Rising electricity prices: where solar pays back fastest
Compare electricity prices and solar payback by state: see where a rooftop system pays back fastest, where it is slowest, and why credit rules matter.
Published 5 min readRoofPayback editorialChecked by automated fact and quality checks
Official data: EIA · DOE · IRS · how we check
In this article · 9 sections
Short answer
Solar pays back fastest where electricity is expensive. In our example home, Hawaii pays back in 4.1 years with full export credit, California in 5.8 years and Maine in 6.8 years. At the other end, Washington takes 17.2 years and North Dakota 16 years. Price matters more than sunshine. Prices are still rising in many states, but a price rise only helps if your utility credits your exported power fairly.
How we compare states
All numbers here come from the same example home, so states can be compared fairly:
- 7 kW rooftop system, using 10500 kWh a year (a kWh, or kilowatt-hour, is the unit your utility bills you for; see what is a kilowatt-hour).
- Installed cost of $3000 per kW, or $21000 in total, with no incentives and $100 a year for maintenance.
- 40% of use happens while the sun is up.
- Electricity price rises 2.5% a year, and panels lose 0.5% of output a year.
- 25-year horizon. Export credits are capped at a year of grid purchases (annual true-up).
- Output comes from PVWatts v8, south-facing at 20° pitch with 14% losses, for one reference city per state.
- Prices are the EIA average residential price for July 2026.
PVWatts is a free solar production estimator from the U.S. Department of Energy's National Laboratory of the Rockies (formerly NREL). See our methodology for the full math.
Prices are up, but not everywhere
The U.S. average residential price was 18.31¢/kWh in July 2026. A year earlier it was 17.45¢. That is a real rise, but states differ a lot.
Some of the biggest year-over-year jumps in July 2026:
- Hawaii: 48¢, up 22% from 39.36¢.
- New Hampshire: 26.6¢, up 16.7%.
- Maine: 32.41¢, up 15.8%.
- New York: 29.9¢, up 14%.
- Maryland: 21.41¢, up 13.7%.
Some states went the other way:
- Connecticut: 24.16¢, down 12.5% from 27.6¢.
- Louisiana: 12.72¢, down 3%.
- Utah: 13.12¢, down 2.5%.
- Wyoming: 14.36¢, down 1.9%.
- Florida and New Jersey: both down 0.5%.
One year of change is a snapshot, not a forecast. Prices can move back. Treat the level of your price as the stronger signal, and the recent change as context. Our July 2026 price guide has more detail, and why prices differ by state explains the causes.
Where solar pays back fastest
These are the shortest paybacks in the example, assuming full credit for exported power:
| State (reference city) | Price | Yearly output per kW | Payback, full credit | Year-1 savings |
|---|---|---|---|---|
| Hawaii (Honolulu) | 48¢/kWh | 1622 kWh/kW | 4.1 years | $5040 |
| California (Los Angeles) | 33.61¢/kWh | 1677 kWh/kW | 5.8 years | $3529 |
| Maine (Portland) | 32.41¢/kWh | 1319 kWh/kW | 6.8 years | $2992 |
| Massachusetts (Boston) | 30.49¢/kWh | 1302 kWh/kW | 7.3 years | $2779 |
| New York (New York City) | 29.9¢/kWh | 1291 kWh/kW | 7.5 years | $2703 |
| Rhode Island (Providence) | 28.29¢/kWh | 1294 kWh/kW | 7.9 years | $2562 |
| District of Columbia (Washington) | 25.21¢/kWh | 1411 kWh/kW | 8.2 years | $2490 |
Notice that Maine, Massachusetts and New York have modest sunshine. They still pay back quickly because each kWh the panels make replaces a very expensive kWh from the grid. Local pages such as Hawaii, California and Massachusetts show the same math in more detail.
Where payback is slowest
| State (reference city) | Price | Yearly output per kW | Payback, full credit | Year-1 savings |
|---|---|---|---|---|
| Washington (Seattle) | 14.71¢/kWh | 1088 kWh/kW | 17.2 years | $1120 |
| North Dakota (Fargo) | 13.41¢/kWh | 1294 kWh/kW | 16 years | $1214 |
| Oregon (Portland) | 15.97¢/kWh | 1128 kWh/kW | 15.4 years | $1261 |
| Tennessee (Nashville) | 13.71¢/kWh | 1339 kWh/kW | 15.2 years | $1285 |
| Kentucky (Louisville) | 13.81¢/kWh | 1355 kWh/kW | 14.9 years | $1310 |
| Louisiana (New Orleans) | 12.72¢/kWh | 1479 kWh/kW | 14.8 years | $1317 |
Cheap power stretches payback. Nevada has some of the best sun in the data, at 1753 kWh/kW, yet its price of 12.77¢/kWh gives a 14.1-year payback. Arizona, with 1755 kWh/kW and 15.38¢/kWh, comes in at 12 years. Sun helps, but it cannot fully make up for a low price.
Why a price rise does not always shorten payback
Credit rules can change the picture a lot. The same system in the same state can have very different payback depending on how your utility values the power you export. Look at three examples:
| State | Full credit | Half credit | Quarter credit |
|---|---|---|---|
| California | 5.8 years | 7.6 years | 9.7 years |
| Illinois | 11.3 years | 15 years | 17.9 years |
| Arizona | 12 years | 15.2 years | 19.4 years |
"Full credit" means each exported kWh is credited at the retail price, as in classic net metering. Half and quarter credit mean exports are worth less. Rules vary by state and utility, and DSIRE keeps a database of current programs at programs.dsireusa.org. Our guide on net metering vs. net billing explains how to read your own utility's rules.
If you use most of your solar power yourself, credit rules matter less. Part of why we assume 40% of use happens while the sun is up is to reflect that.
Incentives and the example
The example above uses no incentives. The IRS says the 30% federal Residential Clean Energy Credit (Section 25D) is not available for property placed in service after December 31, 2025. Check the IRS page and talk to a tax professional about your situation. Some states and utilities have their own programs, so check DSIRE too. For more on this, read is solar worth it without the tax credit.
How to check your own numbers
- Find your real price per kWh on your bill. State averages hide big differences between utilities. The electricity prices pages show state averages from EIA, which publishes them monthly in the Electric Power Monthly, Table 5.6.A. Recent months are preliminary.
- Ask your utility how it credits exported power, and whether that can change.
- Get written quotes. Your price per kW may be very different from $3000.
- Run your own inputs in the solar calculator.
- Compare your usage with the example. Not sure how many panels you need? See how many solar panels do I need.
Bottom line
High electricity prices are the biggest driver of fast solar payback. Hawaii, California and the Northeast lead in our example. Low-price states, and cloudier ones, take longer. Rising prices help a solar owner, but credit rules, your quote and your own usage can change the result a lot. These figures are an example, not a quote or a promise. Use the solar calculator with your own numbers before you decide.
Sources
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