Solar payback estimator: when do the savings catch up?

Payback is the year your cumulative bill savings, after maintenance, first equal what you paid after incentives. This solar payback calculator works it out year by year, the way Kentucky utilities now credit solar for new customers. You get first-year production and bill savings, the payback year, cumulative net savings, a cash-flow chart, and the payback year if electricity prices rise 1%, 3% or 5% a year.

How the solar payback calculator works

For each year of the analysis period, the estimator:

1. Calculates production: system size × kWh per kW × (1 − degradation) raised to the number of years since year one.
2. Splits production into the share used in your home and the share exported to the grid.
3. Values the kWh used on site at your retail price, increased each year by the escalation rate you choose.
4. Values the exported kWh at your export credit. The export credit is held flat unless you change it, because nobody knows what future rate cases will set.
5. Subtracts annual maintenance and monitoring.

The payback year is the first year in which cumulative net savings are equal to or greater than the installed cost minus incentives.

What each input means and where to find it

Don’t use your total bill divided by your kWh as the retail price. The fixed monthly customer charge stays the same with or without solar, so that shortcut overstates what each kWh saves. Home electricity use is a reality check: solar used on site can never exceed it, and comparing the two shows how much of your annual use the system covers.

Why self-consumption matters under Kentucky export credits

Kentucky’s 2019 net-metering law, in effect from January 2020, lets the Public Service Commission set the credit that new net-metering customers receive for energy they export. That credit is a dollar bill credit rather than a one-for-one kWh credit. Customers of LG&E and KU who started net metering on or after September 24, 2021 are on the NMS-2 tariff, where exports earn a credit below the retail rate: 7.534¢ per kWh at KU and 7.089¢ at LG&E, left unchanged in the PSC’s 2026 rate orders. The 7¢ default rounds these. Customers who connected under the older rules keep them at that address for 25 years. Other utilities and many co-ops have their own export terms, and co-ops and city utilities served by TVA fall outside the state statute. Check your utility’s current tariff.

The gap between retail price and export credit is the whole story. At the defaults, every 10 points of self-consumption is worth about $70 in year one. The bigger risk is a proposal that quietly values every kWh at retail: at the defaults, that overstates first-year savings by 25%.

What this estimator ignores

• Financing and time value of money. Loan interest, dealer fees, lease payments and discounting are left out; a dollar in year 20 counts the same as one today. The ownership comparison tool covers both.
• Taxes. We don’t model tax effects, and nothing here is tax advice.
• Roof replacement. Removing and reinstalling panels for a new roof can cost thousands. If your roof is older, add it to the installed cost.
• Batteries. Storage changes self-consumption and adds cost. See Battery & Storage Economics.
• Equipment replacement and tariff redesigns. An inverter replacement or a new rate structure can move payback by years.

Disclaimer

This estimator is a simplified, preliminary model for general information, not a quote, a production estimate for your roof or a promise of savings. It is not financial, tax or legal advice. Results depend on your equipment, roof, weather, usage and future tariffs. If the numbers matter to a decision, a Proposal Second Opinion checks them against your actual documents.