Production times price equals savings. Multiply the system's yearly kilowatt-hours by the local utility rate and you have the headline number every solar customer wants to see.
12,000 kWh a year at $0.14 per kWh saves $1,680 — the figure that drives the payback conversation.
The example
Three homes, each with estimated yearly production and their utility rate.
| A | B | C | D | |
|---|---|---|---|---|
| 1 | Home | Annual kWh | Rate $/kWh | Savings / yr |
| 2 | Home A | 12,000 | 0.14 | $1,680 |
| 3 | Home B | 9,000 | 0.16 | $1,440 |
| 4 | Home C | 15,000 | 0.13 | $1,950 |
The formula
One multiplication per row:
How it works
Savings is simply production valued at the price you would otherwise pay:
B2is the kilowatt-hours the array makes in a year.C2is the utility rate — what each kWh would cost from the grid.- Multiplying them gives the dollars the system keeps off the bill in year one.
Utility rates rise over time, so a multi-year estimate usually grows this figure by 2–4% per year.
Try it: interactive demo
Enter annual production and your utility rate.
Variations
Add a yearly rate escalator
Project savings in year N with a rate that climbs each year.
Pitfalls & errors
Enter the rate in dollars (0.14), not cents (14), or the estimate is 100x too high.
Net metering rules vary — if export credits differ from the retail rate, split production into self-used and exported kWh.
Practice workbook
Frequently asked questions
Is this the same as my payback period?
Should I use my current rate or an average?
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