How are annual savings calculated?

System size times peak sun hours times 365 gives yearly kWh, multiplied by your electricity price.

What are peak sun hours?

The number of hours per day equivalent to full-strength sunlight. It's usually lower than daylight hours.

How is payback calculated?

The system cost divided by the annual savings. A 9000 system saving 2190 a year pays back in about 4.1 years.

Does it include feed-in payments?

No. It assumes production offsets electricity you'd buy. Export tariffs or partial self-use would change the result.

Why is real output often lower?

Shading, panel angle, temperature, dirt, and gradual degradation all reduce real-world production below the ideal.

Can I share a calculation?

Yes. Use Share to copy a link that reopens the calculator with the same figures.

Solar panel savings calculator

Enter your system size in kilowatts, average peak sun hours, your electricity price, and the system cost. The calculator estimates annual production, yearly savings, and how long the system takes to pay for itself.

Use it to gauge whether solar panels are worth it for your sunlight and electricity price.

Annual savings

$2,190

Annual production: 7,300 kWh
Payback period: 4.1 years

The result updates as you type. The headline is the annual saving; the others show yearly production and the payback period in years.

How does it work?

Production assumes all generated energy offsets purchased electricity. Real output varies with shading, panel angle, weather, and degradation; feed-in tariffs and self-use rates change the savings.

Solar savings formula

\text{savings} = kW \times h \times 365 \times \text{price}

kW: System size in kilowatts.
h: Average peak sun hours per day.
price: Electricity price per kWh.
savings: Money saved per year.

A 5 kW system at 4 peak sun hours produces about 7300 kWh a year; at 0.30 per kWh that saves around 2190, paying back a 9000 system in about 4.1 years.

Method & sources

Annual production = system size × peak sun hours × 365. All generated energy is assumed to offset purchased electricity. Payback divides system cost by annual savings.

Sources

Where this method comes from — use these references to understand the formula, assumptions, and limits.

Homeowner's guide to going solar — U.S. Department of Energy, verified 2026-06-10

How we calculate

Annual production = system size × peak sun hours × 365.
All generated energy is assumed to offset purchased electricity.
Payback divides system cost by annual savings.
Real output varies with shading, angle, weather, and panel degradation.

Rounding

Money is shown as whole units, production as whole kWh, payback to one decimal. Full precision is used internally.

What this calculator does

Solar savings come from generating electricity you'd otherwise buy. This calculator multiplies system size by peak sun hours and days to estimate annual production, values it at your electricity price, and divides the system cost by the saving to find the payback period.

How to use it

Enter your system size in kilowatts.
Enter your average peak sun hours per day.
Enter your electricity price per kWh and the system cost.
Read the annual savings and payback period.

A worked example

A 5 kW system at 4 peak sun hours produces about 7300 kWh a year. At 0.30 per kWh that saves roughly 2190, paying back a 9000 system in about 4.1 years.

Finding your sun hours

Peak sun hours are the daily equivalent of full-strength sunlight, typically 3–5 in temperate climates and more in sunny regions. Local solar maps or installers can give a figure for your area.

Common mistakes

Using daylight hours instead of peak sun hours.
Assuming 100% of production offsets your bill — self-use rates vary.
Ignoring panel degradation and maintenance over time.

When it's useful

Weighing a solar quote, comparing system sizes, or checking whether the payback period fits how long you'll stay in the home.

FAQ

How are annual savings calculated?: System size times peak sun hours times 365 gives yearly kWh, multiplied by your electricity price.
What are peak sun hours?: The number of hours per day equivalent to full-strength sunlight. It's usually lower than daylight hours.
How is payback calculated?: The system cost divided by the annual savings. A 9000 system saving 2190 a year pays back in about 4.1 years.
Does it include feed-in payments?: No. It assumes production offsets electricity you'd buy. Export tariffs or partial self-use would change the result.
Why is real output often lower?: Shading, panel angle, temperature, dirt, and gradual degradation all reduce real-world production below the ideal.
Can I share a calculation?: Yes. Use Share to copy a link that reopens the calculator with the same figures.

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