Electricity Rate Needed for Solar to Pay Off
Instead of asking what your payback is at today's rate, this flips the question: what electricity rate would your system need to hit a specific target payback, given its cost and expected production?
At your inputs, the electricity rate that hits a 10-year payback is $0.160/kWh.
| Required electricity rate | $0.160/kWh |
|---|---|
| Payback at your actual entered rate | 8.9 years |
- This uses planning estimates you entered, not a contractor quote or guaranteed savings.
- It solves for the electricity rate that meets your target payback; it does not predict future rates.
What this also tells you: Your actual entered rate gives a payback of 8.9 years; the rate above is only the threshold for your stated target, not a forecast.
This is a planning estimate based on your entries. It does not size equipment, determine electrical or building-code compliance, verify incentive eligibility, or replace a contractor quote or professional energy audit.
Why this decision comes up
A homeowner unsure whether their local electricity rate is high enough to make solar worthwhile benefits from seeing the exact rate their own system's numbers require.
How this is calculated
The required rate is solved directly from your net cost, expected annual production, and target payback period, then compared against the actual rate you enter.
A worked example
With the defaults ($16,000 net cost, 10,000 kWh/year expected production, 10-year target payback), the required electricity rate works out to exactly $0.16/kWh. A homeowner paying $0.18/kWh or more today already clears this target; one paying less does not, at these inputs.
Common mistakes
A common mistake is comparing the required rate against a national average rather than your own actual utility rate, which is the only number that matters for your own decision.
Limitations
This does not predict where your future rate will actually land; it only solves for the rate your own inputs require today. Run the full payback tool with your actual quote for the complete picture.
Common questions
Why solve for the rate instead of just the payback?
It reframes the decision around a rate you can directly compare to your actual utility bill, rather than a payback number you have to separately judge as good or bad.
What if my actual rate is already above the required rate?
Then your system already clears your target payback at today's pricing, and future rate increases would only improve that further.
Does this account for rate increases over time?
No, it solves for a single required rate assuming your entered production stays constant. See the electricity rate escalation tool for a forecast that accounts for rising rates.
Does this work for a system I already have a quote for?
Yes, plug in your actual quoted net cost and production estimate to see exactly what rate that specific quote needs to clear your target.
What if my utility's rate has multiple tiers?
Use your effective blended rate reflecting your typical usage across those tiers, since a single-tier rate may not represent your real average cost per kWh.