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Should I install solar panels?

Calculate the payback period and long-term savings on a residential solar panel investment.

By ShouldICalc Team

Updated January 2025 · See our methodology

Your Numbers

$150
$50 $400
$20,000
$10,000 $40,000

Average is $15,000-25,000 for residential

Available through 2032

5
3 7

Check your area's solar resource map

15
8 35

May affect installation feasibility

Your Results

Annual Savings

$0 – $0

per year

5-Year Savings

$0 – $0

Break Even

— months

💡 Calculating...

Enter your numbers above to see personalized results.

Trade-offs to Consider

Every decision has pros and cons. Here's what to weigh:

  • Money

    High upfront cost but long-term savings. 25+ years of reduced electric bills after payback.

  • Time

    Installation takes 1-3 days. Then it's passive income/savings for decades.

  • Quality

    Increased home value. May require roof work eventually.

  • Convenience

    Set and forget after installation. Grid-tied systems are hands-off.

  • Environment

    Clean energy reduces your carbon footprint significantly.

Related Products

Products that can help you save money. (Affiliate links)

☀️

Renogy 100W Solar Panel Kit

Starter kit for solar setup

View on Amazon
🔌

Kill A Watt Electricity Monitor

Track your energy usage

View on Amazon
📦

Jackery Portable Power Station

Store solar energy for outages

View on Amazon

As an Amazon Associate, we earn from qualifying purchases at no extra cost to you.

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Frequently Asked Questions

How long do solar panels last?
Solar panels typically last 25-30 years and come with 25-year warranties. Most panels retain 80-90% efficiency after 25 years. Inverters may need replacement around year 10-15.
Do solar panels work on cloudy days?
Yes, but at reduced efficiency (10-25% of full capacity). They work best in direct sunlight but still generate power in overcast conditions. Annual production accounts for cloudy days.
What happens when I sell my house?
Studies show solar panels add $15,000-25,000 to home value and help homes sell faster. Buyers want lower utility bills. If panels are financed, you may need to pay off or transfer the loan.
Should I get batteries too?
Batteries add $10,000-15,000 to cost. They make sense if you have frequent outages, time-of-use rates with peak pricing, or want energy independence. For pure savings, grid-tied without batteries is usually better.

How Solar Economics Work

The Federal Tax Credit

The Investment Tax Credit (ITC) covers 30% of your solar system cost through 2032. A $20,000 system gets a $6,000 tax credit, making your net cost $14,000.

Calculating Payback

Payback period = Net system cost ÷ Annual electricity savings

A typical payback is 6-12 years depending on:

  • Your electricity rates (higher = faster payback)
  • Sun exposure (more = faster payback)
  • System cost (lower = faster payback)
  • Local incentives (more = faster payback)

Long-Term Value

After payback, you get 15-20+ years of nearly free electricity. With rising utility rates, savings compound over time.

Best Locations for Solar

Solar makes the most financial sense where:

  • Electricity rates are high - California, Hawaii, Northeast
  • Sun exposure is good - Southwest, Florida, Texas
  • Net metering exists - Sell excess power back to grid
  • Local incentives add up - Some states offer additional credits

When Solar Might Not Make Sense

  • Shaded roof - Trees or buildings block sun
  • Old roof - Will need replacement before panels pay off
  • Planning to move - Won’t capture full payback
  • Low electricity rates - Less to save
  • Poor financing terms - High interest can negate savings

Financing Options

  1. Cash purchase - Best return on investment
  2. Solar loan - Own the system, pay over time
  3. Lease - Lower savings but no upfront cost
  4. PPA - Pay for power at fixed rate, company owns panels