How much can you save with solar panels?
Last edited
Author
Andrew Blok
Electrification and Solar Writer and Editor
Editor
Ryan Barnett
SVP, Policy & New Market Development
If your electric bill keeps creeping up and the savings claims you've seen for home solar panels sound too big to be true, gut check the math.
In Palmetto's average estimates for homes that bought solar with cash or a loan in the second half of 2025, monthly savings ranged from less that $100 a month to nearly $300, depending on your state. Real savings depends on a combination of your home’s roof and available sunlight, your utility’s policies, and your typical energy costs without solar. Here’s what you need to know to understand your potential to save.
How solar savings work
Solar panels save you money by helping you buy less electricity from your utility.
The U.S. Energy Information Administration (EIA) says U.S. homes pay an average of 18.2 cents per kWh in 2026 and expects prices to keep rising. Every kilowatt-hours your panel makes is one you don’t need to buy from your utility. And, in many places, every bit of electricity you share with your neighbors (when your panels make more electricity than you need) can earn you credits that further reduce your bill, though you’ll still receive an electric bill with solar panels.
While saving 18 cents at time may seem small, it can add up to thousands of dollars over solar panels' typical lifespan.
How you save depends on whether you buy or lease your solar panels. When you purchase, most of your expense occurs up front, when you pay to purchase and install the solar panels. Then, your savings work to offset that expense over your payback period.
Saving with a solar lease works a bit differently. Instead of paying upfront, you make predictable monthly payments over the lifetime of your lease. When your lease payment and remaining electric bill is smaller than your electricity costs would have been without solar, you save overall. It’s a good idea to look at annual savings, since monthly savings can vary significantly throughout the year.
It’s possible that solar panels, purchased or leased, won’t save you enough money to make them worth it on strictly financial terms. A heavily shaded roof, small electric bills to start, or an overpriced or otherwise bad solar deal might all result in low or negligible savings. It’s one of the reasons you should get multiple quotes before you sign a contract.
How much can solar panels save you?
These figures come from real Palmetto installations purchased with cash or loans in the second half of 2025, before any incentives. They’re the average of estimated savings and shouldn’t be taken as representative of what any individual house will see.
| State | Avg. estimated monthly savings | Avg. estimated 25-year savings | Avg. payback period (years) |
|---|---|---|---|
| Arizona | $144 | $63,152 | 11.1 |
| California | $238 | $104,508 | 6.2 |
| Colorado | $131 | $57,602 | 10.7 |
| Connecticut | $289 | $126,542 | 7.3 |
| Florida | $192 | $84,120 | 10.6 |
| Georgia | $106 | $46,433 | 15.8 |
| Illinois | $136 | $59,764 | 14 |
| Indiana | $131 | $57,744 | 13.8 |
| Kansas | $126 | $55,540 | 12.9 |
| Kentucky | $109 | $48,012 | 16 |
| Maine | $223 | $97,675 | 9 |
| Maryland | $212 | $93,078 | 10 |
| Massachusetts | $289 | $126,679 | 6.6 |
| Michigan | $72 | $31,535 | 18.9 |
| New Hampshire | $170 | $74,732 | 11.9 |
| New Jersey | $190 | $83,522 | 9.9 |
| New Mexico | $131 | $57,611 | 9.7 |
| New York | $247 | $108,227 | 7.1 |
| North Carolina | $149 | $65,556 | 11.7 |
| Ohio | $133 | $58,434 | 12.5 |
| Oklahoma | $90 | $39,677 | 17.2 |
| Oregon | $102 | $44,913 | 15.1 |
| Pennsylvania | $189 | $83,109 | 10 |
| Rhode Island | $224 | $98,427 | 8 |
| South Carolina | $101 | $44,209 | 12.1 |
| Texas | $164 | $72,119 | 11 |
| Vermont | $185 | $81,302 | 10.5 |
| Virginia | $162 | $70,978 | 11.8 |
| Wisconsin | $212 | $92,972 | 11.4 |
Average savings estimates and payback periods are based on real Palmetto installations purchased with cash and loans in the second half of 2025, but do not necessarily reflect the value you would see. Reach out for a personalized savings estimate. Visit individual state pages for methodology and assumptions.
What influences your savings with solar panels
Your electricity rate and usage matter most, followed by your roof, how your utility credits extra power, and how you pay.
- Rate and usage. A higher rate and a higher bill give solar higher potential savings.
- Roof and system size. Direction, shade, and space affect output. How many solar panels you need depends on your usage and roof.
- Credit for extra power. Net metering, which credits you for electricity you send to the grid at the retail rate, is a significant driver of savings. Some utilities credit you at a lower rate, which can lower savings.
- How you pay. Cash, a loan, and a lease each change your monthly math.
- Incentives. Rebates or tax credits still exist in some states and cities. They can lower your cost and boost your savings.
Adding significant electricity demand (like a new electric vehicle or hot tub) after you go solar can raise what you pay your utility. That can make it look like you’re saving less, even if you’re still saving the same amount.
Ask any installer which rate and usage an estimate assumes. These questions to ask your solar installer help.
A state average is a starting point, not your number. Learn more about what solar could do for your home, or reach out for a free quote when you want a personalized savings estimate.
See how much you can save by going solar with Palmetto
Frequently asked questions
How do solar panels save money?
They help you buy less electricity from your utility and, in many places, can also earn you bill credits for any electricity you send to the grid. These credits come from policies called net metering or net billing, and their value varies by utility.
What is the solar payback period?
For purchased solar panels, it is the time it takes for your savings to equal your costs. We estimate that average payback periods for Palmetto systems installed in the second half of 2025 run 6.2 to 18.9 years, depending on the state.
Leased solar panels don’t really have a payback period, since there’s no upfront cost.
How do I calculate my solar payback period?
Divide your total system cost by your estimated yearly savings. If a hypothetical solar panel system cost $20,000 and saved $2,000 a year, it’s payback period would be 10 years.
Disclaimer: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors.
