Solar Panel Savings Calculator
Estimate your solar panel savings, payback period, and return on investment based on your electricity bill and local sun hours.
Solar panel savings are estimated by calculating annual electricity generation and comparing it to grid electricity costs. The core formula is:
Annual Savings = Annual Generation (kWh) × Electricity Rate ($/kWh)
Annual Generation depends on system size, location, and panel efficiency:
Annual Generation (kWh) = System Size (kW) × Peak Sun Hours/Day × 365 × System Efficiency
System Efficiency accounts for inverter losses (~96%), temperature derating (~90%), soiling (~97%), and wiring (~98%):
Overall System Efficiency ≈ 0.96 × 0.90 × 0.97 × 0.98 ≈ 0.82 (82%)
Worked Example — 6 kW system in Phoenix, AZ (5.5 peak sun hours/day):
- Gross generation: 6 kW × 5.5 h × 365 = 12,045 kWh/year
- After system efficiency: 12,045 × 0.82 = 9,877 kWh/year
- Electricity rate: $0.13/kWh
- Annual savings = 9,877 × $0.13 = $1,284/year
- System cost: $18,000
- Federal ITC (30%): −$5,400 → Net cost = $12,600
- Simple payback period = $12,600 / $1,284 = 9.8 years
US Peak Sun Hours by Region:
- Phoenix, AZ: 5.5–6.0 h
- Denver, CO: 4.8–5.2 h
- Dallas, TX: 4.5–5.0 h
- New York, NY: 4.0–4.5 h
- Seattle, WA: 3.0–3.5 h
Long-term: Most panels are warrantied for 25 years at 80% output. A 9.8-year payback leaves ~15 years of near-free electricity — generating an estimated $19,000+ in total savings over panel lifetime.