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Calculate solar panel system size, payback period, and 25-year savings. Includes federal tax credit and state incentives.
US average: $0.16/kWh
US avg: $2.50-$3.50/W installed
Going solar is one of the highest-ROI home improvements available today. With federal tax credits, falling panel prices, and rising utility rates, most homeowners recoup their investment in 6-10 years and enjoy 15-20 additional years of near-free electricity. Our solar panel calculator helps you understand the true economics of solar for your specific situation.
Start with your average monthly electric bill and your rate per kWh (found on your utility bill). Dividing the bill by the rate gives your monthly kWh consumption. The average US household uses about 900 kWh per month, but this varies widely by region, home size, and heating/cooling system. Southern states with electric heating may use 1,500+ kWh per month.
Peak sun hours (PSH) represent the equivalent hours of full-intensity sunlight your location receives daily. Phoenix averages 6.5 PSH while Seattle averages 3.5 PSH. This is the single biggest factor in solar production. A 7 kW system in Arizona produces roughly twice the energy of the same system in the Pacific Northwest.
To size your system, divide your daily kWh usage by peak sun hours and account for system losses (about 15% for inverter efficiency, wiring, temperature, and soiling). Modern residential panels produce 370-430 watts each. A 7 kW system requires approximately 17-19 panels and about 340-380 square feet of unshaded roof space.
The 30% federal Investment Tax Credit (ITC) is the largest incentive, available through 2032. Many states offer additional credits, rebates, or SRECs (Solar Renewable Energy Certificates). Some utilities offer net metering, crediting you retail rate for excess production sent to the grid. Combined, incentives can reduce total cost by 40-60%.
Cash purchases provide the highest lifetime savings and shortest payback. Solar loans (typically 10-25 year terms at 4-8% APR) let you go solar with no money down, often with monthly loan payments lower than your previous electric bill. Solar leases and PPAs (Power Purchase Agreements) require no upfront cost but provide lower lifetime savings. Avoid any agreement that places a lien on your home.
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The average US home uses 900 kWh/month and needs a 6-7 kW system (15-18 panels at 400W each). Your actual needs depend on your electric bill, location (peak sun hours), roof orientation, and shading. Our calculator sizes the system to offset your full electric bill.
The average installed cost in 2025 is $2.50-$3.50 per watt before incentives. A typical 7 kW system costs $17,500-$24,500 gross. After the 30% federal tax credit, the net cost drops to $12,250-$17,150. State incentives can reduce costs further.
The Federal Investment Tax Credit (ITC) covers 30% of your total solar installation cost, including panels, inverters, batteries, and labor. This is a dollar-for-dollar reduction of your federal income tax. The 30% rate is available through 2032, then steps down to 26% in 2033 and 22% in 2034.
The typical payback period is 6-10 years depending on your electric rate, sun exposure, and incentives. In states with high electricity costs (CA, CT, MA) and good incentives, payback can be as fast as 4-6 years. After payback, solar panels generate essentially free electricity for another 15-20 years.
Modern solar panels have a 25-30 year warranty and can produce electricity for 30-40 years. They degrade at approximately 0.5% per year, meaning a panel producing 400W at installation will still produce about 350W after 25 years. Inverters typically last 12-15 years and may need replacement once.
Yes, solar panels produce electricity on cloudy days, though at reduced output (10-25% of peak capacity). They do not produce electricity at night. Net metering programs allow you to send excess daytime production to the grid in exchange for credits to use at night or on cloudy days.
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