Compound Interest Rate Calculator

Solar payback time measures how long it takes for a rooftop system to recover the upfront investment through avoided electricity bills. When you size a system with realistic installation costs, local electricity rates, and the average sun hours in your region, you can plan financing, incentives, and conservation steps so the system starts delivering net value as soon as possible.

How the math works

The calculator below multiplies your system size (in kilowatts) by the average daily peak sun hours to estimate annual production, then applies a performance ratio to account for inverter losses, tilt, shading, and dust. Annual production is compared to your current usage to determine how much of your bill the solar energy can replace. The resulting annual savings divide into the system cost to deliver a payback timeframe. Unlike generic calculators, this one highlights the actual kWh your panels can cover, the percentage of your energy load that solar displaces, and the remaining grid spend you still carry.

Factors that shape payback

• System cost: Includes panels, inverters, installation labor, and permit fees.
• Electricity rate: Higher rates accelerate payback because each kWh is worth more when offset.
• Average sun hours: Regions with 5 to 6 peak sun hours double the energy per kilowatt compared to northern climates.
• Performance losses: Starts at around 10–15% for typical roof angles, and you can see the impact of extra shading or soiling.

Realistic example

A 6 kW system that costs $18,000 and experiences a 15% performance loss will produce about 9,636 kWh in a year when the site sees 5.5 peak sun hours daily. At an $0.18/kWh tariff, that translates to roughly $1,734 in avoided energy spending and a payback of 10.4 years, while offsetting 89% of a 900 kWh/month usage profile. After that payoff, every kilowatt-hour the solar array generates delivers pure savings and continued return on investment through net metering credits or reduced demand charges.

Optimizing for faster returns

For faster payback, consider energy efficiency upgrades before adding panels, lock in competitive financing with low interest, and explore local incentives. Track your usage patterns so you can size the array to cover the highest-cost portion of your bill, and maintain the modules to keep performance losses below the assumed projection.

Estimate your payback

Enter your project details to see annual production, savings, offset percentage, and payback.