Are solar panels worth it now that the 30% federal credit is gone? For a lot of homes the answer is still yes, but the margin is thinner. Systems homeowners own and install after Dec 31, 2025 get no federal credit (IRS), so the full price has to pay for itself through lower bills. Three numbers decide it: what you pay per kWh, how your utility credits exported power, and what you pay per watt.
Are Solar Panels Worth It? The Three Deciding Numbers
- Your electricity rate. Your bill shows $/kWh. The higher it is, the more each solar kWh saves.
- Export credit. Under full net metering, an exported kWh is worth close to retail. Under net billing (like California’s tariff since April 2023), exports earn much less, so the solar you use yourself is worth more.
- Installed price. LBNL’s 2025 data update put the 2024 median at $4.0/W ($3.5/W cash, $4.7/W loan-financed), before incentives.
Example Payback Math (No Federal Credit)
Illustrative assumptions, not a quote: a 7kW system at $3.5/W costs $24,500. Say PVWatts estimates 1,400kWh per kW per year at your address, which is 9,800kWh per year.
| Scenario | Value per kWh | Yearly savings | Simple payback |
|---|---|---|---|
| Net metering, $0.30/kWh | $0.30 | $2,940 | ~8.3 years |
| Net metering, $0.15/kWh | $0.15 | $1,470 | ~16.7 years |
| Net billing, 40% self-use at $0.30, exports at $0.05 | blended $0.15 | $1,470 | ~16.7 years |
Simple payback ignores rate increases, panel degradation, loan interest and maintenance. It’s a starting point, not a forecast.
When Solar Still Makes Sense
- High rates (roughly $0.25/kWh and up) with full or near-full net metering.
- You can pay cash or get a low-rate loan with no hidden dealer fee.
- A sunny, unshaded roof with at least 10 years of life left.
- You plan to stay long enough to pass the payback point.
When It Probably Doesn’t
- Cheap power, poor export credits and shade.
- A roof that needs replacing within a few years. Removing and reinstalling panels costs extra.
- A loan where the “tax credit lump-sum payment” assumption no longer applies.
Other Value Not in the Table
Backup power (only with a battery, since grid-tie solar shuts off in an outage), protection from future rate hikes, and possibly home value. Treat these as bonuses rather than core math.
Step-by-Step: Run the Numbers for Your Own House
- Find your real rate. Divide the total on a recent bill (excluding one-time charges) by kWh used. That “all-in” rate includes delivery charges that solar can offset. EIA reports the U.S. average residential price at about 16.5 cents/kWh in 2024, but state averages range widely.
- Get a production estimate. Enter your address in NREL PVWatts. It returns monthly and yearly kWh for the system size you enter.
- Check your export rules. Ask your utility whether exports are credited at retail (net metering) or at a lower avoided-cost or hourly rate (net billing). See net metering vs net billing.
- Get real quotes priced in $/W. Compare them with LBNL’s medians.
- Compute payback and lifetime savings, then subtract financing costs.
Worked Example: Lifetime Savings, Not Just Payback
Simple payback hides what happens after the system is paid off. Panels usually carry 25-year performance warranties, and output declines slowly over time. NREL research by Jordan and Kurtz found a median degradation rate of about 0.5% per year for crystalline silicon panels (see our solar panel degradation guide).
Using the example above (7 kW, $24,500, 9,800 kWh in year one, $0.30/kWh under net metering, illustrative):
| Year | Production (−0.5%/yr) | Savings at $0.30/ |
|---|---|---|
| 1 | 9,800 kWh | $2,940 |
| 10 | about 9,370 kWh | about $2,810 |
| 25 | about 8,700 kWh | about $2,610 |
| 25-year total | about 230,000 kWh | about $69,000 |
At a flat rate, 25-year savings come to about $69,000 against a $24,500 price. At $0.15/kWh, they are about $34,500, which is still positive but much tighter once you count an inverter replacement or a loan’s interest. Rates rising over time would improve these numbers. Rates falling or export credits being cut would hurt them.
What Drives Your Production Number
PVWatts’ estimate depends on a few inputs you can check yourself:
- Location and weather. PVWatts uses typical-year solar data from NREL’s National Solar Radiation Database for your address.
- Tilt and azimuth. In the U.S., south-facing roofs produce the most over a year. East and west roofs produce less in total but more in the morning or late afternoon, which can be useful under time-of-use rates.
- System losses. PVWatts’ default is 14% for wiring, soiling, shading, mismatch and other losses. Heavy shade raises that.
- Array size. Production scales almost linearly with kW, so a 10 kW system makes roughly 10/7 as much as a 7 kW system at the same site.
Run PVWatts with two or three roof faces if your house has them, then add the results together. For panel counts, see how many solar panels do I need.
Worked Example: Net Billing Self-Use
Under net billing, the share of solar you use as it’s produced matters a lot. Using the same 9,800 kWh system and a $0.30 retail rate with $0.05 exports (illustrative):
| Self-use share | Used at home | Exported | Yearly value |
|---|---|---|---|
| 30% | 2,940 kWh × $0.30 | 6,860 kWh × $0.05 | $1,225 |
| 50% | 4,900 kWh × $0.30 | 4,900 kWh × $0.05 | $1,715 |
| 70% | 6,860 kWh × $0.30 | 2,940 kWh × $0.05 | $2,205 |
Moving loads like laundry, dishwashing, pool pumps and EV charging into midday raises self-use without buying a battery.
How Financing Changes the Answer
LBNL’s data shows loan-financed systems had a higher median price ($4.7/W) than cash ($3.5/W), partly because of dealer fees built into the price. On a 7 kW system, that is $32,900 versus $24,500. That $8,400 gap can add years to payback before counting interest.
| 7 kW system | Cash | Loan-financed (median price) |
|---|---|---|
| Median $/W (LBNL, 2024) | $3.5 | $4.7 |
| System price | $24,500 | $32,900 |
| Payback at $2,940/ | ~8.3 years | ~11.2 years plus interest |
Before signing, read our guide to solar loan rates and dealer fees.
Does a Battery Change Whether Solar Is Worth It?
Under net billing, a battery stores midday solar for the evening peak, when power is worth more. Under net metering, the grid already acts like a free battery, so a battery mostly adds backup value. In both cases a battery adds real cost, and the federal credit for owned batteries also ended after 2025. See is a solar battery worth it and the California case in NEM 3.0 explained.
A Quick Decision Checklist
| Question | Leans yes | Leans no |
|---|---|---|
| All-in rate | $0.25/ | Under $0.13/ |
| Export credit | Full retail | Low wholesale rate |
| Roof | South, west or east facing, little shade, 10+ years left | Heavy shade or needs replacing soon |
| Payment | Cash or low-rate loan without dealer fee | High-fee loan |
| Time in home | 10+ years | Moving in a few years |
FAQ
Are solar panels worth it without the tax credit?
They can be, where rates are high and exports are credited near retail. Run your own address in NREL PVWatts and use your real rate.
Is leasing better now?
Lease and PPA companies may still claim a business credit (48E) through 2027 under new deadlines. Compare total 20-year cost, escalators and buyout terms.
Do batteries make solar worth it?
Under net billing, a battery shifts midday solar into the evening, when power is worth more.
How long do solar panels take to pay for themselves without the credit?
In the example above, from about 8 years at $0.30/kWh to about 17 years at $0.15/kWh. Your rate and export credits decide it.
Do solar panels increase home value?
Some studies, including work by Lawrence Berkeley National Laboratory, have found buyers paid premiums for homes with owned solar. Leased systems are treated differently, because the lease transfers to the buyer.
Is solar worth it if I might move?
It depends on whether you pass the payback point or recover the value at sale. Owned systems are usually simpler to sell with than leased ones. See our lease buyout and selling guide.
Do solar panels work on cloudy days?
Yes, at reduced output. PVWatts’ yearly estimate already includes typical cloudy weather for your location.
Sources: IRS, Residential Clean Energy Credit; LBNL, U.S. Distributed Solar and Storage 2025 Data Update (Oct 2025); NREL PVWatts; CPUC Net Billing Tariff. Prices dated as noted; accessed Oct 2026; EIA average residential price 2024; Jordan and Kurtz, “Photovoltaic Degradation Rates” (NREL); LBNL research on home value premiums. Accessed Oct 2026.
Related: EcoFlow Delta 3 Max for Home Backup, Adjustable Solar Panel Mounting Brackets Review, Solar Sheen Glass Solar Panel Cleaning