Assumes 3%/yr rate increases, 0.5%/yr panel degradation and no federal tax credit (the 30% §25D credit ended for systems installed after Dec 31, 2025). How we calculate
Data approachEIA rates · NREL sun hours · 2026 federal policy · methodology
A home with a $150 monthly electric bill saves about $1,350 in the first year with a right-sized 6.6 kW solar system, or about $112 a month. The same 8 kW system saves roughly $790 a year in Louisiana and $4,000 in Hawaii in our model. With no federal credit for homeowner-owned systems completed after December 31, 2025, the $19,800 example system pays back in about 15 years. Figures are modeled estimates, not quotes.
How we calculated this (data as of October 2026): $150 × 12 months × 0.75 bill offset ≈ $1,350. System size: $1,800 a year ÷ 18.3¢ ≈ 9,840 kWh ÷ (5.0 sun hours × 365 × 0.82) ≈ 6.6 kW, at $3.00/W ≈ $19,800. Savings grow about 2.5% a year (3% rate escalation minus 0.5% panel degradation), so 25-year net savings are about $26,200 before inverter replacement, financing costs and taxes.
What is data and what is assumption: Electricity rates are EIA averages (18.31¢/kWh nationally and state figures for July 2026, from EIA Electric Power Monthly Table 5.6.A). Sun hours are state averages from NREL-based tables. The $3.00/W price sits inside the $2.50-$3.50/W range reported for 2026 (EnergySage’s marketplace average is about $2.60/W; see EnergySage). The bill offsets (0.55-0.87), the 0.82 performance factor, the 3% rate escalation and the 0.5% degradation are our modeling assumptions. Full details: methodology.
📋 Key Insights
What Determines How Much Solar Saves You Each Year?
Three things: your electricity rate, how your utility credits exported power, and how much your system produces. Year-one savings are the electricity you no longer buy plus the credit you earn for exports.
Your rate matters most. Two identical 8 kW systems save very different amounts in our model: about $2,700 a year in California (33.61¢/kWh, even with reduced export credits) and about $1,110 in Texas (15.88¢, no statewide net metering). In July 2026 EIA reported residential averages from 12.72¢ in Louisiana to 48.00¢ in Hawaii, against 18.31¢ nationally.
Export rules set how much of your bill disappears. In our model, a right-sized system removes about 87% of the bill with full retail net metering, 70% with net billing or reduced export credits, 60% in low-export markets (California’s Net Billing Tariff, Hawaii) and 55% where there is no statewide net metering or credits track wholesale prices. These percentages are assumptions, and fixed customer charges remain in every case. Check your utility’s export rule before you sign; it can shift payback by several years.
Production depends on sun and roof. Each installed kW produces about 1,500 kWh a year at 5.0 peak sun hours and about 1,950 kWh at 6.5 hours (Arizona), using our 0.82 performance factor. Shade and roof direction can trim 10-20%; use NREL PVWatts for your address.
Solar vs utility company · 25-year comparison
25-year totals: 3%/yr rate increases, 0.5%/yr degradation, no federal credit. Methodology
For the same 8 kW system, modeled year-one savings range from about $790 in Louisiana to about $4,000 in Hawaii. The table combines each state’s EIA rate, NREL-based sun hours and an assumed export offset.
Year-1 savings for an 8 kW system by state (model: 8 kW × sun hours × 365 × 0.82 × rate × offset; $24,000 installed at $3.00/W; no federal or state incentives; rates are EIA July 2026 residential averages)
*New Connecticut RRES netting enrollees in 2026 pay a 4.02¢/kWh Solar Energy Adjustment on all solar production, which we subtract from the rate (Eversource). EIA prices are single-month averages and vary by season; Hawaii’s July 2026 price was 22% above July 2025.
Data visualization
Average residential electricity price by state, July 2026 (¢/kWh). Hawaii pays 48.00¢ versus 12.72¢ in Louisiana, against a US average of 18.31¢. Source: EIA Electric Power Monthly, Table 5.6.A.
Chart summary: Bar color shows the price tier: green is under 16¢, lime 16-20¢, amber 20-26¢, orange 26-34¢ and red above 34¢. Prices differ almost fourfold across these states, from Louisiana (12.72¢) to Hawaii (48.00¢). Only Hawaii, California, Massachusetts, New York, New Jersey and Connecticut sit well above the 18.31¢ US average, and those are the states where each kWh a solar system produces is worth the most.
The next chart turns those prices into modeled savings for an 8 kW system.
Data visualization
Modeled year-1 savings for an 8 kW solar system by state ($). Hawaii is about $4,000 and Louisiana about $787 at $3.00/W with no incentives. Model inputs: EIA July 2026 rates and NREL-based sun hours.
Chart summary: The modeled savings ranking follows the price chart more than the sunshine ranking. Hawaii ($4,000) leads, and California, Massachusetts and New York cluster at roughly $2,500-$2,700. Sunny Arizona ($1,680) lands mid-pack because its rate is low and its export credit is reduced, and Louisiana (~$790) is lowest because of low rates and limited export credit. These are model outputs, so treat them as a comparison between states rather than a quote for your home.
State incentives are not included above and shorten several of these paybacks: New York’s 25% credit (up to $5,000), Massachusetts’ SMART payments and New Jersey’s ADI (SREC-II) payments. For costs by system size, see How Much Do Solar Panels Cost in 2026?; for a monthly view, see How Much Do Solar Panels Save Per Month?.
⚡ System Size
How Does System Size Change Yearly Solar Savings?
Savings scale almost linearly with size until you cover your usage: at our national example each extra kW adds about $205 a year, and in a high-rate state like New York about $310. Beyond 100% of your usage, extra panels earn little where exports are credited below retail.
Year-1 savings by system size (model: $3.00/W, no federal credit; US example = 18.3¢, 5.0 sun hours, 0.75 offset, home using 9,840 kWh a year; New York = 29.90¢, 4.0 sun hours, 0.87 offset; savings capped at 100% of usage)
System size
Annual output (US example)
Share of 9,840 kWh used
Installed cost
Year-1 savings, US example
Year-1 savings, New York
4 kW
~5,990 kWh
61%
$12,000
~$820
~$1,250
5 kW
~7,480 kWh
76%
$15,000
~$1,030
~$1,560
6 kW
~8,980 kWh
91%
$18,000
~$1,230
~$1,870
7 kW
~10,480 kWh
107%
$21,000
~$1,350 (capped)
~$2,180
8 kW
~11,970 kWh
122%
$24,000
~$1,350 (capped)
~$2,490
Table takeaway: In the US example, savings stop growing at about 6.6 kW, the size that matches annual use, so a 7 or 8 kW system costs more without saving more. Match the system to your actual consumption. If you plan to add an EV or a heat pump, size for the extra kWh you expect to use; adding panels later usually means a second permit and a second installer visit. The solar system size calculator recommends a size from your location, roof and current bill.
🏛️ Incentives
Which Incentives Still Boost Solar Savings in 2026?
State credits, production payments, utility programs and net metering remain; the 30% federal homeowner credit does not for systems completed after December 31, 2025.
Federal status. Until December 31, 2025, homeowners could claim 30% of system cost (including qualifying batteries) under §25D. The One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025) ended it for expenditures made after that date, and the IRS says an installation completed after December 31, 2025 counts as made after it, even if you paid earlier (IRS FAQ). Systems completed in 2025 are claimed on the 2025 return. Our solar tax credit calculator explains what applies to your install date. This is not tax advice; confirm with a tax professional.
What is still available (confirm current terms with each program):
State income-tax credits: New York (25% up to $5,000), South Carolina (25%, up to $3,500 a year), Arizona (25% up to $1,000), Massachusetts (15% up to $1,000) and Hawaii (35% up to $5,000).
Production payments: Massachusetts SMART 3.0 (about 3¢/kWh for residential systems, per program trackers) and New Jersey’s ADI program under SuSI (SREC-II), which cut the residential rate to $77/MWh for registrations received on or after July 27, 2026 under a May 21, 2026 NJ BPU order.
Connecticut RRES: a netting tariff (retail credit) or buy-all tariff rather than an upfront rebate. New 2026 netting enrollees pay a 4.02¢/kWh Solar Energy Adjustment.
Tax exemptions on sales tax and added property value in many states.
Utility rebates and battery programs in some territories.
Leases and PPAs: third-party owners may still claim the §48E business credit. Projects that began construction by July 4, 2026 have a longer window; projects that did not generally must be placed in service by December 31, 2027. Some owners pass value into your price, but no discount is guaranteed.
Farms and rural businesses: USDA REAP grants, plus business credits and depreciation for business-owned systems.
Batteries no longer get a federal homeowner credit in 2026. They add savings mainly under net billing, low export credits or steep time-of-use rates, or through utility programs that pay for battery use.
Home value. A Lawrence Berkeley National Laboratory study of 22,822 home sales in eight states (2002-2013) found average premiums of about $4 per watt for owned solar (LBNL). That data is dated and market-specific, so treat it as a possible bonus rather than part of annual savings.
📋 Key Insights
How Do You Calculate Your Own Solar Savings Before You Buy?
Multiply your monthly bill by 12 and by your export-rule offset for year-one savings, then divide the installed cost by that number for payback. Four inputs drive the result: your annual kWh, your rate and export rules, your roof’s production, and the installed price.
Add up 12 months of kWh from your bills, not just dollars, because rates change. A home using 12,000 kWh at 20¢ spends $2,400 a year. (EIA says the average US household uses about 10,500 kWh a year.)
Find your export rule. Full retail net metering, net billing or avoided-cost credits change how much of the bill disappears (roughly 87%, 70% or 55% in our model).
Estimate production for your roof. Use NREL PVWatts with your address, tilt and direction. Moderate shading from trees or a chimney can cut output 10-20%.
Price it. Our model uses $3.00/W; competitive marketplace quotes are often lower. An 8 kW system costs about $24,000 at $3.00/W, with no federal credit to subtract.
Example: $2,400 a year × 0.87 (full retail net metering) ≈ $2,090 saved in year one. At $27,000 installed, simple payback ≈ 13 years, and savings continue for the rest of the system’s 25+ year life. The solar payback calculator runs this for your address, bill and local pricing.
Here is how the national example (6.6 kW, $19,800, $1,350 in year-one savings) plays out year by year.
Data visualization
Cumulative cash flow of a $19,800 solar system over 25 years ($). With rates rising 3% a year the system is ahead by about $26,200 in year 25; with flat rates, about $12,000. No federal credit; panel output falls 0.5% a year. Model inputs: EIA 2026 rates and NREL PVWatts-based sun hours.
Chart summary: Simple payback (installed cost ÷ year-one savings) is 14.7 years. If rates rise 3% a year the cumulative line crosses zero in year 13, and if rates stay flat it crosses in year 16. The gap by year 25 is about $14,000, so your utility’s rate trend matters as much as the system price.
Direct answers for US homeowners — sized for a $150/month electric bill.
About $1,350 in year one for a home with a $150 monthly electric bill: $150 × 12 × 0.75, where 0.75 is our blended assumption for the share of the bill a right-sized system removes (0.55 to 0.87 depending on how your utility credits exports). That is roughly $112 a month. In our model, savings then grow about 2.5% a year as rates rise. Your number depends on your rate, export rules and roof, so check it with your own bills and NREL PVWatts.
About 15 years in our national example ($19,800 ÷ $1,350), because the 30% homeowner credit no longer applies to systems completed after December 31, 2025. In our 8 kW state model, high-rate states with full retail net metering (Hawaii, Massachusetts, New York, New Jersey) pay back in roughly 6 to 11 years, mid-rate states in 12 to 15 years, and low-rate states with weak export credits (Indiana, Texas, Louisiana) in 20 years or more. Quotes below $3.00 per watt shorten these figures.
Not for homeowners who buy. The §25D residential clean energy credit does not apply to expenditures made after December 31, 2025, and the IRS treats an installation completed after that date as made after it (Public Law 119-21). Systems completed in 2025 are claimed on the 2025 return. Leases and PPAs can still pass through value from the §48E business credit if the system is placed in service by December 31, 2027, or if construction began by July 4, 2026. This is not tax advice; confirm with a tax professional.
Rates and export rules matter more than sunshine. For an 8 kW system in our model, year-one savings run from about $790 in Louisiana (12.72¢/kWh, limited export credit) to about $4,000 in Hawaii (48.00¢/kWh). Cloudier Massachusetts (4.2 sun hours, 30.49¢, full retail net metering) saves about $2,670 a year, while sunnier Arizona (6.5 sun hours, 15.38¢, reduced export credit) saves about $1,680. Rates are EIA July 2026 averages.
Sometimes. Home batteries typically cost roughly $7,000 to $18,000 installed and get no federal homeowner credit after 2025. They add savings mainly where exports earn little, such as California's Net Billing Tariff (often about 3 to 8¢/kWh versus a retail rate above 30¢) or in net-billing states, and where time-of-use rates or utility programs pay for battery use. In full retail net metering states a battery mostly adds backup power, not savings.
$150/month electric bill by state
System size and payback vary by electricity rate and sun hours — see your state.
18.19¢/kWh — US average residential price. Source: EIA Electric Power Monthly, Table 5.6.B (year-to-date through July 2026), residential average retail price (July 2026) (EIA)
Solar production
4.5 peak sun hours/day × 0.82 system derate. Approximate state-average daily solar resource (peak sun hours) based on NREL solar resource data (NSRDB); not location-specific — use NREL PVWatts for an address-level estimate. (NREL PVWatts)
Installed price
$3.00 per watt before incentives. Blended 2026 US residential installed price used by this site; EnergySage marketplace reported about $2.60/W (mid-2026); full-market medians are higher.
Federal tax credit
$0 for homeowner-owned systems installed in 2026 — the 30% §25D credit ended Dec 31, 2025 (IRS)
Net metering
National blend — solar assumed to offset 75% of the bill (87% in full-retail net-metering states, 55–70% elsewhere).
Estimates only — not tax, legal or financial advice. Get at least three installer quotes and confirm incentives with your utility and a tax professional.