Solar Panel Savings Calculator
Estimate the annual electricity production, dollar savings, and simple payback period of a rooftop solar system from its size, your sun-hours, and your electricity rate.
How to use this tool
- Enter the DC size of the proposed solar system in kilowatts.
- Enter your area's average daily peak sun-hours (3–6 for most of the US).
- Enter your current electricity rate in dollars per kWh.
- Adjust the performance ratio if you have a detailed estimate (default 0.80).
- Enter the net installed cost after credits, then read savings and payback.
See what rooftop solar could produce and save each year, and how long it takes to pay for itself. Enter your system size, local sun-hours, and electricity rate to get an annual production, dollar savings, and simple payback estimate.
Formula
Annual production scales with array size, sunlight, and a real-world derate:
Annual kWh = System kW × Sun-hours/day × 365 × Performance ratio
Savings assume each kWh produced offsets a kWh you would otherwise buy at retail:
Annual savings = Annual kWh × Electricity rate
Simple payback (years) = Net installed cost ÷ Annual savings
How it works
A solar array's yearly output is governed by three things: how big the array is (its DC kilowatt rating), how much usable sunlight your roof gets (peak sun-hours), and a performance ratio that captures real-world losses from heat, shading, soiling, wiring, and inverter conversion. Multiplying nameplate kW by sun-hours, by 365 days, and by that derate gives a sound first-order estimate of annual kilowatt-hours.
This calculator converts production into dollars by assuming every kWh you generate offsets a kWh you would otherwise buy at your retail rate — the case under one-to-one net metering. Dividing the net installed cost (after tax credits and rebates) by those annual savings yields a simple payback period in years.
The model is intentionally a screening tool. It ignores rate inflation (which shortens payback), panel degradation of roughly 0.5% per year (which lengthens it), time-of-use export rates, and the time value of money. Treat the result as a ballpark for comparing systems and locations, not a financed-savings projection.
Worked example
6 kW system, 5 sun-hours, $0.15/kWh, $18,000 net cost
- Annual production = 6 kW × 5 h × 365 × 0.80 = 8,760 kWh.
- Annual savings = 8,760 kWh × $0.15 = $1,314.00.
- Simple payback = $18,000 ÷ $1,314.00 = 13.70 years.
Annual production 8,760 kWh | Annual savings $1,314.00 | Simple payback 13.70 years
Estimated annual production (kWh) at 0.80 performance ratio
| System size | 4 sun-hours | 5 sun-hours | 6 sun-hours |
|---|---|---|---|
| 4 kW | 4,672 kWh | 5,840 kWh | 7,008 kWh |
| 6 kW | 7,008 kWh | 8,760 kWh | 10,512 kWh |
| 8 kW | 9,344 kWh | 11,680 kWh | 14,016 kWh |
| 10 kW | 11,680 kWh | 14,600 kWh | 17,520 kWh |
Key terms
- Peak sun-hours
- The number of hours per day during which sunlight averages 1,000 W/m². A location getting 5 peak sun-hours delivers the same daily energy as 5 hours of full-strength sun.
- Performance ratio (derate)
- Actual energy delivered divided by the ideal energy a system would produce with no losses. Real rooftop systems run about 0.75–0.85.
- Net metering
- A billing arrangement that credits exported solar energy against energy you import, often at the full retail rate, effectively letting the grid act as a battery.
- Simple payback period
- The time for cumulative savings to equal the system's net cost, ignoring interest, inflation, and panel degradation.
Frequently asked questions
- How many peak sun-hours does my area get?
- Most of the continental US averages 4–6 peak sun-hours per day over the year, with the Southwest highest and the Pacific Northwest lowest. Your installer or a solar-resource map (e.g. NREL's PVWatts) can give a local figure.
- Why is the payback 'simple'?
- Simple payback divides cost by first-year savings and ignores rate inflation, panel degradation, and financing. Real payback is usually a bit shorter because electricity prices tend to rise faster than panels degrade.
- Does this include the federal tax credit?
- Only if you enter the net cost after the credit. Enter the installed price minus any tax credits and rebates so the payback reflects what you actually pay out of pocket.