US residential solar · 2026 data

Worst States for Solar Payback in 2026: Where the Numbers Don't Add Up

26.3 yrs Slowest state payback (8 kW)
12.36 ¢/kWh Lowest state rate (July 2026 YTD)
0% Federal homeowner credit, 2026 installs

Typical result:

  • Tennessee: **26.3-year** simple payback, slowest in the model (8 kW)
  • Rate gap drives payback: Massachusetts pays **2.3×** Louisiana's rate
  • 30% homeowner tax credit **ended Dec 31, 2025**
  • Run your own rate and quote before ruling solar out
✓ EIA rates & NREL sun data ✓ 2026 federal policy applied ✓ Open methodology
· 9 min read ·By
Calculate My Savings View State Incentives

Numbers on this page are built from public data

EIA electricity rates NREL PVWatts DSIRE incentives IRS Our methodology
Author Green Energy Calculators Editorial Team
Editorial policy No paid placements
Last updated
Data approach EIA rates · NREL sun hours · 2026 federal policy · methodology

Solar pays back slowest where electricity is cheap and exports earn little, because every kilowatt-hour your panels produce is only worth what you would otherwise pay your utility. In this site’s model, an 8 kW system with no federal credit takes about 26.3 years to pay back in Tennessee, the slowest state, versus about 6.0 years in Hawaii. The U.S. average residential rate is 18.19¢/kWh (EIA, year-to-date through July 2026), and North Dakota has the lowest state rate at 12.36¢. Since the 30% federal homeowner tax credit ended on December 31, 2025, payback is slower everywhere, and most of all in low-rate states.

Solar is a financial product as much as an energy product, and results are highly location-dependent. This guide uses published electricity rates and policy facts, then shows modeled simple payback by state from one consistent scenario: an 8 kW system at $3.00 per watt ($24,000), each state’s own rate, sun hours and bill offset, and no federal credit. Payback depends on your quote, your roof, and your utility’s rules, so treat these as comparisons between states, not quotes.

What Changed in 2026: The 30% Homeowner Tax Credit Ended

The biggest change for U.S. homeowners is federal. The One Big Beautiful Bill Act, signed July 4, 2025, ended the Section 25D Residential Clean Energy Credit for property placed in service after December 31, 2025. Earlier guidance, including earlier versions of this article, described the 30% credit as available through 2032. That is no longer correct.

With no credit, the whole system cost has to be earned back from bill savings. The 8 kW model system costs about $24,000, and simple payback is that cost divided by first-year savings. Cheap-electricity states feel this most, because their annual savings were already small.

Leases and power purchase agreements (PPAs) may still benefit from a commercial credit under tighter timing rules. Terms differ by provider, so confirm with your installer and a tax professional before assuming any federal incentive applies. You can estimate your own numbers with our solar tax credit calculator.

Why Do Some States Have Poor Solar ROI?

Sunlight matters, but it isn’t the only variable. Simple payback is:

Payback (years) = net system cost ÷ annual savings

Annual savings equal the kWh your system produces, multiplied by what each kWh is worth to you. That value is your retail rate for power you use directly, and your utility’s export credit for power sent to the grid. Three things push the value down:

  • Low retail electricity rates. A solar kWh can’t save more than the power it replaces.
  • Weak export compensation. Some states or utilities credit exports at wholesale or avoided-cost rates rather than the retail rate.
  • Higher net cost. With the homeowner credit gone, state and local incentives are now a larger share of the difference between markets.

Louisiana gets more annual sunshine than Massachusetts (5.4 versus 4.2 peak sun hours in our data), yet Massachusetts’ much higher electricity rate (30.14¢ versus 13.35¢) gives each kWh far more value. Use a solar ROI calculator with your own rate, production estimate, and quote for a realistic answer.

Which States Have the Lowest Electricity Rates?

Electricity price is the clearest public indicator of how much a solar kWh can be worth. The chart shows the eight lowest-rate states in this site’s data, ranked by EIA average residential price (year-to-date through July 2026), alongside the U.S. average and three high-rate states.

Average residential electricity price by state, EIA year-to-date through July 2026 (cents per kWh). North Dakota pays 12.36¢ versus 30.14¢ in Massachusetts. Orange bars are below the 18.19¢ U.S. average, blue bars are above, and the amber bar is the U.S. average. Source: U.S. EIA, Electric Power Monthly, Table 5.6.B.

Chart summary: Eight of the twelve bars are below the 18.19¢ U.S. average. North Dakota is lowest at 12.36¢/kWh, followed by Nebraska (12.90¢), Idaho (12.96¢), Utah (13.16¢), and Louisiana (13.35¢). At the other end, Massachusetts (30.14¢) pays about 2.3× Louisiana’s rate, California pays 33.25¢, and Hawaii 46.28¢, about 3.5× Louisiana’s rate. The takeaway: the same panels produce much less bill savings in the low-rate states on the left of this chart.

StateResidential rate (EIA, YTD through July 2026)
North Dakota12.36¢/kWh
Nebraska12.90¢/kWh
Idaho12.96¢/kWh
Utah13.16¢/kWh
Louisiana13.35¢/kWh
Nevada13.53¢/kWh
Oklahoma13.58¢/kWh
Arkansas13.61¢/kWh
U.S. average18.19¢/kWh
Massachusetts30.14¢/kWh
California33.25¢/kWh
Hawaii46.28¢/kWh

Monthly figures shift with the season, and rankings change depending on the period used, so treat this as a snapshot rather than a permanent ranking. A low state average also doesn’t make solar a bad choice for every household; your utility’s rate plan and your usage can differ a lot from the state figure. Note too that the cheapest-rate state is not automatically the slowest payback: North Dakota has the lowest rate but credits exports at retail, so its modeled payback (20.7 years) is faster than Louisiana’s (25.3 years). To see how your state compares, our guide to Solar Panel Payback Period by State has the full data.

How Do Low Electricity Rates Hurt Solar Payback?

The rate effect is easy to see with one consistent example. Take an 8 kW system at this site’s $3.00/W model price ($24,000, no federal credit) and compute savings with each state’s own rate, peak sun hours and bill offset. The ranking metric is simple payback (net cost ÷ year-1 savings), and the five slowest states in the model are listed first.

StateResidential ratePeak sun hoursYear-1 savings (8 kW)Simple payback
Tennessee13.87¢5.0$91326.3 years
South Dakota14.50¢4.8$91726.2 years
Louisiana13.35¢5.4$94925.3 years
Mississippi15.19¢5.2$1,04023.1 years
Georgia15.40¢5.2$1,05522.7 years
U.S. average18.19¢4.5$1,47016.3 years
Massachusetts30.14¢4.2$2,6379.1 years
California33.25¢5.8$2,7718.7 years
Hawaii46.28¢6.0$3,9896.0 years
Modeled simple payback for an 8 kW system by state (years). The same $24,000 system takes 26.3 years in Tennessee and 25.3 years in Louisiana, versus 9.1 years in Massachusetts and 6.0 in Hawaii. Formula: net cost ÷ year-1 savings from the site model, no federal credit.

Chart summary: Modeled simple payback is 26.3 years in Tennessee, 26.2 in South Dakota, and 25.3 in Louisiana, against 16.3 years at the national average and 9.1 years in Massachusetts. Hawaii is shortest at 6.0 years. These figures use the site model’s bill offset and export assumptions for each state, and they leave out financing, maintenance, and future rate changes.

The identical 8 kW system saves about $1,700 more in year one in Massachusetts than in Louisiana, roughly $42,200 over 25 years before any discounting or rate changes. These simple figures ignore financing costs, panel degradation, maintenance, fixed utility charges, and future rate changes, all of which move the real result.

Rate trajectory matters too. If rates rise, solar gets more valuable; if they stay flat, the economics stay weak. Betting on rate increases is speculation, so stress-test any quote against flat rates for the full 25-year life, using our solar payback calculator.

How Do Net Metering Rollbacks Change Solar Savings?

Under full retail net metering, power you export is credited at the full rate you pay. Under net billing or avoided-cost compensation, exports earn only a fraction of that. The rules are set state by state, and sometimes utility by utility, so always confirm the current terms before signing.

Here is a hypothetical example using an 8 kW system in Indiana, which produces about 10,775 kWh a year in the model. Assume it exports 30% of that and the state rate is 17.04¢/kWh. Under retail crediting those exports would be worth about $551. At an assumed 4¢ export credit, they’d be worth about $129. That is a gap of roughly $422 a year, or about $10,500 over 25 years, before any rate changes.

Indiana is a documented real-world case. Its 2017 law, Senate Enrolled Act 309, allowed utilities to stop offering net metering to new customers after July 1, 2022, replacing it with an excess distributed generation credit set at the utility’s wholesale price plus 25%. Systems installed before the cutoff are grandfathered at retail crediting until July 1, 2032, or until July 1, 2047 for systems installed before 2018, according to Solar United Neighbors.

The lesson applies everywhere: the policy behind your original financial case can change. Before signing, ask how exports are credited today, whether your system would be grandfathered if rules change, and what the utility’s regulatory process looks like.

When Does Solar Still Make Sense in Low-Rate States?

Even where average payback is slow, individual homes can beat the average. Four situations are worth modeling:

  • Time-of-use (TOU) rates. If your plan charges much more at peak hours, solar and storage can shift your usage toward higher-value times. Model it with our time-of-use savings calculator.
  • High electricity use. A home that uses far more electricity than the median spreads system cost over more kWh. Check your own annual kWh on your bills.
  • Batteries when exports pay little. Storing midday power for evening use can beat a low export credit, but batteries add substantial cost, and the homeowner tax credit that once offset it ended with 25D.
  • Your actual tariff. Your bill’s per-kWh price can differ from the state average, and fixed monthly charges aren’t reduced by solar. Use the per-kWh rate on your own bill.

If the numbers still look marginal, compare quotes, consider whether you’ll stay in the home long enough to break even, and don’t rely on rate increases to rescue the numbers.

Sources and Methodology

  • U.S. Energy Information Administration, Electric Power Monthly, Table 5.6.B, state-level average residential electricity prices, year-to-date through July 2026 (the figures behind this site’s state data).
  • One Big Beautiful Bill Act (Public Law 119-21), signed July 4, 2025, which ended the Section 25D Residential Clean Energy Credit for property placed in service after December 31, 2025. See also IRS Form 5695 instructions.
  • Solar United Neighbors, “Net metering in Indiana,” and Indiana Senate Enrolled Act 309 (2017).
  • National Renewable Energy Laboratory, PVWatts Calculator, for production estimates by location.
  • State payback figures: this site’s model (8 kW, $3.00/W, 82% system efficiency, state sun hours and bill offset, no federal credit); see the methodology.

Dollar examples and payback figures in this article are our own arithmetic from the stated assumptions. They are illustrations, not quotes, forecasts, or tax or financial advice. Last reviewed October 6, 2026.

Related calculators

Free tools for US homeowners — instant results, all 50 states.

Solar Savings Calculator
Annual and 25-year electricity savings
Solar Payback Calculator
Years until panels pay for themselves
Solar ROI Calculator
25-year return on investment
Solar Tax Credit Calculator
2026 federal credit status & what still applies
Net Metering Calculator
Credits for power sold back
Battery Savings Calculator
Backup and self-consumption ROI

Frequently asked questions

Direct answers for US homeowners.

No official ranking exists, because payback depends on your electric rate, export compensation, system price, and incentives. In this site's model (8 kW, $3.00/W, no federal credit), Tennessee is slowest at about 26.3 years of simple payback, followed by South Dakota (26.2), Louisiana (25.3), Mississippi (23.1) and Georgia (22.7). By rate alone, North Dakota is lowest at 12.36¢/kWh versus 18.19¢ nationally. Check your own bill and quote.

Related guides

Guide

Best States for Solar ROI in 2026: What Actually Drives Payback

Solar ROI in 2026 depends mostly on your electricity rate, net metering and state …

Guide

Solar Panel Payback Period by State (2026, All 50 States)

Solar payback by state, 2026: about 7 years in Hawaii, 9 in California and Massachusetts, …

Guide

Are Solar Panels Worth It in 2026? (Honest US Guide)

Are solar panels worth it in 2026? With no federal credit, simple payback is about 17 …

Guide

Net Metering by State 2026: Rules, Credits & Changes

See how net metering works in 2026, which states changed export credits, and what to check …

Popular state solar guides

Electricity rates and incentives vary — see data for your state.

CA California 33.25¢/kWh · 5.8h sun TX Texas 16.06¢/kWh · 5.6h sun FL Florida 15.3¢/kWh · 5.7h sun AZ Arizona 15.44¢/kWh · 6.5h sun NC North Carolina 14.94¢/kWh · 5.2h sun NY New York 29.38¢/kWh · 4.3h sun MA Massachusetts 30.14¢/kWh · 4.2h sun CO Colorado 16.72¢/kWh · 5.5h sun
View all 50 states →

How these numbers were calculated

Electricity rate
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).
Model
Version 2026.10 · 3%/yr electricity price escalation · 0.5%/yr panel degradation · simple payback = installed cost ÷ year-1 savings
Policy checked
· Full methodology · Report an error

Estimates only — not tax, legal or financial advice. Get at least three installer quotes and confirm incentives with your utility and a tax professional.

Calculate my savings →