Solar can be a great investment or a slow one. The panels work about the same everywhere. What changes is how much each kilowatt-hour (kWh) is worth to you, and how many of them your roof can make.
This guide walks through the factors that matter, then runs the numbers for three very different states. You will see the full arithmetic, so you can redo it with your own bill.
What decides if solar is worth it?
Six things do most of the work. Check each one before you get quotes.
1. Your electricity rate
This is the biggest factor. Every kWh your panels make replaces one you would have bought. If you pay 33¢ per kWh, each solar kWh saves you 33¢. If you pay 12¢, it saves 12¢. Same panels, almost three times the savings. Find your rate by dividing your bill's energy charge by the kWh you used.
2. Your sun hours
"Peak sun hours" is the average number of hours per day of full-strength sunlight. Sunny states such as Arizona and California get 5.5 to 6.5. Cloudier places in the Pacific Northwest and the Northeast get closer to 3.5 to 4.5. More sun means more kWh from the same system.
3. Export rules
Your panels make the most power at midday, often when you are out. What your utility pays for that extra power matters a lot. Under 1:1 net metering, exports earn full retail value. Under net billing, they may earn a third of that or less. Our net metering guide explains the options.
4. Your roof
A south, west or east-facing roof with little shade works best. If your roof needs replacing within 10 years, do that first, or you may pay to remove and reinstall the panels later. See our roof and solar guide.
5. How long you will stay
Solar pays back over years, not months. If you might move in three years, you may not reach break-even. Studies suggest solar can add to a home's sale price, but a buyer will not always pay you back the full cost.
6. How you pay
Paying cash gives the fastest payback. A loan adds interest, which can add years. A lease or power purchase agreement (PPA) costs nothing up front but shares the savings with the solar company.
How do you estimate your yearly savings?
You can get a solid ballpark with one formula:
Yearly production (kWh) = system size (kW) × sun hours × 365 × 0.78
The 0.78 is a "system derate." It covers real-world losses from heat, wiring, the inverter, dust and some shade. Then:
Yearly savings = yearly production × your rate
Simple payback = system cost ÷ yearly savings
For the examples below, we use a 6 kW system at about $3.00 per watt. That is 6,000 watts × $3.00 = $18,000. Real quotes vary; see our solar cost guide. Since the US 30% homeowner tax credit (25D) ended for systems installed after Dec 31, 2025, we use the full price with no credit.
What does the math look like in three different states?
California: high rate, lots of sun
- Production: 6 × 6.1 × 365 × 0.78 = about 10,420 kWh a year
- Value if every kWh offsets a purchase: 10,420 × $0.336 = $3,501 a year
- Payback: $18,000 ÷ $3,501 = about 5.1 years
But California's main utilities now use net billing, which pays much less for exports. Say you use 60% of your solar at home and export 40% at about 8¢:
- Used at home: 6,252 kWh × $0.336 = $2,101
- Exported: 4,168 kWh × $0.08 = $333
- Total: $2,434 a year, so payback is $18,000 ÷ $2,434 = about 7.4 years
Still a strong result. This is also why many Californians add a battery, so they can store midday power and use it in the evening.
Texas: middle rate, good sun
- Production: 6 × 5.2 × 365 × 0.78 = about 8,883 kWh a year
- Value: 8,883 × $0.159 = $1,412 a year
- Payback: $18,000 ÷ $1,412 = about 12.7 years
Texas has no statewide net metering rule. What you earn for exports depends on your retail electricity plan, and some pay far less than retail. If your plan pays little for exports, payback grows longer.
Washington: lower rate, less sun
- Production: 6 × 4 × 365 × 0.78 = about 6,833 kWh a year
- Value: 6,833 × $0.147 = $1,004 a year
- Payback: $18,000 ÷ $1,004 = about 17.9 years
Panels often last 25 to 30 years, so you would still come out ahead over their life. But nearly 18 years is a long wait, and an inverter replacement along the way adds cost.
| State | Rate | Sun hours | kWh per year (6 kW) | Yearly value | Simple payback |
|---|---|---|---|---|---|
| California | 33.6¢ | 6.1 | 10,420 | $2,434–$3,501 | 5.1–7.4 years |
| Texas | 15.9¢ | 5.2 | 8,883 | $1,412 | 12.7 years |
| Washington | 14.7¢ | 4.0 | 6,833 | $1,004 | 17.9 years |
These are simple estimates. They ignore rising electricity prices, which shorten payback, and slow panel aging of about 0.5% a year, which stretches it a little. To run your own numbers, try our solar savings calculator, or look up typical rates and sun hours on our state pages.
How does financing change the answer?
Cash is simplest. The Texas example pays back in about 12.7 years with cash. Finance the same $18,000 over 15 years at 7% interest, and your payments total about $29,100. Your yearly savings of $1,412 may not cover the loan payment of about $1,940 a year, so you would pay more each month at first.
A lease or PPA flips this. You pay nothing up front, and you pay the solar company a monthly fee or a price per kWh. You save from day one if that price is below your utility rate. But the company keeps most of the long-term value, and many contracts include a yearly price increase called an escalator. Read our incentives guide to see why leases are being pushed hard in 2026.
When should you not go solar?
Solar is not the right call for everyone. Think twice, or wait, if any of these fit you:
- Your rate is low and your sun is weak. If the rate-times-sun-hours number is under about 60, payback can pass 18 years.
- Your roof is shaded most of the day. Heavy tree shade can cut output by half or more.
- Your roof is near the end of its life. Replace it first.
- You expect to move within a few years and do not want to bet on a buyer paying for the system.
- Your utility pays very little for exports and you are away from home all day, with no plan for a battery.
- Your electric bill is already small. A $60 monthly bill leaves little room to save.
- The only offer is a lease with a steep escalator that could pass your utility rate in later years.
If you rent or cannot use your roof, look at community solar or plug-in options in our solar for renters guide.
How do you get a fair answer for your own home?
Gather 12 months of electric bills. Note your total kWh used and your average rate. Then get at least three quotes from licensed installers. Compare each quote's price per watt, expected yearly kWh and the export rule it assumes.
Check that the installer's production estimate is close to the formula above. If a quote claims far more kWh than size × sun hours × 365 × 0.78, ask why. Our quote checklist lists what else to ask.
Frequently asked questions
Is solar still worth it without the federal tax credit?
Often yes, in high-rate states. The 30% homeowner credit ended for systems installed after Dec 31, 2025, which adds a few years to payback. In low-rate states, losing the credit can push payback past 15 years.
What is a good payback period for solar?
Under 8 years is strong. Eight to 12 years is fair for a system that should last 25 years or more. Past 15 years, the case gets weak, since you may need an inverter replacement along the way.
Does solar work in cloudy states?
Yes. Panels still make power on cloudy days, just less. A 6 kW system with 4 sun hours makes about 6,833 kWh a year. Whether that pays off depends mostly on your electricity rate and export rules.
Should I add a battery to make solar worth it?
A battery helps most when exports earn little, or when you have time-of-use rates with pricey evenings. It also adds $11,000 or more, so it often lengthens payback unless rebates or rate gaps are large.
Will solar raise my home's value?
Owned systems often add some value, but the amount varies by market. Leased systems can make a sale more complex because the buyer must take over the contract.
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