When you're considering solar, the fundamental question is simple: over the life of the system, will solar cost less than continuing to buy electricity from the grid? Let's do the math.

The True Cost of Grid Electricity

Most people think of their electric bill as a fixed monthly expense. But electricity rates have been steadily climbing:

  • 2020 average US residential rate: $0.131/kWh
  • 2023 average US residential rate: $0.164/kWh
  • 2026 average US residential rate: ~$0.18/kWh

That's a roughly 37% increase in six years. At a 3.5% annual increase, today's $150/month bill becomes $250/month in 15 years and $350/month in 25 years.

The True Cost of Solar

Solar has a high upfront cost but virtually zero ongoing cost. Here's a typical scenario:

  • System cost: $24,000
  • After 30% ITC: $16,800
  • 25-year electricity production value: $40,000–$55,000
  • Net savings over 25 years: $23,000–$38,000

Monthly Cost Comparison

If you finance your solar system with a loan:

  • Average solar loan payment: $120–$160/month (fixed for 15-20 years, then $0)
  • Average grid electric bill: $150/month (and rising every year)

In many cases, your solar loan payment is lower than your current electric bill from day one. After the loan is paid off, your electricity is essentially free for the remaining 10+ years of the system's life.

State-by-State Comparison

The solar advantage varies by location:

  • California: Solar wins decisively. At $0.32/kWh, solar produces electricity at an effective rate of about $0.06/kWh over 25 years.
  • Texas: Solar is competitive now and becomes increasingly advantageous as rates rise in the deregulated market.
  • Florida: Solar wins with 237 sunny days and strong production. Tax exemptions sweeten the deal.
  • Massachusetts: High rates ($0.28/kWh) mean solar pays for itself in under 6 years.
  • Arizona: With 299 sunny days, solar produces more power per panel than almost anywhere else.

What About Cloudy Days and Winter?

Solar panels work on cloudy days — just at reduced capacity (typically 10-25% of rated output). With net metering, your system overproduces in summer and you use those credits in winter. Most homeowners zero out their annual electricity cost even with seasonal variation.

The Grid Reliability Factor

Beyond cost, there's the reliability angle. Grid outages are becoming more common due to extreme weather, aging infrastructure, and increasing demand. Solar with battery storage provides energy security that the grid alone cannot offer.

The Verdict

For the majority of American homeowners, solar is already cheaper than grid electricity on a 25-year cost basis. With the 30% federal tax credit available through 2032 and state incentives stacking on top, there has never been a better time to make the switch.

Check your local electricity rates at ZipElectricity.com to see how solar compares in your area.