Solar Panel Savings Calculator

This calculator estimates your potential savings from a solar panel installation by combining three inputs: your current monthly electricity bill, your state's average electricity rate, and your state's average peak sun hours per day. We use these to derive your annual electricity usage in kWh, then size a system to offset that usage and project savings over 25 years (the typical warrantied lifespan of solar panels).

The model accounts for an annual electricity rate increase (default 3%, in line with the long-run U.S. average) and a panel degradation rate of 0.5% per year. We assume a 14% system loss factor — a standard NREL assumption that captures inverter inefficiency, wiring losses, soiling, and shading.

Savings are calculated as the value of electricity offset by your solar production. The 25-year cumulative savings figure represents the total dollars you would avoid spending on grid electricity over that period, assuming utility rates rise at the rate you specify.

Solar panel savings depend on a handful of variables — but the two that matter most are your local electricity rate and how much sunlight your roof receives. A homeowner in California or Hawaii with high utility rates and abundant sun can offset nearly their entire electric bill, while a homeowner in a cloudy, low-rate state may see more modest savings.

The federal Investment Tax Credit (ITC) of 30%, extended through 2032 by the Inflation Reduction Act, dramatically improves the economics by covering a significant portion of the system cost. Combined with steadily rising utility rates — averaging 3 to 4% per year over the past decade — the lifetime savings from a typical residential solar installation can easily reach $30,000 to $80,000.

This calculator gives you a high-level estimate. To get accurate numbers for your specific home, consider variables your bill cannot capture: roof orientation and pitch, shading from trees and buildings, available roof space, your utility's net metering policy, and any state or local incentives layered on top of the federal credit. The most reliable next step is to request quotes from two or three certified installers in your area and compare their projections against this estimate.