Electricity Rate Sensitivity Calculator
See how much electricity price escalation (0%, 3%, or 6% per year) changes your solar payback period, 25-year profit, and IRR. Utility rates are the biggest lever in solar ROI.
How this calculator works
- Utility rates are the single biggest lever in solar ROI. This tool runs the same 6 kW benchmark at three electricity price scenarios: flat (0%/yr), moderate (3%/yr), and high (6%/yr) escalation.
- Each scenario returns payback period, 25-year net profit, and IRR for your state.
- US residential electricity has risen about 4–5%/year over the last decade — the 3% scenario is the conservative middle.
Example scenarios
High-rate state (MA): Payback swings ~7 yr at 0% to ~5 yr at 6% escalation — big sensitivity.
Low-rate state (ID): Even 6% escalation may not fix a 18+ yr payback — rate level matters more than growth.
Data & algorithm
- For each escalation, we project 25 years of cash flow: production × (self-consumption × escalated rate + export × export credit) minus degradation.
- Payback = net cost ÷ year-1 savings. IRR from the 25-year cumulative cash flow.
Official data sources
- EIA (rates; historical escalation ~4–5%/yr), NREL PVWatts.
All figures dated 2026. Incentives and rates change — verify current values with your utility and the administering authority before making decisions.
Frequently asked questions
How much do electricity rate increases affect solar payback?
A lot — at 6%/yr escalation, 25-year profit is typically 2–3× the flat-rate scenario. This is the core argument that solar is an inflation hedge.
What rate escalation should I assume?
EIA data shows US residential rates rising ~4–5%/year over the last decade; 3% is a conservative planning number.
Does rate sensitivity differ by state?
Yes — states with full-retail net metering capture escalation on both self-use and exports; net-billing states only on self-use, so they are less sensitive.