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Are solar panels worth it?

Updated

General information, not a substitute for the advice of an attorney.

Short answer: It depends on four numbers, and all four are checkable. What the system will produce (NREL PVWatts), what you pay per kWh, what the system costs installed, and whether any incentive still applies. We do not give a verdict; we show how to run the math with primary figures.

The four inputs

  • Output. PVWatts returns annual and monthly AC kWh and a capacity factor for your address, system size, tilt, and azimuth (PVWatts V8 documentation; calculator at pvwatts.nrel.gov).
  • Price. Texas's average retail price across all sectors was 9.79 cents per kWh in 2024, ranked 42nd among states (EIA Texas Electricity Profile). Use your own bill's per-kWh rate instead; residential rates differ from the all-sector average, and in ERCOT retail areas what your provider pays for exported kWh is set by contract, not statute (Texas Utilities Code 39.916).
  • Cost. Median residential installed prices in 2023 ranged from $3.2 to $5.2 per watt by state, before incentives, at a median size of 7.4 kW (LBNL Tracking the Sun 2024).
  • Incentives. The section 25D residential credit "will not be allowed for any expenditures made after December 31, 2025," and an expenditure counts when installation is completed (IRS Fact Sheet 2025-05). State and utility programs vary; check our state pages.

How to run it

First-year savings are roughly annual kWh produced times the per-kWh value of that energy, which is your retail rate for kWh you use yourself and your buyback rate for kWh you export. Simple payback is installed cost divided by first-year savings. Our arithmetic as a worked example only: a 7.4 kW system at $3.2 per watt costs $23,680 (both LBNL figures); if PVWatts says it produces 11,000 kWh a year and every kWh is worth 9.79 cents (EIA Texas all-sector average), that is $1,077 a year and a 22-year simple payback. Change any input and the answer changes; a higher retail rate or lower install price shortens it considerably.

What the math leaves out

Panel degradation over time (see how long solar panels last), inverter replacement, financing cost, rate changes, and the resale treatment of a leased system all move the result. None of them is in a per-watt price.

See rooftop solar and net metering by state, the permit finder, and outage history by county and ZIP.

General information from the sources linked above, not legal, tax, or financial advice.

Sources and helpful links

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