How Much Can You Save By Switching to Solar?
Quick answer: It depends mostly on your electricity rate and how your utility credits the power you send back to the grid. A typical US home that covers its usage with solar might save somewhere around $1,300 to $1,800 a year at 2025 average prices, and a lot more in high-rate states like Hawaii and Massachusetts.
Most people look into solar because of the electric bill. How much you’ll actually save comes down to a handful of numbers you can find on your own bill and your utility’s website, and they vary a lot from one house to the next.
The numbers that decide your savings
- Your electricity rate. The average US residential price was about 17.3 cents per kWh in 2025 and reached 18.3 cents in July 2026, according to the EIA. Rates run from under 12 cents in North Dakota and Idaho to more than 40 cents in Hawaii.
- How much electricity you use. The average US home used about 865 kWh a month in 2024, or roughly 10,400 kWh a year.
- How much your panels produce. In NREL’s PVWatts calculator, each kilowatt of panels typically makes somewhere around 1,100 kWh a year in cloudier northern areas and 1,700 kWh or more in the Southwest.
- What your utility pays for the power you export. At midday your panels often make more than you’re using. Under full net metering, those exports earn a credit at the retail rate. Under net billing, which California and a number of other states now use for new customers, exports earn much less.
- What the system costs. EnergySage’s September 2026 marketplace average is $2.60 per watt before incentives. The 30% federal tax credit for homeowners ended for systems installed after 2025.
A worked example
Here’s a simple example built on national averages. Your own numbers will be different, so treat it as a way to see how the math works.
| Item | Example |
|---|---|
| Yearly electricity use | 10,400 kWh |
| System size to cover it (at about 1,300 kWh per kW per year) | 8 kW |
| Installed cost at EnergySage’s 8 kW average | About $21,000 |
| Value of that power at 17.3 cents per kWh | About $1,800 a year |
| Simple payback | About 11 to 12 years |
That $1,800 assumes every kWh your panels make is worth the full retail rate, which is how full net metering works. With net billing the picture changes. Say 40% of your solar output goes to the grid and earns 5 cents per kWh, while the rest replaces power you’d otherwise buy. Your yearly savings drop to roughly $1,300, and payback stretches to around 16 years.
Two things tend to improve the math over time. Electricity prices have been climbing, by about 5.6% a year on average from 2020 to 2025 in EIA’s figures (closer to 3.6% a year over the past decade), and every price increase makes your own solar power worth more. Panels also keep working for decades, typically losing only about half a percent of output per year.
Where solar saves the most
High electricity prices do most of the work. Hawaii (about 40.6 cents per kWh in 2025), California (32.5 cents) and Massachusetts (30.5 cents) had the most expensive power in the country, so each kWh of solar there is worth two to three times what it’s worth in North Dakota or Idaho.
Export rules can pull the other way. California’s net billing tariff, which applies to systems that applied to connect on or after April 15, 2023, credits exported power at roughly 75% less than the old net metering rules did. That’s why many new California systems include a home battery, so more of the solar power gets used at home.
State and utility programs matter too. A few states still pay for the power your system produces through solar renewable energy certificates or similar programs. Our guide to solar rebates and incentives covers what’s available in 2026.
What can shrink your savings
- Shade, a shallow or north-facing roof, or a roof that needs replacing partway through the system’s life.
- A loan with a high interest rate or hidden dealer fees. The Consumer Financial Protection Bureau found dealer fees often add 10% to 30% to the price.
- A lease or power purchase agreement with a steep yearly price escalator.
- Fixed monthly utility charges that you pay no matter how much solar you have.
- An inverter replacement, which usually costs $1,000 to $3,000 and often comes due at some point for string inverters.
How to estimate your own savings
Add up the kWh on your last 12 bills and work out what you actually pay per kWh, including delivery charges. Look up how your utility credits exported power (search your utility’s name plus “net metering” or “net billing”). Then run your address through NREL’s free PVWatts calculator to see how much a system of a given size would produce where you live. Multiply the output by the value of each kWh and compare the result to real quotes.
Our articles on solar payback time and how many panels you need go through each step in more detail.
