Solar Panel Savings Calculator

Annual production is estimated as system size (kW) × peak sun hours per day × 365 × a derate factor. Peak sun hours are the number of hours per day the sun delivers 1,000 watts per square meter — they range from roughly 3.5 in the cloudy Northwest to over 6 in the desert Southwest. The derate factor (default 0.8) accounts for real-world losses that nameplate ratings ignore: inverter conversion, wiring resistance, panel soiling, heat, and gradual degradation. NREL's PVWatts model uses a similar system-loss adjustment.

Annual savings equal estimated production multiplied by your retail electricity rate. This is a simplification: it assumes every kilowatt-hour you generate offsets a kilowatt-hour you would otherwise buy at the retail rate, which holds under full net metering but not under time-of-use rates, net-billing, or when production exceeds your usage. Any credit percentage you enter is subtracted from the system price, and simple payback is net cost divided by annual savings. The default is 0% because the US federal residential clean-energy credit is not available for property placed in service after December 31, 2025; verify current federal, state, and local incentives before changing it.

The chart tracks your cumulative savings against the net system cost year by year; the point where the line crosses zero is your break-even, or payback, year. The model holds the electricity rate flat, so it is deliberately conservative — real utility rates have historically risen over time, which would shorten payback. It also excludes financing interest, maintenance, inverter replacement, and any state or utility incentives, all of which vary too much to estimate generically.