Solar vs. investing the cash

"Does solar pay for itself?" is the wrong question — almost anything pays for itself eventually. The real question is whether buying the system beats investing the same lump sum. This tool answers that one, with both sides measured the same way.

Open the calculator →Set "Cash return (%/yr)" to your genuine opportunity cost, then read the equivalent-return tile.

The comparison, made fair

The cash side takes the system's price and grows it at your expected return, compounded, with tax on the gains. The solar side takes each year's bill savings, meaning the electricity you stop buying and nothing else, and reinvests them at that same after-tax return. Whichever pile is bigger at your horizon wins. Avoided utility bills aren't taxed and investment gains are, so the cash side clears a slightly lower bar, and the model builds that in. Gasoline never enters this comparison. If you're adding an electric car, what it saves on fuel is the car's own line.

Two numbers do the work:

• Equivalent return — the constant annual yield on the net system cost that makes your raw bill savings over the analysis window add up to that cost, counting the system as worth $0 afterwards. Put it next to your cash assumption. If equivalent return is 7% and your realistic after-tax cash yield is 5%, solar wins on this comparison — and the 7% is already a tax-free yield on avoided bills, not a 7% accounting profit.
• Cost of doing nothing — the escalating utility bills you keep paying if you don't buy. It's the baseline both options are really competing against. If you already have panels, it's the bill with those still running, not a no-solar house.

Picking a return rate you can defend

This is the input that swings the verdict most, so be honest with it. Solar savings are low-risk and bond-like in their steadiness: they show up whether or not the market has a good decade. They differ from a bond in one way that matters here — bond interest is usually taxable and avoided bills are not, so don't hold a tax-free savings stream against a pre-tax stock assumption. Comparing them to a 10% stock-market number holds solar to a bar it was never trying to clear. A conservative figure — the current 10-year Treasury yield is the usual anchor — matches the risk profile. If you want to see solar lose, raising this number is how; the point is to know you did it.

Horizon and degradation

Set the analysis period to something you'll actually hold through — often the warranty length of the battery or inverter, since a major repair after that point changes the math. Panel output fades a little each year (0.5%/yr by default), and a battery's capacity faster (2%/yr); the model carries both on the solar side. The year-by-year table shades everything past your horizon, because those years are less certain.

What this comparison leaves out

Return isn't the whole story. A locked-in bill is worth something during a volatile-rate decade; an owned system moves money into the house rather than spending it; a battery keeps the lights on in an outage. The calculator has separate lenses for each of those — rate hedge, home equity, resilience — so you can weigh them without letting them muddy the core return comparison.

Compare your numbers →See How it works for the after-tax and reinvestment mechanics in full.