Solar Payback by State

Solar payback by state changes for three main reasons: a kilowatt-hour has a different benchmark value in each jurisdiction, the same array produces a different modeled annual amount, and installed cash prices vary by region. This comparison holds the system size constant, reads those three dimensions from the bundled datasets, and calculates the first whole year when accumulated bill savings meet the modeled net cost.

The rate is the U.S. Energy Information Administration’s 2024 annual residential average revenue per kWh. It is useful for a consistent national comparison, but it is not a utility tariff. The solar factor expresses annual AC kWh per installed DC kW using PVWatts-style planning conventions. It varies materially with the state’s solar resource, while roof direction, tilt, shade, snow, temperature, inverter clipping, and equipment losses can move an individual site away from the benchmark.

Regional installed-cost bands come from the existing EnergySage Marketplace Intel H2 2024 and NREL 2024 residential PV benchmark notes. Choose low, midpoint, or high to move each state to the corresponding point in its own regional band. The selected-state statement also exposes an editable dollars-per-watt value, useful when a real cash quote is available. Financing cost, loan dealer fees, battery cost, roof work, and main-panel upgrades belong in net cost only when they are part of the decision being compared.

Worked example

Consider a 7 kW system in a state with a 1,500 kWh-per-kW production factor, a 20¢ electricity rate, and an installed price of $3.00 per watt. Installed cost is 7 × 1,000 × $3.00, or $21,000. Annual production is 7 × 1,500, or 10,500 kWh. If every solar kWh avoids a 20¢ purchase, first-year avoided cost is $2,100. With zero escalation and no incentive, the simple payback is 10 years. A 3% bill escalation can move the whole-year recovery point earlier, but it is still an assumption rather than a guaranteed tariff path.

How to read the result

Use the ranking to identify which assumptions drive the spread, not to declare one state universally “best.” A short result can come from high retail prices as much as strong sun. A high-price state may also have export rules that pay less than the retail rate. If midday production is exported at a low credit, only self-consumed energy and properly valued exports should enter annual savings. Net metering, avoided-cost export rates, time-of-use periods, minimum bills, fixed charges, system-size caps, and annual true-ups can change the answer materially.

This is simple, undiscounted payback on a modeled bill, not a financial projection. It omits discount rates, degradation, inverter replacement, maintenance, insurance, taxes, home value, financing, and opportunity cost. Start with the table to compare a controlled case, then replace the selected state’s $/W with a cash quote and calculate savings from twelve months of interval or billed usage under the actual utility rules. Leave the incentive at zero unless eligibility and amount have been independently verified.

1. U.S. EIA — Electric Power Monthly, Table 5.6.A (2024 annual) — Residential electricity-rate benchmarks for all states and DC.
2. NREL — PVWatts Version 8 documentation (2025) — Annual AC production-factor conventions and system-loss context.
3. EnergySage — Marketplace Intel Report (H2 2024) — Regional residential installed-price context.
4. NREL — U.S. Solar Photovoltaic System and Energy Storage Cost Benchmarks (2024) — Residential PV cost-benchmark context.

Back to the kWh Math homepage