How solar payback is actually calculated
Two installers can quote the same roof and give payback figures a decade apart without either of them lying. The arithmetic is not where they differ. The assumptions are.
The formula
Payback is the year in which everything the panels have saved you adds up to more than they cost. That is the whole idea:
Payback = the year when cumulative savings first exceed net cost
Net cost is the install price minus any credit or rebate. Savings in a given year are the electricity the system produced that you would otherwise have bought, valued at what you would have paid for it, minus what it cost you to keep the system running that year.
Which expands to four things you have to estimate:
- Production - how many kWh the array makes each year
- Price - what a kWh from the utility costs, now and later
- Cost - the install price, less credits
- Upkeep - what the system costs to run
Every disagreement between two estimates lives in one of those four. It is worth going through them in order, because they are not equally uncertain and they are not equally often wrong.
1. Production
This is the most solid of the four, and the one people worry about most. The National Renewable Energy Laboratory publishes PVWatts, a model that takes a location, a tilt, an orientation and a system size and returns expected output using decades of typical weather data for that spot. Solar Straight queries PVWatts v8 for a 1 kW array and scales the result, with defaults of 20 degrees tilt and due south.
PVWatts is genuinely good, and it is the same model most serious estimates use. Its limit is that it knows the weather and not your roof. It cannot see the tree that shades you until mid-afternoon, the chimney, or the neighbour's extension. Shading is the single most common reason a real installation underperforms its estimate, and no online calculator can account for it. That one needs somebody on your roof.
2. Price, and the assumption that decides everything
Your saving is not the electricity you generate. It is the electricity you generate and would otherwise have bought, priced at your own utility's rate. Two things follow from that, and both are commonly got wrong.
The first is that surplus you export is worth much less than the power you use, and increasingly worth nothing much at all. Full-retail net metering, where the utility credits exports at the same price it charges, is being withdrawn across the US. California moved to a far lower export rate under NEM 3.0. Solar Straight values exports at zero, which is deliberately pessimistic: it makes the estimate a floor. If your utility still pays well for exports, your real return is better than the figure shown. Assuming a generous export rate is how oversized systems get sold.
The second is the growth rate, and this is the most sensitive number in the entire model. Prices in year twenty matter enormously to a twenty-five year total, so a small difference in the annual rate compounds into a large difference in the answer.
The industry convention has long been about 3.5% a year, justified by the claim that utility rates rise faster than inflation. The EIA's data says otherwise: residential prices went from a little over 12 cents per kWh in 2013 to 16 cents in 2023, which is 2.9% a year, and less than 1% once inflation is accounted for. Electricity has tracked inflation, not outrun it.
Solar Straight used to use 3.5% and now uses 2.9%. That correction was not cosmetic. For a Seattle household the old figure reported payback in 24.2 years and a lifetime gain of $3,307. At the real rate, the same household never pays back and is down $2,568. Same roof, same panels, same arithmetic. One assumption.
3. Cost, and the credit that ended
Install price is best taken from a real quote you hold, in dollars per watt, because it varies more by installer than by state. Solar Straight deliberately publishes no fabricated fifty-state price table: inventing a precise figure for a state with no supporting data is exactly the false precision worth avoiding.
The bigger issue is the credit. The Residential Clean Energy Credit under IRC Section 25D - the familiar 30% - was terminated by the One Big Beautiful Bill Act (P.L. 119-21), signed 4 July 2025, for expenditures made after 31 December 2025. A homeowner buying today gets no federal credit.
This is the largest single reason honest results now look worse than they did. On a $28,000 system the credit was worth about $8,400. A calculator still applying it understates your cost by five figures and shortens payback by roughly three years. Two caveats worth knowing: Section 48E still exists for third-party-owned systems, so a lease or PPA arrangement may still have a credit in it, claimed by the company that owns the panels rather than by you; and credits earned before 2026 carry forward. State, utility and local incentives may also still exist where you live, and are worth checking separately.
4. Upkeep, which most tools price at zero
Panels are not maintenance-free. There is insurance, occasional cleaning, monitoring, and the reserve for replacing the inverter, which typically needs doing once in the panels' life. NREL's Annual Technology Baseline benchmarks residential upkeep at around $30 per kW per year, which is about $300 a year on a 10 kW system, or $7,500 across twenty-five years.
Most calculators charge nothing for any of it. Depending on location that overstates the lifetime result by anywhere from 7% to 40%.
Alongside it, output falls. Panels degrade at about 0.5% a year, the standard manufacturer warranty figure, so a panel in year twenty-five makes roughly 88% of what it made when new.
Two things worth understanding about the answer
The totals are in future dollars. Savings are counted in the money of the year they happen and are not discounted back to today. A dollar saved in year twenty-five is not worth a dollar spent now. Every solar calculator works this way, which at least keeps comparisons fair, but since electricity has merely tracked inflation the real gain in today's money is meaningfully smaller than the headline.
Sometimes the answer is never. If cumulative savings do not overtake the cost within twenty-five years, the honest output is "never" rather than extending the horizon to forty years until the number turns positive. In places with cheap electricity, and now that the federal credit is gone, never is a real and reasonably common answer.
What none of this can tell you
Shading, roof condition and whether it needs replacing under the panels, an unusually complex install, panel upgrades, permits and interconnection fees, battery storage, time-of-use tariffs, financing costs - every figure here assumes a cash purchase - and any effect on the resale value of your home. Those are not small, and none of them is knowable from a form.
What a calculator can do is handle the arithmetic accurately and say plainly where the arithmetic stops, so your attention goes to the parts that are genuinely a judgement.
Solar Straight runs this model for your location, and publishes every assumption above on its methodology page with the date each was last checked. The wider source list is in where these numbers come from.