Home / Other / Solar Panel Calculator
Solar Panel Savings Calculator
Solar salesman promised you'll "never pay an electric bill again." Let's see if the math actually works once you factor in the real costs, the 30% tax credit, and 25 years of savings.
System Details
Incentives & Rates
25-Year Savings Analysis
💰 Federal Tax Credit Savings
You'll get $0 back on your 2025 taxes (30% ITC). This is a direct tax credit, not a deduction—it reduces your tax bill dollar-for-dollar.
The REAL Cost (And Savings) of Solar
Solar salesmen love showing you the "lifetime savings" chart that looks like a hockey stick shooting to the moon. What they gloss over: Year 1-7, you're in the hole. Only after payback does it become "free electricity." Let's break down what actually happens.
💡 Real Talk from David Martinez, NABCEP Solar Installer
The "$0 down solar" scam: Companies that push loans or leases are not your friends. A loan at 5.99% for 25 years almost DOUBLES the system cost. And leases? You get none of the tax credit, your rates escalate 2.9%/year, and you can't sell your house without the buyer assuming the lease (good luck). If you can't pay cash, save up or get a HELOC at 3-4%. Never, EVER lease solar panels.
How Much Electricity Will It Actually Produce?
The formula: kW × Peak Sun Hours × 365 × 0.80
That 0.80 is the "derate factor"—panels don't operate at 100% efficiency. Why?
- Temperature loss: Panels lose 10-15% efficiency when hot (and they get HOT in summer)
- Dust/dirt: 2-5% loss (more in desert climates)
- Inverter loss: 3-5% (DC to AC conversion isn't perfect)
- Wiring loss: 1-2%
- Shading/angle: 0-10% depending on your roof
Example: 6kW system in Arizona (5.5 peak sun hours)
6 kW × 5.5 hours × 365 days × 0.80 = 9,636 kWh/year
Average U.S. home uses 10,500 kWh/year, so this would cover 92% of your usage.
Understanding the 30% Federal Tax Credit (ITC)
Thanks to the 2022 Inflation Reduction Act, the federal solar Investment Tax Credit is 30% through 2032. Here's how it works:
- $20,000 system = $6,000 tax credit
- It's a CREDIT, not a deduction. $6k comes directly off your tax bill.
- You claim it on IRS Form 5695 when filing taxes the year you install.
- If you don't owe $6k in taxes, it rolls over to next year (but doesn't refund).
What's included in the 30%: Panels, inverters, mounting hardware, labor, permits, even batteries (if charged by solar 100% of the time)
What's NOT included: Tree removal, roof repairs, electrical panel upgrades (unless required for solar)
⚠️ Common Mistake: "My Electric Bill Will Be $0"
Wrong. Most systems are designed to offset 80-100% of usage, not 100%+. Why? Oversizing is wasteful—unless your utility pays well for excess (most don't). You'll still have a bill for: 1) Grid connection fee ($10-30/month), 2) Winter months when production is low, 3) Any excess usage during cloudy weeks. Realistic goal: Reduce bil l by 70-90%, not eliminate it.
Net Metering: The Secret Sauce
Net metering = the utility "buys" your excess solar power during the day, crediting your account. Then you use those credits at night when panels aren't producing.
Good net metering states: CA, MA, NJ, NY (1:1 credit—you get retail price)
Bad/No net metering: HI, NV (pre-2020), AL (capped credits or wholesale rates)
Without net metering, solar is 30-50% less valuable. Check your state's rules BEFORE buying.
Hidden Costs to Budget For
The $20k quote isn't the final number. Add:
- Roof repairs/replacement: If your roof is 10+ years old, replace it BEFORE solar. Removing panels to re-roof later costs $3k-5k.
- Electrical panel upgrade: $1,500-3,000 if your main panel is old/full
- Tree trimming: $500-2,000 if shading is an issue
- Monitoring system: $200-500 (tracks production, alerts you to problems)
- Critter guard: $500-1,000 (keeps squirrels/birds from nesting under panels)
System Lifespan & Degradation
Panels: Warrantied for 25 years, but physically last 30-40 years. They degrade ~0.5%/year. After 25 years, still producing 87% of original capacity.
Inverter: Dies after 10-15 years. Budget $2k-3k for replacement (or $4k-6k for micro-inverters).
Batteries (if you have them): 10-15 year lifespan. Replacement: $8k-12k.
💡 David's #1 Tip: Get 3 Quotes, Ignore the First
The Jehovah's Witness solar sales guy who knocks on your door? His quote is 30-40% inflated. Call 3 local installers (NOT national chains). Quotes should be $2.50-3.50/watt installed. Anything over $4/watt is robbery. And don't sign same-day—high-pressure sales = you're getting ripped off.
Does Solar Make Sense for YOU?
Solar is a GREAT investment if:
- Your electric bill is >$100/month ($1,200/year minimum)
- You get 4+ peak sun hours/day (check PVWatts)
- Your roof faces south/southwest and isn't shaded
- You plan to stay in the house 7+ years
- Your state has good net metering or incentives
- You can pay CASH or use a low-interest loan
Solar is a BAD investment if:
- Your electric rates are dirt cheap (<$0.09 /kWh) unless you have huge usage
- Your roof needs replacement in <5 years
- You're planning to move in 2-3 years
- Lots of tree shade (and you won't cut them down)
- You're considering a LEASE (again, never lease)
Real ROI Analysis Example
Scenario: Texas homeowner, $180/month bill
- System cost: $18,000 (6kW)
- Federal tax credit: -$5,400 (30%)
- Net cost: $12,600
- Annual production: 9,000 kWh
- Annual savings (at $0.14/kWh): $1,260/year
- Payback period: 10 years
- 25-year savings: $12,600 cost vs $45,000 saved = $32,400 net profit
- Plus: Home value increases $13k-18k
That's a 257% ROI over 25 years, or ~5% annualized return (better than bonds, worse than stocks).
Reviewed by David Martinez
NABCEP Certified Solar Installer (12+ years)
David has installed 400+ residential systems. His advice? Never trust a door-knocker salesman. Get quotes from local installers with actual reviews.
Frequently Asked Questions
How much do solar panels actually save?
Average U.S. household saves $1,200-1,800/year depending on electric rates and sun exposure. In California with $0.36/kWh rates? $2,500+/year. In Washington state with cheap hydro power at $0.10/kWh? Maybe $600/year. It's wildly location-dependent. The 30% federal tax credit makes it pencil out in most states.
What's the payback period for solar panels?
Nationally: 6-10 years. Florida/Arizona (sunny + decent rates): 5-7 years. California (expensive electricity): 4-6 years. Massachusetts/Connecticut (great incentives): 5-8 years. After that, it's free electricity for 15-20 more years. Panels are warrantied for 25 years but often last 30+.
Do solar panels work if the grid goes down?
Not unless you have a battery. Standard grid-tied solar shuts off during outages (code requirement—protects utility workers). Want backup power? Add a battery like Tesla Powerwall ($10k-15k installed). Or get a hybrid inverter + basic battery bank ($5k-8k). Pure solar without battery = no power during blackouts.
Will solar panels increase my home value?
Yes. National average: $15k increase in home value for a typical 6kW system. Zillow study found homes with solar sell 4% faster and for 4% more. OWNED panels add value. LEASED panels are a nightmare—buyers often won't assume the lease. Never lease solar. Ever.