Calculate how much money you’ll save with solar panels every month and over 25 years. Free solar savings calculator with ITC, net metering, and rate escalation.
The financial case for solar isn't just about how many kilowatt-hours your panels produce — it's about how much money stays in your pocket over the life of the system. Most solar savings calculators oversimplify: they multiply Year 1 production by the current electricity rate and call it a 25-year number. That approach systematically understates the real savings because it ignores the compounding effect of rising utility rates, the progressive erosion from panel degradation, and the impact of your state's net metering policy.
This Solar Savings Calculator models your savings year by year, applying your actual electricity rate, utility rate escalation, net metering credit rate, federal ITC, and state incentives to deliver a complete financial picture: Year 1 savings, monthly average savings, 10-year and 25-year cumulative savings, break-even year, and lifetime net savings after system cost.
Whether you're a homeowner comparing quotes or a solar sales professional building proposals, this tool gives you the accurate, transparent numbers that build customer confidence and close deals.
Year-by-Year Savings Model
Models each year's savings with compounding utility rate escalation and cumulative panel degradation — not a flat multiplier.
Incentive & Net Metering Aware
Applies federal ITC, state tax credits, local rebates, and your specific net metering credit rate to calculate true net savings.
Complete Savings Timeline
Outputs Year 1 savings, monthly average, 10-year and 25-year cumulative totals, break-even year, and lifetime net savings after system cost.
Early Sales Conversations
Run a quick savings estimate while on the phone or during a first meeting. Use monthly savings to frame the proposal as "replacing a bill" rather than "buying equipment" — one of the most powerful closes in solar sales.
Comparing Multiple Quotes
When a homeowner has multiple quotes, re-run this calculator with the system size and cost from each quote to compare true 25-year net savings — not just the headline system price.
Pre-Proposal Financial Modeling
Validate your savings assumptions before generating a formal proposal. Adjust rate escalation and net metering inputs to understand the sensitivity of the financial case to key variables — and present conservative, defensible numbers.
Enter Your Monthly Electricity Bill & Rate
Input your average monthly electricity bill in dollars and your current rate in $/kWh. Check your utility bill for the exact rate, or use the national average of $0.17/kWh as a starting point. Your monthly bill is used to confirm the rate makes sense against your consumption.
Enter System Size & Peak Sun Hours
Input your solar system size in kW DC and your location's average peak sun hours per day. Use NREL data for accuracy: Phoenix averages 6.5, Dallas 5.5, New York 4.0, Seattle 3.5. Together with system efficiency, these inputs determine your annual solar production.
Enter Federal ITC & State Incentives
Enter the federal Investment Tax Credit percentage. Note that the 30% residential ITC expired December 31, 2025 — check current IRS guidance for 2026 and beyond. Add any state tax credits, utility rebates, or other one-time incentives in dollars to calculate your true net system cost.
Set Net Metering Rate & Rate Escalation
Enter your net metering credit rate as a percentage of retail rate (100% = full retail, 25% = California NEM 3.0 avoided cost). Set your utility rate escalation assumption — the national historical average is 2.9%/year. Higher escalation means larger future savings, but use conservative assumptions for proposals.
Review Your Complete Savings Profile
Instantly see Year 1 savings, monthly average savings, 10-year and 25-year cumulative savings, break-even year, and lifetime net savings after system cost. Use the interactive savings chart to show the growing financial advantage of solar over time.
Here's what each output tells you and how to interpret it in a customer conversation or financial model.
Year 1 Savings
e.g. $1,820
Electricity cost avoided in the first year of operation. Calculated from annual production × electricity rate × net metering factor. This is your baseline — savings grow each year as rates escalate.
Monthly Average Savings
e.g. $152/mo
Year 1 savings divided by 12. The most relatable metric for homeowners comparing their new solar payment against the electricity bill it replaces.
10-Year Cumulative Savings
e.g. $20,400
Total electricity cost avoided over 10 years, accounting for rate escalation and panel degradation. Useful for demonstrating savings before and after the typical loan payoff period.
25-Year Cumulative Savings
e.g. $62,500
Total lifetime savings over the standard warranty period. This is the headline number for proposals — it represents money the customer keeps instead of sending to the utility company over 25 years.
Break-Even Year
e.g. Year 7.5
The year cumulative savings exceed the net system cost. After break-even, every dollar of savings is pure financial gain. National average: 6–10 years depending on state and electricity rate.
Lifetime Net Savings
e.g. $42,100
25-year cumulative savings minus net system cost after all incentives. This is the true bottom-line financial return — the total wealth created by going solar versus remaining on utility power.
The calculator uses a year-by-year simulation model rather than a simple multiplier. Each year's savings are individually calculated using compounding rate escalation and cumulative panel degradation before being summed to produce lifetime totals.
Annual Production
Annual kWh = System kW × Peak Sun Hours/Day × 365 × System Efficiency (%)
Year N Savings
Year N kWh = Annual kWh × (1 - Degradation Rate × N)
Year N Rate = Base Rate × (1 + Escalation Rate)^N
Year N Savings = Year N kWh × Year N Rate × Net Metering Rate (%)
Net System Cost & Break-Even
Net Cost = Gross System Cost − (Gross Cost × ITC%) − State Incentives ($)
Break-Even Year = Year where Σ(Year 1..N Savings) ≥ Net System Cost
Lifetime Net Savings = Σ(Year 1..25 Savings) − Net System Cost
Worked example: A 10 kW system in Atlanta, GA. Annual production: 10 × 4.9 × 365 × 0.80 = 14,308 kWh. Base rate: $0.15/kWh. Escalation: 2.9%/yr. Degradation: 0.5%/yr. Net metering: 100%. Year 1 savings: 14,308 × $0.15 × 1.00 = $2,146. Year 10 savings: 14,308 × 0.95 × $0.15 × 1.029^10 = $2,703. 25-year cumulative savings: ≈ $71,400. System cost $35,000, ITC savings (if eligible) reduces net cost — remaining balance determines lifetime net savings.
Calculations sourced from SurgePV’s Solar Savings Calculator — surgepv.com/tools/solar-saving-calculator/
Estimated 25-year cumulative savings before system cost. Assumes 2.9% rate escalation, 0.5%/yr degradation, 100% net metering, 5.0 PSH/day, 80% system efficiency.
| System Size | Annual Production | $0.12/kWh Rate | $0.17/kWh Rate | $0.25/kWh Rate | $0.35/kWh Rate |
|---|---|---|---|---|---|
| 5 kW | 7,300 kWh/yr | $16,200 | $23,000 | $33,700 | $47,200 |
| 8 kW | 11,680 kWh/yr | $26,000 | $36,700 | $53,900 | $75,500 |
| 10 kW | 14,600 kWh/yr | $32,400 | $45,900 | $67,400 | $94,400 |
| 12 kW | 17,520 kWh/yr | $38,900 | $55,000 | $80,800 | $113,200 |
| 15 kW | 21,900 kWh/yr | $48,600 | $68,800 | $101,000 | $141,500 |
| 20 kW | 29,200 kWh/yr | $64,800 | $91,700 | $134,600 | $188,600 |
25-year cumulative savings before system cost. Actual savings vary by location, net metering policy, and incentives applied. Use the calculator above for a site-specific estimate.
Always Use Your Actual Electricity Rate
The electricity rate is the single most powerful lever in solar savings. A difference of $0.05/kWh (e.g., $0.12 vs. $0.17) changes 25-year savings by $5,000–$15,000 on a typical residential system. Pull the exact rate from the customer's bill — do not use state averages when you have the real number available.
Don't Apply 100% Net Metering in NEM 3.0 States
California's NEM 3.0 pays export credits at avoided cost — roughly $0.04–$0.08/kWh, compared to retail rates of $0.25–$0.35/kWh. Using 100% net metering for a California customer will dramatically overstate savings. Always check your state's current net metering policy before setting this input.
Use Conservative Rate Escalation Assumptions
It's tempting to use 4–5% annual escalation to inflate long-term savings projections — but this is bad practice and can lead to post-install customer disappointment. The U.S. historical average is 2.5–3.0%. Use 2.9% as your default and explain to customers that this is a conservative, data-based assumption — it actually builds more trust than inflated projections.
Include ALL Incentives — Not Just the ITC
Many installers only factor in the federal ITC and miss significant additional savings from state tax credits (Maryland: 30% up to $1,000, New York: 25% up to $5,000), utility rebates ($100–$500/kW in many programs), SREC income (up to $300/SREC in Massachusetts), and property tax exemptions. Run a full incentive check for every project using a tool like DSIRE.
The average U.S. homeowner saves $1,200–$1,800 per year on electricity with a properly sized solar system. Over 25 years, that's $30,000–$60,000 in cumulative savings before system cost. Homeowners in high-rate states like California ($0.25–$0.35/kWh), Massachusetts ($0.22/kWh), or Hawaii ($0.35+/kWh) see dramatically higher savings than those in low-rate states like Louisiana ($0.10/kWh). Use this calculator with your actual electricity rate and location for a precise estimate.
Yes — traditional net metering (full retail credit for exported solar) significantly increases savings by allowing excess daytime production to offset evening consumption. In states with 1:1 net metering, solar savings can be 25–40% higher than in states with avoided-cost export programs like California's NEM 3.0. In NEM 3.0 states, pairing solar with battery storage to maximize self-consumption is essential for achieving strong savings.
Solar savings are calculated as: Annual Savings = Annual Solar Production (kWh) × Electricity Rate ($/kWh) × Net Metering Credit Rate (%). For Year N savings, multiply by (1 + Rate Escalation)^N for the rate and by (1 - Degradation Rate × N) for production decline. Subtract net system cost (after ITC and incentives) from cumulative savings to find lifetime net savings and break-even year.
A realistic estimate uses your actual electricity rate, your location's verified peak sun hours (from NREL NSRDB), a system sized for 90–100% offset, and conservative assumptions: 2.9% rate escalation, 0.5%/year panel degradation, and accurate net metering policy for your state. Be cautious of estimates using rate escalation above 4%/year, offset ratios above 110%, or net metering assumptions that don't match your utility's actual policy.
Utility rate escalation multiplies savings over time. At 3%/year escalation, electricity that costs $0.15/kWh today costs $0.27/kWh in 20 years. This means every kWh your solar system produces in Year 20 is worth 80% more than in Year 1. Historically, U.S. residential electricity rates have escalated at an average of about 2.5–3.0% per year since 2000, according to EIA data — making solar an increasingly valuable inflation hedge.
Yes — the vast majority of residential solar systems deliver positive financial returns. The National Renewable Energy Laboratory (NREL) estimates that solar adds $4–$6 in home value for every $1 of annual electricity savings. Most systems break even in 6–10 years and generate $20,000–$60,000 in net lifetime savings after system cost. The cases where solar doesn't make financial sense are typically: very low electricity rates (below $0.10/kWh), heavily shaded roofs, or very short planned time in the home.
A properly sized solar system typically reduces electricity bills by 70–100%. The residual bill covers grid interconnection fees, minimum charges, and any consumption that exceeds solar production (primarily evening and nighttime usage). Homeowners in states with strong 1:1 net metering and near-zero minimum charges can approach a $0 monthly electricity bill. Adding battery storage eliminates most remaining grid consumption.
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