Solar Panel Calculator

How each number is calculated

The calculator runs four steps in order, and every output on the result card comes from one of them. The worked example below uses the default inputs: a $180 monthly bill, an electricity rate of $0.17 per kWh, 4.5 peak sun hours per day, a 90% bill offset, 400 W panels, and an installed cost of $2.75 per watt. The full set of assumptions is documented on the methodology page.

Step 1: bill to usage

Monthly usage is your bill divided by your rate: $180 ÷ $0.17 = 1,059 kWh per month, or 12,706 kWh per year. The 90% offset sets a production target of 11,435 kWh per year. A lower offset is sensible if your roof is small or your utility pays little for exported power; 100% is the usual choice under full retail net metering.

Step 2: usage to system size

Each kilowatt of panels produces roughly sun hours × 365 days × 0.78 in a year. At 4.5 sun hours that is 1,281 kWh per kW per year. The 0.78 performance ratio accounts for inverter, wiring, soiling, and temperature losses. Dividing the target by that yield gives the system size: 11,435 ÷ 1,281 = 8.93 kW.

Step 3: system size to panels and roof area

Panel count is system size divided by panel wattage, rounded up: 8.93 kW ÷ 0.4 kW = 22.3, so 23 panels. At about 20 square feet per panel including spacing, the array needs roughly 460 sq ft of usable roof. If you enter your own roof area, the card tells you whether the panels fit. For a deeper look at panel count alone, use the panel count calculator.

Step 4: cost, savings, and payback

Gross cost is system size × 1,000 × price per watt: 8.93 kW × 1,000 × $2.75 = $24,546. The 30% federal credit removes $7,364, leaving a net cost of $17,182. Yearly savings are the production target times your rate: 11,435 kWh × $0.17 = $1,944, or $162 a month. Payback is net cost divided by yearly savings: $17,182 ÷ $1,944 = 8.8 years. The cost calculator and ROI calculator run the same model with the cost and return figures brought to the front.

How to read the result card

The badge at the top of the card is driven entirely by payback. A payback of 7 years or less is labeled a strong solar candidate, 7 to 11 years is moderate, and anything longer is flagged as a longer payback period. The default example lands at 8.8 years, in the moderate band, which is typical for a mid-priced state with average sun and a rate near the US average.

One property of this model surprises people: changing your bill changes the system size and the dollar amounts, but not the payback. Cost and savings both scale with the number of kilowatts, so the ratio between them depends only on price per watt, sun hours, electricity rate, and the tax credit. To shorten payback you need cheaper installation, more sun, a higher rate, or extra incentives, not a bigger or smaller system.

Three example homes

All three rows use the default rate, sun hours, offset, panel wattage, and price per watt. Only the monthly bill changes.

Net cost is after the 30% federal credit. Gross costs are $13,637, $24,546, and $40,910.

Where to get accurate inputs

• Monthly bill and rate: average twelve months of bills rather than using one month, since summer cooling or winter heating can double usage. Divide the total dollars by the total kWh on those bills for a rate that includes delivery charges and taxes, which matters more than the bare supply rate.
• Sun hours: NREL’s free PVWatts calculator returns the annual solar resource for your address in kWh/m²/day, which is the same unit as peak sun hours. Most of the contiguous US falls between 3.7 and 6.5.
• Electricity rates: the EIA state electricity profiles publish average residential rates by state if you do not have a bill in front of you.
• Cost per watt: start with $2.70 in low-cost markets such as Texas, Florida, and Arizona, $3.00 in mid-cost states, and $3.35 in high-cost states such as California, Massachusetts, and New York. Replace it with the price per watt from real quotes as soon as you have them.

What the calculator does not model

The model is deliberately simple so that every number can be traced back to your inputs. That means several real-world effects are left out.

• Panel degradation. Output declines by roughly 0.5% per year, so a system produces about 88% of its first-year energy in year 25. Savings in later years will be a little lower than the flat figure shown.
• Utility rate increases. Savings are calculated at today’s rate. Residential rates have historically risen by a few percent a year, which shortens real payback.
• Export compensation. The model values every kWh at the retail rate. Under net billing, as in California, Arizona, and Nevada, exported power is credited below retail, and the savings on the exported share are smaller.
• Financing. Costs are treated as cash. Loan interest, dealer fees, and lease escalators change the picture substantially.
• Roof orientation and shading. A north-facing or partly shaded array yields less than the sun-hours figure implies. PVWatts can model tilt and azimuth for you.