0.5%/year → ~88% output at year 25
  • Thin-Film: ~0.7%/year → ~83% output at year 25
  • Most manufacturers guarantee 80-85% production at 25 years
  • Actual degradation may be lower than rated in mild climates
Q

Does roof orientation affect solar panel production?

Yes, roof orientation significantly affects solar production. South-facing roofs are optimal in the Northern Hemisphere, producing 100% of potential output. East and west-facing roofs produce about 85% as much, while north-facing roofs may only produce 50%. Flat roofs work well at about 90% efficiency with tilted mounting.

OrientationProduction %Recommendation
South100%Ideal — maximum production
South-East/West95%Excellent — minimal loss
East or West85%Good — worth installing
Flat90%Good — use tilted mounts
North-East/West65%Marginal — consider alternatives
North50%Not recommended in most cases
Q

Is battery storage worth the investment for solar?

Battery storage adds $8,000-$15,000 to your solar system cost but provides backup power, increases self-consumption of solar energy, and can provide additional savings in areas without full net metering. It is most valuable in areas with time-of-use rates, frequent power outages, or reduced net metering credits.

  • Qualifies for the 30% federal tax credit when paired with solar
  • Tesla Powerwall (13.5 kWh) costs ~$12,000-$15,000 installed
  • Most cost-effective in states with low net metering rates
  • Provides 8-12 hours of backup power for essential loads
  • Battery replacement typically needed at year 12-15 (at ~70% original cost)

Example Calculations

1Average California Home (Cash Purchase)

Inputs

StateCalifornia
Monthly Usage900 kWh
Electricity Rate$0.27/kWh
Offset100%
Panel TypeMonocrystalline 400W
FinancingCash

Result

25-Year Net Savings$52,847
System Size5.6 kW (14 panels)
Year 1 Production9,406 kWh
Payback Period6.2 years
ROI449%
LCOE$0.049/kWh

System size: 900 × 12 / (5.8 × 365 × 0.96) = 5.3 kW → 14 panels at 400W = 5.6 kW. Total cost: 5,600W × $3.00/W = $16,800. Net cost after 30% ITC: $11,760. First year savings: 9,406 kWh × $0.27 = $2,540. Payback: $11,760 / ~$1,900 avg annual savings ≈ 6.2 years.

2Texas Home with Solar Loan and Battery

Inputs

StateTexas
Monthly Usage1,250 kWh
Electricity Rate$0.13/kWh
Panel TypeMonocrystalline 400W
FinancingSolar Loan (6.5%, 20yr)
BatteryYes (13.5 kWh, $12,000)

Result

25-Year Net Savings$18,312
System Size8.0 kW (20 panels)
Total System Cost$36,000
Net Cost After ITC$25,200
Payback Period14.8 years
Monthly Loan Payment$188

Lower electricity rates in Texas lead to a longer payback period. The battery adds $12,000 but provides backup power during Texas grid emergencies. The 30% ITC applies to both panels ($24,000) and battery ($12,000). Monthly loan payment: $25,200 at 6.5% for 20 years = $188/month.

3Budget System in Ohio (Polycrystalline)

Inputs

StateOhio
Monthly Usage800 kWh
Electricity Rate$0.14/kWh
Panel TypePolycrystalline 350W
FinancingCash

Result

25-Year Net Savings$12,640
System Size5.6 kW (16 panels)
Total System Cost$14,000
Net Cost After ITC$9,800
Payback Period11.4 years
LCOE$0.058/kWh

Ohio has lower sun hours (3.9) and moderate rates, resulting in longer payback. Budget polycrystalline panels at $2.50/W reduce initial cost. System still provides positive ROI over 25 years with 129% return on investment.

Formulas Used

System Size Formula

System (kW) = (Monthly kWh × 12 × Offset%) / (Peak Sun Hours × 365 × Efficiency)

Calculates the required solar system size based on energy needs and location.

Where:

Monthly kWh= Average monthly electricity consumption
Offset%= Desired percentage of electricity to offset (e.g., 100%)
Peak Sun Hours= Average daily peak sun hours at your location
Efficiency= Combined system efficiency (orientation × tilt × shading × inverter)

Payback Period

Payback (years) = Net System Cost / Average Annual Savings

Estimates how long until cumulative savings equal the initial investment.

Where:

Net System Cost= Total cost minus federal tax credit, state incentives, and utility rebates
Average Annual Savings= Electricity savings plus net metering credits, accounting for rate escalation

Levelized Cost of Energy (LCOE)

LCOE = Total Lifetime Cost / Total Lifetime Production (kWh)

The effective per-kWh cost of solar electricity over the system lifetime.

Where:

Total Lifetime Cost= Net system cost + 25 years of maintenance + battery replacement
Total Lifetime Production= Sum of annual production with degradation over 25 years

CO₂ Offset

CO₂ (lbs) = Σ [Annual Production × (1 - Degradation)^year × CO₂ Factor]

Total carbon dioxide emissions avoided by displacing grid electricity with solar.

Where:

Annual Production= First year electricity generation in kWh
Degradation= Annual panel output decline rate (e.g., 0.4%/year)
CO₂ Factor= Grid emission factor in lbs CO₂ per kWh (varies by state)

Understanding Solar Panel Economics

Solar panel installation has become one of the most compelling home investments in recent years. With the federal Investment Tax Credit covering 30% of system costs through 2032, falling panel prices, and rising electricity rates, the economics of going solar are stronger than ever. Our solar panel calculator helps you model the complete financial picture including system sizing, cost breakdown, incentives, and a 25-year savings projection.

The key to maximizing solar ROI is understanding how your location, roof characteristics, and electricity usage interact. Southern states with high peak sun hours (5-6.5 hours/day) and high electricity rates produce the best returns, but even northern states with 3.5-4 hours of peak sun can achieve positive payback within 10-12 years. The calculator accounts for seasonal variation, panel degradation, electricity rate escalation, and your chosen financing method.

The calculator compares cash purchase, solar loan, and lease financing options side by side so you can see which path delivers the best long-term savings. It also models battery storage economics to help you decide if adding a home battery makes financial sense. The detailed 25-year projection table and interactive charts show your solar investment from day one through full system payback and beyond.

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Last Updated: Feb 12, 2026

This calculator is provided for informational and educational purposes only. Results are estimates and should not be considered professional financial, medical, legal, or other advice. Always consult a qualified professional before making important decisions. UseCalcPro is not responsible for any actions taken based on calculator results.

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