How Much Can Solar Save You, and Is It Worth It?

Start with kWh, because that is what solar makes and what your meter counts. A 10 kW system produces about 11,100 kWh a year in Seattle and about 16,900 in Phoenix, with the other six cities in the table below in between. What those kWh are worth depends on your electricity rate. At each state's 2025 average rate (EIA), the same system's output is worth an estimated $45,000 to $170,000 over 25 years. That is gross savings, the value of the electricity before you pay for the system. The system itself costs roughly $30,000 to $36,000 in cash in these states, at typical prices before dealer fees (Lawrence Berkeley National Laboratory), and that cost comes out of the gross figure. Both numbers are estimates built on the assumptions listed under the table, and your own inputs narrow them: your annual kWh usage, your system's annual kWh production, and your utility rate per kWh. Below is the math and the city-by-city evidence, followed by an honest read on when solar pays off and when it does not.

Why offset percentages hide your real savings

Most solar quotes lead with a line like "this system covers 87% of your electricity." That figure is almost always accurate. It is also almost useless for deciding whether to buy.

Offset is a ratio of solar production to home usage. It says nothing about the price of electricity. An 87% offset on a $60 monthly bill is a different story from 87% offset on a $300 monthly bill. The percentage is identical, but the dollar savings differ by a factor of five.

Solrova reports savings in kWh because that is what your utility meter measures. Your bill comes from two numbers: the kWh you bought and the rate you paid per kWh. When solar reduces the kWh you buy, multiply the avoided kWh by your rate and you have your real dollar savings.

The kWh figure is also auditable. Your inverter logs production every minute. If a proposal promises 14,200 kWh per year and your system delivers 14,200 kWh per year, the estimate held. An offset percentage drifts whenever your usage drifts. Buy an electric car and your offset falls even though the system performed perfectly.

The four-step math you can run yourself

You can estimate your own savings using the numbers on your utility bill. Start with annual usage: add up the last 12 months of kWh from your bill or online account. The U.S. average runs about 10,500 kWh per year, while homes with EVs or electric heating often hit 15,000 to 25,000.

Next, estimate annual production. The standard formula is system size in kW multiplied by peak sun hours per day multiplied by 365 multiplied by 0.80. The 0.80 factor accounts for heat, wiring loss, and inverter inefficiency. If an installer promises a higher number, ask to see the production model.

Third, multiply annual kWh produced by your current rate per kWh. The rate appears on your bill as "energy charge" or "rate per kWh." That product is your Year 1 dollar savings.

Fourth, project lifetime savings using an annual rate escalation. Solrova assumes 2.6% per year, the U.S. residential average from 2010 to 2024 in EIA data and the same default the Solar Design Studio uses. With panels losing 0.5% of their output each year, Year 1 savings multiplied by roughly 32.4 gives a reasonable 25-year gross. Then subtract a one-time inverter replacement near year 13.

A 10.5 kW system in Phoenix at 5.8 peak sun hours and Arizona's 2025 average rate of $0.153/kWh produces about 17,800 kWh per year. At that rate the electricity is worth about $2,723 in Year 1 and roughly $86,000 gross over 25 years after the inverter replacement. The system cost comes out of that figure: about $32,900 at Arizona's typical cash price of $3.13 per watt before dealer fees (Lawrence Berkeley National Laboratory, Tracking the Sun).

Rate, not sunshine, sets your real savings

The eight-city table below uses a standard 10 kW system and shows why two homes with identical equipment can land thousands of dollars apart.

Los Angeles and Boston, neither famous for desert sunshine, post the highest 25-year value on the list. The same system makes about 16,400 kWh a year in Los Angeles and 16,900 in Phoenix, so the kWh barely differ, yet the Los Angeles output is worth an estimated $170,600 gross over 25 years against $81,700 in Phoenix. The gap is California's $0.325/kWh average rate against $0.153/kWh in Arizona.

Boston makes the point more sharply. At 4.4 peak sun hours, well below Phoenix or Los Angeles, a Boston system makes about 12,800 kWh a year, and at Massachusetts' $0.305/kWh average those kWh are worth an estimated $124,400 gross over 25 years. Seattle reverses the pattern: about 11,100 kWh a year at a $0.131/kWh average leaves the 25-year gross value near $45,100.

Sun hours determine how much electricity your roof can make. Your rate determines what each kWh is worth. High-rate states with average sunshine almost always pay back faster than low-rate states with abundant sun.

When solar makes sense and when to walk away

Solar is a strong financial decision when four conditions stack up. Your monthly bill clears $150. Your roof has 4.5 or more peak sun hours and minimal shading. You expect to stay in the home seven years or longer. And your roof faces south or west with enough surface area for the size you need.

Several common scenarios make solar a poor fit. A bill under $80 leaves too little spend to recover system cost. A roof due for replacement within five years means paying later to remove and reinstall the panels, a separate job whose price grows with the number of panels, so replace the roof first. A move within three to five years leaves too little time to recover the cost, and any home-value uplift is too uncertain to bank on. Heavy shading can cut output enough to break the math.

What is the payback period for solar panels?

Payback is the point where your accumulated electricity savings equal what you paid for the system. Across the markets in the eight-city table on this page, that runs about 6 to 20 years for a 10 kW system bought with cash in 2026, at each state's typical price before dealer fees and incentives (Lawrence Berkeley National Laboratory, Tracking the Sun). Four inputs set where you land in that range. The first is system cost, the dollars you actually pay after any state incentives. The second is your utility rate per kWh, which the table shows matters more than sunshine: California's $0.325 per kWh average pays a system back far faster than Washington's $0.131 per kWh on identical hardware. The third is your annual kWh usage, because a system sized against a small bill has little spend to recover. The fourth is financing method. Cash pays back fastest because no interest accrues, a loan stretches payback by the cost of borrowing, and lease and PPA structures replace the payback question with a monthly rate you compare against your utility bill.

One 2026-specific note: the Section 25D federal credit expired December 31, 2025, which removed $6,000 to $12,000 of upfront cost reduction on most home-sized systems and lengthened payback for cash and loan buyers by roughly two to five years across the markets on this page. Before you accept any payback claim in a sales proposal, run your own numbers in kWh and dollars, not offset percentages.

How 2026 tax credit changes shifted the math

The federal residential tax credit under Section 25D expired on December 31, 2025. Cash and loan buyers in 2026 receive no federal credit. That removed $6,000 to $12,000 of upfront cost reduction for most home-sized systems and lengthened payback by roughly two to five years across the markets on this page.

Leases and power purchase agreements look different. The commercial Section 48E credit, worth 30 percent, remains available for solar under current law, but a project that begins construction after July 4, 2026 must be placed in service by December 31, 2027. The solar company that owns the system claims it and can pass part of the benefit through as a lower lease or PPA price. That can make a lease or PPA look better than ownership in the early years, though a cash purchase can still cost less over 25 years.

The right choice depends on your cash on hand and how long you plan to stay. No financing structure is universally best. Our Cash vs. Loan vs. Lease vs. PPA guide runs one worked example through all four options and staying with the utility. The kWh math itself does not change: kWh produced multiplied by your rate. Only the upfront cost and payback period shift with the financing path.