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Subtract federal tax credit (30% ITC), state rebates, and utility incentives from gross installation cost. Include financing costs if applicable.
Net cost = Gross cost − Federal ITC − State/local rebatesMultiply annual kWh production by your blended electricity rate including delivery charges. Escalate rates 2–4% annually for realistic long-term savings.
Year 1 savings = Annual kWh × $/kWh; Year N = Year 1 × (1 + rate escalation)^NPayback is the year cumulative savings exceed net cost. ROI compares total lifetime savings to net investment.
Payback year = when Σ Annual savings ≥ Net cost; ROI = (Lifetime savings − Net cost) / Net cost × 100%Updated: July 2026
After 30% ITC ($5,400), net cost is $12,600. Producing 8,400 kWh/year saves $2,100/year. Simple payback ~6 years; 25-year savings exceed $60,000 at 3% rate escalation.
$28,000 gross, $19,600 net after ITC. Offsetting 14,000 kWh at 18¢/kWh saves $2,520/year. Payback ~7.8 years with 25-year ROI of 220%.
$35,000 gross with two Powerwalls, $24,500 net. Higher cost extends payback to 10–12 years but adds outage protection value not captured in kWh savings alone.
Include state rebates, SRECs, and utility incentives that reduce net cost. Missing a $1,000 state rebate adds a year to calculated payback.
Flat-rate payback calculations underestimate returns. Historical utility rate increases of 2–4% annually shorten effective payback by 1–2 years over a 25-year system life.
Understanding payback period helps evaluate whether solar is a sound investment. This calculator estimates break-even years, return on investment, and lifetime savings from system cost, federal and local incentives, electricity rates, and projected annual production.