# Are solar panels worth it in the first year without the credit? URL: https://solarrealcost.com/does-solar-pay/are-solar-panels-worth-it-now Updated: 2026-09-18 Review: Reviewed by SolarRealCost Editorial Team, editorial review: primary sources checked and independently fact-checked The honest 2026 arithmetic: production from NREL's own model, your real electricity rate, and the federal credit at zero. Sometimes yes, sometimes clearly not. The honest answer is that it depends, and every input you need is public. Four things decide it: how much sun your roof gets, what you pay per kilowatt-hour, what your utility credits exported power at, and what the system costs. The federal credit is no longer one of them. - **Production** comes from NREL's PVWatts — free, public, and better than any sales estimate. - **Your rate** is on your bill; your state's average is published monthly by the EIA. - **The federal credit is $0** for a 2026 purchase. - **Escalation is the assumption that hides bad deals.** 2.5% is defensible; 5% is a sales number. - Sometimes the answer is **no**, and a tool that never says so is not a tool. ## Start with production, from a neutral source [NREL's PVWatts](https://pvwatts.nlr.gov/) is a national-laboratory model that estimates annual output for a specific location, roof orientation, pitch and shading. It is free, it takes two minutes, and it is what our payback tool uses through the [PVWatts v8 API](https://developer.nlr.gov/docs/solar/pvwatts/v8/). Our [PVWatts calculator walkthrough](https://solarrealcost.com/does-solar-pay/pvwatts-calculator) goes through each input box and what the result leaves out. Run it yourself. Then compare the number with whatever an installer's proposal claims. If their figure is materially higher, ask what shading loss they assumed. If you live somewhere gray, see [whether solar panels work on cloudy days](https://solarrealcost.com/does-solar-pay/do-solar-panels-work-on-cloudy-days) for what clouds and winter do to a year's output. Tool: [Will solar pay for itself on your roof?](https://solarrealcost.com/does-solar-pay/tools/will-solar-pay-for-itself). Production from NREL's model, at your real rate, with the federal credit shown at $0 and dated. ## Then the money Annual production times your rate gives the first-year bill offset — roughly, because what you export is credited differently from what you use on site. Net cost divided by that offset gives a simple payback in years. The number people get wrong is escalation: how fast they assume electricity prices rise. It compounds over twenty-five years, so a generous assumption can turn a mediocre investment into a good-looking one on paper. Try it at 2% and at 4%; if the decision flips, it was never solid. **Run the real numbers for your roof.** Good when: Before you talk to anyone, and again after the first quote arrives. Watch out: Any payback figure that still counts a 30% federal credit is wrong for a 2026 purchase. **What this leaves out** Panels degrade roughly half a percent a year. An inverter typically needs replacing somewhere around year 12 to 15. And what your utility pays for exported power is set by your state and can change — often with existing customers grandfathered on different terms. None of that is in a simple payback figure. ## When the answer is no Heavy shade, a north-facing roof with no alternative plane, a very low electricity rate, or a plan to move in three years. Any of those can make the arithmetic fail, and no amount of financing structure fixes it. If your roof is the problem rather than the economics, [community solar](https://www.energy.gov/cmei/systems/community-solar-basics) is the option worth knowing about. ## Bottom line Run PVWatts, use your own rate, set the credit to zero, and be willing to accept a negative answer. The cost side is in [what solar costs to install](https://solarrealcost.com/does-solar-pay/install-solar-panels-cost). Start the Solar Check: https://solarrealcost.com/check ## Common questions ### Is solar still worth it without the federal credit? Sometimes. It depends on your sunlight, your roof orientation and shading, what you pay per kilowatt-hour, and what your utility credits exported power at. All four are knowable before you talk to anyone. ### Where do I get an honest production figure? NREL's PVWatts model is free, public and is what our tool uses. Run your own address through it and compare the answer with any installer's figure. ### What escalation rate should I assume? Around 2.5% a year for residential electricity is defensible. Anything near 5% is a sales input, and because it compounds over 25 years it can make a poor payback look good. ### What does this calculation leave out? Panel degradation of roughly half a percent a year, an inverter replacement somewhere around year 12 to 15, and what your utility actually pays for exports. ## Sources - [NLR (formerly NREL) Developer Network: PVWatts v8 API documentation](https://developer.nlr.gov/docs/solar/pvwatts/v8/) - [NLR (formerly NREL): PVWatts Calculator](https://pvwatts.nlr.gov/) - [IRS: Residential Clean Energy Credit — not available for property placed in service after 31 December 2025](https://www.irs.gov/credits-deductions/residential-clean-energy-credit) - [U.S. Energy Information Administration: average retail price of electricity by state](https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_6_a) - [U.S. Department of Energy: Homeowner's guide to going solar](https://www.energy.gov/eere/solar/homeowners-guide-going-solar)