Solar Panel Cost Calculator: What Your Proposal Costs Per Watt, Per kWh, and After the Tax Credit Ended
A solar proposal is built to be persuasive rather than comparable. The price per watt is missing, the low headline rate is paid for by a fee inside the price, the payment on a lease rises every year, and in 2026 the federal tax credit line may describe a credit that no longer exists. Enter the proposal as written.
This proposal prices the system at $4.00 per watt before any incentive. It claims $9,600 of federal tax credit, but $0 is what applies here — an overstatement of $9,600. Section 25D was terminated for expenditures made after 31 December 2025, and the IRS counts the year the system is installed and ready for use. The loan is advertised at 0.99%, but a dealer fee of $8,000 is built into the price to pay for that rate. Measured against the $24,000 the same system costs in cash, the true APR is 3.52%. Over 25 years you are locking in 15.4 cents per kWh, against an average utility rate of 23.7 cents over the same period on the escalation you entered. On these figures the deal is ahead by $21,498 over the period. It breaks even only if your utility raises rates -1.09% every year for the whole period. With nothing paid up front, the position is cash-positive from the first year — which is a financing outcome, not evidence that the price is right.
Price per watt
The only figure that makes two quotes comparable.
This quote is $0.85 a watt above the Department of Energy benchmark for a representative residential system — $6,800 across the array. That is a question to put to the installer, not a verdict: roof complexity, equipment and local labour all move the number.
What the financing really costs
A low headline rate is bought with a fee inside your price.
The advertised rate is real, but it is charged against a price that includes the fee paying for it. The same array bought outright costs $24,000. Ask for the cash price in writing — the gap is the whole finding.
The federal tax credit
Reconciled against the credit that actually applies.
Section 25D was terminated for expenditures made after 31 December 2025, and the IRS counts the year the system is installed and ready for use — not the year it was ordered or paid for. A proposal still carrying this line is quoting money that will not arrive.
The escalator
Where a lease or PPA is actually decided.
What the utility would have to do
The assumption doing the most work in any solar proposal.
This deal comes out even only if your utility raises rates -1.09% every year for the whole period. Compare that against what your utility has actually done over the last decade before accepting the proposal’s own assumption.
Questions to put to the installer
Generated from the figures you entered, so each one is specific to this proposal.
- This proposal works out at $4.00/W. What is the cash price for this exact system, same panels, same inverter, same scope?
- If the cash price is lower than the financed price, the difference is a dealer fee paying for the 0.99% rate. How much is it, and what happens to my price if I finance elsewhere?
- Your proposal shows $9,600 of federal tax credit. Section 25D ended for expenditures after 31 December 2025 — on what basis is that figure on my quote?
- What does it cost to remove and reinstall the array when the roof is replaced, and who pays if a leak is traced to a penetration?
- What utility rate increase does your savings estimate assume, every year, and what has my utility actually averaged over the last ten?
- What is the production guarantee, in kWh, and what do you pay me if the system underperforms it?
- Am I on full retail net metering, and is that grandfathered for the life of this system or subject to change?
Year-by-year ledger
Production, the rate it offsets, what you pay, and where you stand.
| Year | Production | Rate | Power value | You pay | Cumulative |
|---|---|---|---|---|---|
| 1 | 11,000 kWh | 17.4¢ | $1,919 | $1,595 | +$324 |
| 2 | 10,945 kWh | 17.9¢ | $1,958 | $1,595 | +$686 |
| 3 | 10,890 kWh | 18.3¢ | $1,997 | $1,595 | +$1,087 |
| 4 | 10,836 kWh | 18.8¢ | $2,036 | $1,595 | +$1,528 |
| 5 | 10,782 kWh | 19.3¢ | $2,077 | $1,595 | +$2,009 |
| 6 | 10,728 kWh | 19.7¢ | $2,118 | $1,595 | +$2,532 |
| 7 | 10,674 kWh | 20.2¢ | $2,160 | $1,595 | +$3,097 |
| 8 | 10,621 kWh | 20.7¢ | $2,203 | $1,595 | +$3,704 |
| 9 | 10,568 kWh | 21.3¢ | $2,247 | $1,595 | +$4,355 |
| 10 | 10,515 kWh | 21.8¢ | $2,291 | $1,595 | +$5,051 |
| 11 | 10,462 kWh | 22.3¢ | $2,337 | $1,595 | +$5,793 |
| 12 | 10,410 kWh | 22.9¢ | $2,383 | $1,595 | +$6,581 |
| 13 | 10,358 kWh | 23.5¢ | $2,431 | $1,595 | +$7,416 |
| 14 | 10,306 kWh | 24.1¢ | $2,479 | $1,595 | +$8,300 |
| 15 | 10,255 kWh | 24.7¢ | $2,528 | $1,595 | +$9,233 |
| 16 | 10,203 kWh | 25.3¢ | $2,579 | $1,595 | +$10,216 |
| 17 | 10,152 kWh | 25.9¢ | $2,630 | $1,595 | +$11,251 |
| 18 | 10,101 kWh | 26.6¢ | $2,682 | $1,595 | +$12,337 |
| 19 | 10,051 kWh | 27.2¢ | $2,735 | $1,595 | +$13,477 |
| 20 | 10,001 kWh | 27.9¢ | $2,790 | $1,595 | +$14,672 |
| 21 | 9,951 kWh | 28.6¢ | $2,845 | $1,595 | +$15,922 |
| 22 | 9,901 kWh | 29.3¢ | $2,902 | $1,595 | +$17,228 |
| 23 | 9,851 kWh | 30.0¢ | $2,960 | $1,595 | +$18,592 |
| 24 | 9,802 kWh | 30.8¢ | $3,018 | $1,595 | +$20,015 |
| 25 | 9,753 kWh | 31.6¢ | $3,078 | $1,595 | +$21,498 |
How the audit works
Four numbers decide whether a solar deal is good, and a proposal is engineered to obscure three of them. The price per watt is the only figure that makes two quotes comparable, and it is almost never printed. The dealer fee is what a lender charges the installer to advertise 0.99% — it is inside your price, so the same system is cheaper in cash. The escalator raises a lease payment every year for twenty-five years against a utility rate that may rise more slowly. And the federal credit was repealed for purchases after 2025. This page recomputes all four from the figures on your own proposal.
An 8 kW system quoted at $32,000 is $4.00 a watt. With a 25% dealer fee inside that price, the same array costs $24,000 in cash — $3.00 a watt. Financed at an advertised 0.99% over 25 years the payment is $120.45 a month and you repay $36,136, which against the cash price is a true APR of 3.52%, not 0.99%, and $12,136 more than paying outright. If the proposal also shows a $9,600 federal credit, that is $9,600 of a credit that no longer applies to a purchase completed in 2026.
Ask one question and most of the fog clears: what is the cash price for this exact system? The gap between that and the financed price is the fee buying your headline rate.
Price per watt is the only comparable number
Divide the contract price by the system's DC watts. An 8 kW system at $32,000 is $4.00 a watt. That single figure is what lets you set one quote against another, against the national benchmark, and against what your neighbour paid.
It is almost never printed on a proposal, because a proposal is designed to be compared against your current electricity bill rather than against another installer.
The US Department of Energy publishes a national residential benchmark — around $3.15 a watt for a representative 8 kW system in the most recent modelled year. A quote well above that is not automatically bad, but it is a question you should be able to answer.
A 0.99% solar loan is not cheap money
Nobody lends at 0.99% for twenty-five years. The lender is paid up front, out of a dealer fee charged to the installer — commonly 20% to 30% of the contract — and that fee is added to the price you sign.
So the comparison is not 0.99% against a bank rate. It is a financed price against a cash price for the identical array. On the worked example the financed price is $32,000 and the cash price $24,000; repaying $36,136 for a $24,000 system is a true APR of 3.52%.
This is why the most useful question in the room is: what is the cash price? An installer who will not answer has told you the fee is large.
The escalator is the whole lease
A lease or PPA is sold on year one, where the payment sits comfortably below the bill it replaces. The contract then raises that payment by around 2.9% every year for twenty-five years.
Whether that ends well depends entirely on whether your utility raises rates faster than your contract does. At a 2.9% escalator against 2% utility inflation, the crossover lands in year nine — from then on you are paying a premium for electricity, by contract, every year, and it widens.
Over the full term that example pays $62,613 for power worth $57,633. The proposal was never wrong about year one. It just stopped there.
The federal tax credit was repealed for purchases
Section 25D — the 30% residential clean energy credit — was terminated by P.L. 119-21, signed 4 July 2025, for expenditures made after 31 December 2025. It was cut seven years short of its scheduled expiry.
The IRS treats the expenditure as made in the year the property is installed and ready for use, not the year it was ordered or paid for. A deposit in 2025 on a system commissioned in 2026 does not qualify.
So a 2026 proposal showing a 30% credit line is quoting money that will not arrive. Enter the credit exactly as printed and this page reports the overstatement in dollars.
Who owns the system decides who gets the incentive
Under a lease or PPA the system on your roof belongs to the financier. You are buying electricity, not equipment, so there is no residential credit for you to claim — the business-side credits go to the owner.
That asymmetry is why third-party ownership is being pushed harder since 25D ended: the installer can still monetise a credit that the homeowner no longer can, and the sales pitch can still contain the word 'incentive'.
It also means you own nothing at the end of the term, and the contract places a filing against your property that has to be dealt with when you sell or refinance.
The number that settles it is cents per kWh
Strip away the framing and a solar deal is a long-term electricity contract. The honest way to judge it is the price per kWh you are locking in over the whole period, set beside the rate it is supposed to beat.
This page computes total cost over total production. On the worked loan that is 13.9 cents against an average utility rate of 23.7 cents over the same twenty-five years — a good deal despite the fee and the dead credit. On the worked PPA it is 24.2 cents against 22.2 — a bad one, despite year one looking fine.
The same tool gives both answers, which is the point. A proposal is not automatically a swindle, and it is not automatically sound either.
When a lease or PPA escalator overtakes the bill it replaces
A $145-a-month PPA on an 11,000 kWh array at 17.45¢/kWh. The crossover is the first year the contract costs more than the power it delivers; the last column is the 25-year net position against a utility rising 2% a year.
| Annual escalator | Utility rises 1%/yr | Utility rises 2%/yr | Utility rises 3%/yr | Utility rises 4%/yr | 25-year net at 2% |
|---|---|---|---|---|---|
| 0% (fixed) | never | never | never | never | +$14,133 |
| 1.9% | year 9 | never | never | never | +$2,607 |
| 2.9% (typical) | year 6 | year 9 | never | never | −$4,979 |
| 3.9% | year 4 | year 6 | year 9 | never | −$13,862 |
| 4.9% | year 4 | year 4 | year 6 | year 9 | −$24,276 |
Read the row your contract puts you in, then the column you actually believe about your utility. A salesperson's assumed utility escalation is the assumption doing the most work in the proposal.
Computed by CalcDomain's solar-proposal-auditor engine and locked by its golden tests.
Assumptions & Limitations
This audit assumes:
- First-year production is the proposal's own estimate. This audit tests what the deal costs, not whether that estimate is achievable on your roof.
- Output degrades geometrically at the rate entered, from year two onward. Year one is the quoted figure.
- Your utility rate escalates geometrically at the rate you enter, applied to every kWh the array offsets.
- Every kWh produced is valued at your retail rate multiplied by the share you are credited for. Under full net metering that share is 100%.
- The dealer fee is the gap between the contract price and what the same system costs in cash, and it is treated as part of the price rather than as interest.
- Lease and PPA payments escalate geometrically from the first-year figure for the whole contract term.
- A third-party-owned system earns the homeowner no federal residential credit, because the homeowner does not own it.
It does not cover:
- This audit prices the proposal in front of you. It does not verify the production estimate, the shading study, the roof's condition, or whether the equipment is what the contract says.
- It does not model time-of-use rates, demand charges, net-billing export rates that differ by hour, or a utility's future rate design — all of which can move the answer materially.
- It does not price a battery, a roof replacement bundled into the contract, or a critter guard and monitoring add-on.
- It does not model the UCC-1 fixture filing a lease or PPA places against the property, or what removing and reinstalling the array costs when the roof is replaced or the house is sold.
- State and local incentive rules are not modelled; enter only amounts you have confirmed with the administering agency.
- It is not tax advice. Whether you could have used a credit depends on your tax liability, and eligibility turns on the installation date.
Evidence, sources and editorial review
Solar Panel Cost Calculator: What Your Proposal Costs Per Watt, Per kWh, and After the Tax Credit Ended groups its evidence and methodology review here so sources, assumptions and responsibility can be checked together.
Methodology
Price per watt divides the contract price by the system's DC watts. The dealer fee — what a lender charges an installer to offer a low headline rate — is subtracted from the contract price to give the cash-equivalent price of the same system. The true APR of the financing is then the discount rate that equates the loan's payment stream to that cash-equivalent price, solved by bisection: an advertised rate measured against an inflated price is not the rate the borrower pays. The federal credit is reconciled against the percentage that actually applies, which is bound to a provenance-tracked dataset; Section 25D was terminated for expenditures made after 31 December 2025, and a third-party-owned system earns the homeowner no residential credit at all because the homeowner does not own it. Production is the proposal's own first-year figure, degraded geometrically each year; the utility rate escalates geometrically from the rate entered; and the value of the power is the share of production actually credited. For a lease or PPA the payment escalates geometrically from year one, and the crossover year is the first year that payment exceeds the value of the power it replaces. The levelized cost is total cost over the analysis period divided by total production, reported in cents per kWh beside the average utility rate over the same period. The break-even utility escalation bisects for the annual rate rise at which lifetime value equals lifetime cost. Payback accumulates value net of costs year by year and interpolates within the year it crosses. All figures are locked by golden tests that run on each build.
Reviewed according to the CalcDomain Editorial Policy & Calculator Methodology. We document formulas, edge cases, sources, update dates, and correction paths for calculator pages.
If a figure or a source here is wrong, use the feedback control on this page with the proposal values you entered. Corrections are made against the primary source, the golden tests are updated in the same change, and the version history below records what moved.
Updated
References & Authoritative Sources
- Internal Revenue Service — Residential Clean Energy Credit (Section 25D) · consulted August 28, 2026 · The credit applies to expenditures made through 31 December 2025; eligibility turns on the year the property is installed and ready for use.
- Congressional Research Service, via Congress.gov — Expiration and Carryforward Rules for the Residential Clean Energy Credit (IN12611) · consulted August 28, 2026 · Section 25D was terminated seven years early by P.L. 119-21, signed 4 July 2025.
- U.S. Department of Energy — Solar Photovoltaic System Cost Benchmarks · consulted August 28, 2026 · Source of the national residential benchmark price per watt used as a sanity check on a quote.
- U.S. Energy Information Administration — Electric Power Monthly, Table 5.6.A — average retail price of electricity · consulted January 31, 2026 · Source of the default utility rate.
Data Sources & Benchmarks
The incentives dataset supplies the federal credit percentage that actually applies, so the page cannot go on quoting a credit after it has been repealed; the EIA dataset supplies the default utility rate the deal has to beat.
Frequently Asked Questions
Is there still a 30% federal solar tax credit in 2026?
Not for a purchase. Section 25D was terminated by P.L. 119-21, signed 4 July 2025, for expenditures made after 31 December 2025 — seven years earlier than its scheduled expiry. The IRS counts the year the system is installed and ready for use, so a 2025 deposit on a system commissioned in 2026 does not qualify. If your proposal still shows a credit line, enter it and this page will report the overstatement in dollars.
What is a good price per watt for residential solar?
Take the contract price and divide by the system's DC watts. The Department of Energy's modelled national benchmark for a representative 8 kW residential system is around $3.15 a watt. Real quotes vary widely by state, roof complexity and equipment, so treat the benchmark as a question rather than a verdict — but a quote at $4.50 a watt should come with an explanation you find convincing.
How can a solar loan be 0.99% APR?
It cannot, in the sense you are meant to hear. The lender is paid up front through a dealer fee charged to the installer, commonly 20-30% of the contract, and that fee is inside the price you sign. The same system costs less in cash. Measured against that cash price, the worked example on this page turns an advertised 0.99% into a true APR of 3.52%, and the borrower pays $12,136 more than buying outright.
How do I find the dealer fee on my proposal?
You will not find it — it is not a line item. Ask the installer for the cash price on the identical system, then divide the gap by the financed price. If they decline to quote cash, or the cash price is the same as the financed price, you have learned something either way. Enter your best estimate here and the audit shows what it costs you.
Is a solar lease or PPA a bad deal?
Not automatically, but the escalator decides it and the proposal only shows year one. At a typical 2.9% escalator against 2% utility inflation, the payment overtakes the value of the power in year nine and the gap widens every year after. Over 25 years that example pays $62,613 for power worth $57,633. A fixed, non-escalating payment changes the answer completely.
What happens to a leased system when I sell the house?
The contract runs with the equipment, not with you. A buyer must qualify to assume it or you must buy it out, and the financier's filing against the property has to be cleared at closing. This is the single most common source of solar complaints at sale, and it is not modelled here — it is a question for the contract and, if the sums are large, for a lawyer.
Should I use the utility rate increase the proposal assumes?
No. That assumption is doing more work than any other number in the document, and it is chosen by the party selling you the system. Enter what you actually believe, then read the break-even figure this page reports: the annual rate rise your utility would have to deliver, every year, for the deal to come out even. If that number is higher than anything your utility has sustained, the proposal is resting on it.
Does this tell me whether solar is worth it for my house?
It tells you what this proposal costs, in cents per kWh, against the rate it has to beat. It does not verify the production estimate, the shading study or the roof, and it does not model time-of-use rates or export rules that credit you below retail. Those can move the answer, which is why the production figure and the credited share are inputs you should check rather than accept.
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Update history
Last updated .
| Date | Version | Change |
|---|---|---|
| 2026-08-28 | 1.0 | First release: price per watt, dealer-fee unbundling with true APR solved against the cash-equivalent price, federal credit reconciliation after the Section 25D termination, lease and PPA escalator crossover, levelized cost per kWh, break-even utility escalation and a year-by-year ledger |