Solar savings, explained (without the sales pitch)

This calculator uses a simple bill‑offset model. Instead of asking for sun‑hours, roof pitch, panel efficiency, and other engineering details, it starts from the question most homeowners can answer: “How much electricity do I use and how much do I pay per kWh?”

You provide your monthly usage (kWh) and electricity rate ($/kWh). That tells us your baseline bill for energy charges: Baseline monthly cost = usage × rate. (This ignores fixed fees and taxes; some utilities include a base charge that solar won’t fully eliminate. That’s okay — this tool is meant to be a quick financial lens.)

Then we estimate what portion of that usage solar can cover using Bill offset / coverage. If your offset is 80%, the calculator assumes your solar production replaces 80% of your purchased electricity. Not everyone hits 100% because roofs have limited space, homes have shading, and some people intentionally size a system smaller to reduce upfront cost.

Next comes the most misunderstood part: net metering credit. When your panels generate more than you use at a moment in time, the extra electricity flows back to the grid. Depending on your utility, you may get credited at: (a) the full retail rate (100%), (b) a reduced rate (like 60–90%), or (c) close to wholesale (low credit). This tool treats net metering as a simple multiplier on savings from the offset portion.

Put together, the calculator estimates your effective savings from solar each month like this:

• Baseline monthly bill (energy portion): Bill = usage × rate
• Offset fraction: Offset = offset% ÷ 100
• Net metering factor: NM = netMeter% ÷ 100
• Estimated monthly savings: Savings = Bill × Offset × NM

Example: if you use 900 kWh/month at $0.16/kWh, your energy bill is about $144/month. With 80% offset and 100% net metering, estimated savings are: $144 × 0.80 × 1.00 = $115.20/month.

Now we account for the cost side. You enter system cost (before incentives) and incentives (rebates, credits). Your net cost is: Net cost = max(system cost − incentives, 0). If incentives exceed the cost (rare, but possible in edge cases), we cap the net cost at zero.

After that, the tool projects savings over your chosen time horizon (default 25 years, a typical panel lifetime framing). Electricity rates often rise over time, so we include an annual utility rate increase. Instead of making the model complicated, we compound your annual savings by that percentage each year. In plain English: if electricity becomes more expensive, the dollars you save from solar become larger too.

We also subtract an annual maintenance estimate. Many solar systems have low maintenance, but inverters may need replacement, and some homeowners pay for cleaning or monitoring. Setting maintenance to $0 is an optimistic scenario; $100–$300/year is a common planning range.

Finally, we summarize outcomes:

• Year‑1 savings: 12 × monthly savings − maintenance
• Cumulative savings: sum of yearly savings (with rate increase)
• Net savings: cumulative savings − net system cost
• Payback time: the year when cumulative savings exceeds net system cost
• ROI: net savings ÷ net system cost (shown as a percentage)

This is intentionally simple — it helps you answer the “Should I investigate solar further?” question. If this tool shows positive net savings and a reasonable payback, your next step is getting quotes and confirming your utility’s exact rules. If it shows weak savings, you may still go solar for non‑financial reasons (energy independence, emissions, resilience), but you’ll know the trade‑off up front.

• Fixed utility fees: some base charges remain after solar.
• Battery storage costs: batteries increase cost but improve resilience.
• Panel degradation: real output may decline slightly over time.
• Financing: loan interest can change payback substantially.
• Home value impacts: solar can affect resale value and taxes depending on state rules.

If you want to use this calculator conservatively, reduce offset (e.g., 65–75%), reduce net metering (e.g., 70–90%), choose a low rate increase (0–2%), and include maintenance. For an optimistic scenario, raise offset and net metering, and assume higher electricity inflation.

The math (step‑by‑step)

1) Baseline energy bill

Let U be monthly usage (kWh) and R be electricity rate ($/kWh). Baseline monthly energy cost is: B = U × R.

2) Monthly solar savings estimate

Let O be offset fraction (offset% ÷ 100) and N be net‑metering factor (netMeter% ÷ 100). Estimated monthly savings: S = B × O × N.

3) Net system cost

Let C be system cost and I be incentives. Net cost (out‑of‑pocket): C_net = max(C − I, 0).

4) Projected savings over time

Let g be annual rate increase (as a decimal), M be annual maintenance, and T be the number of years.

Year‑1 savings: Y₁ = 12×S − M.

Year‑k savings (compounded): Yₖ = Y₁ × (1 + g)^(k−1).

Cumulative savings over T years: Cum = Σ (k=1..T) Yₖ.

5) Net savings and ROI

Net savings: Net = Cum − C_net.

ROI (%): ROI = (Net ÷ C_net) × 100 (if C_net is zero, ROI is shown as “N/A”).

6) Payback time

Payback is the first year where cumulative savings ≥ net cost. If that never happens within your horizon, payback is shown as “Not within horizon”.

People often want a quick gut‑check. The meter converts your projected ROI into a 0–100 signal: negative ROI maps near 0, ~0% maps near 40, and large ROI maps closer to 100. It’s not a scientific score — it’s a friendly visualization.

Three scenarios you can copy

Example A: “Pretty typical suburban home”

• Rate: $0.16/kWh, Usage: 900 kWh/mo
• Cost: $20,000, Incentives: $6,000
• Offset: 80%, Net metering: 100%
• Rate increase: 3%/yr, Maintenance: $200/yr, Horizon: 25 yrs

This tends to produce a moderate payback and meaningful lifetime net savings. If your rate is higher (many areas are), the economics usually improve.

Example B: “Low electricity rates” (harder payback)

• Rate: $0.10/kWh, Usage: 700 kWh/mo
• Cost: $22,000, Incentives: $3,000
• Offset: 70%, Net metering: 80%
• Rate increase: 2%/yr, Maintenance: $250/yr, Horizon: 25 yrs

Low utility prices and lower net‑metering credit reduce savings. In these cases, negotiating system price, increasing offset, or using solar for resilience (with a battery) may be the main reason to proceed.

Example C: “High electricity rates” (often strong ROI)

• Rate: $0.28/kWh, Usage: 1100 kWh/mo
• Cost: $24,000, Incentives: $8,000
• Offset: 90%, Net metering: 100%
• Rate increase: 4%/yr, Maintenance: $150/yr, Horizon: 25 yrs

High electricity costs dramatically increase the value of each kWh you avoid buying. This scenario often shows a faster payback. Still, confirm your local net‑metering rules — they matter.

Frequently Asked Questions

• Is this a real solar quote?

  No. It’s a quick planning calculator. Real quotes depend on roof geometry, local labor, utility rules, permits, and incentives.

• What number should I use for net metering?

  If your utility credits exports at the full retail rate, use 100%. If credits are reduced, use 60–90%. If you’re unsure, try 80% as a conservative default.

• Why does the calculator ignore fixed utility fees?

  Fixed charges vary widely and don’t change much with usage. This tool focuses on the energy portion of your bill because that’s what solar most directly affects.

• How do incentives work in real life?

  Incentives can be rebates (upfront), tax credits (reduce taxes owed), or performance payments. Rules change by state and year. For your final decision, verify eligibility and timelines.

• What if I finance solar with a loan?

  Financing changes the cash flow: you’ll compare your loan payment to your reduced electric bill. This calculator assumes you pay net cost up front. For loan scenarios, treat “net cost” as the principal and separately consider interest.

• Does solar always increase home value?

  Often it can, but it depends on location, ownership (owned vs leased), and local market. Some states also have solar property‑tax exemptions. Check local rules and talk to a real estate professional if resale value is a key factor.

• What’s a “good” payback time?

  It’s subjective. Many homeowners like payback within 7–12 years, but longer payback can still be worth it if you plan to stay long‑term, if rates are rising, or if you value energy independence.

Use this responsibly

Use this estimate to compare scenarios, ask better questions, and avoid hype. For the final decision, get multiple quotes, confirm incentive eligibility, and read your utility’s net‑metering policy. Solar can be an excellent investment — but only when the numbers are real.

• Compare at least 2–3 installer quotes.
• Ask how your utility credits exports (net metering).
• Confirm what incentives are guaranteed vs estimated.
• Verify warranty details (panels, inverter, workmanship).