Is installing solar panels worth it?
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Residential solar typically pays back in 7-10 years, generating ~$30K net savings over 25 years — sensitive to your sun, rate, and incentives.
How the math works
payback = (system cost − incentives) ÷ annual electricity savings
Annual savings = system kWh production × your electricity rate, minus net-metering exports/imports if applicable. Production depends on system size + local sun-hours (NREL data: 4.0-6.5 peak hours/day across the US).
The federal credit is gone for 2026 installs. The 30% residential clean energy credit (IRC Section 25D) is not available for systems placed in service after December 31, 2025, per the IRS, after the One Big Beautiful Bill Act ended it early. The incentive slider now starts at 0%; put state, city or utility rebates there.
What that does to the defaults: a $20,000 system covering 80% of a $200 monthly bill, with electricity prices rising 3% a year, paid back in 6.6 years when the credit cut the cost to $14,000. At the full $20,000 it pays back in 9.2 years. Over 25 years the same panels still save about $67,000 of electricity, so the net falls from about $53,000 to $47,000: solar still works on a sunny roof with high rates, it just takes longer to get there.
What kills payback: shaded roof (cuts production 20-40%), low electricity rates ($0.10/kWh vs $0.30), unfavorable net-metering policy, or high financing rates if loan-financed instead of cash-paid.
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Real-world scenarios
- Without the 30% federal credit, a US-average roof pays back in 10.7 years instead of 7.4: four state scenarios at 2026 net costs, and the conditions where solar doesn’t pay back.