Executive Summary
This study compares residential solar across Arizona, Texas, Florida, North Carolina, Georgia and California on what a primary source publishes: each state’s average residential electricity rate (EIA Electric Power Monthly Table 5.6.A, July 2026), its state tax credit and exemptions, and how its utilities credit exported power (Table 2). The installed cost, system size, first-year savings and payback figures earlier versions printed were our own model assumptions — an assumed price per watt times a typed system size — and were withdrawn on October 17, 2026: the national median price per watt Berkeley Lab publishes is not a local price. The federal residential solar credit (Section 25D) expired for homeowner-purchased systems installed after December 31, 2025, so a 2026 cash purchase carries the full price; a lease or PPA may still capture the commercial Section 48E credit (for systems placed in service by December 31, 2027). California’s payback is withdrawn for a second reason: under NEM 3.0 exported power is credited far below the retail rate.
Rates come from EIA’s July 2026 state-average residential prices (Electric Power Monthly Table 5.6.A, released 2026-09-24). Incentive and net-metering rules come from DSIRE and the utilities’ own tariffs (Table 2). To price your own payback, run our solar payback calculator with your quote and your bill.
Key Findings
- No modelled payback is printed. The national median price per watt Berkeley Lab publishes is not a local price, so the cost, savings and payback figures earlier versions of this study printed were withdrawn on October 17, 2026; what remains is sourced.
- Electricity rates differ far more than most buyers expect. California’s average residential rate (33.61¢/kWh, EIA, July 2026) is more than double Texas’s (15.88¢); the rate is one of the three inputs that decide a payback, with the installed price and how much of the output the home uses itself.
- How exports are credited matters as much as the rate. Florida’s investor-owned utilities credit exports at the retail rate through the year; Arizona, Georgia and North Carolina utilities credit them far below retail (Table 2); California’s NEM 3.0 credits them at avoided-cost values, which is why no California payback is printed.
- The federal §25D residential solar tax credit expired for systems installed after December 31, 2025, so a 2026 cash purchase carries the full price; a lease or PPA may still capture the §48E commercial credit (for systems placed in service by December 31, 2027).
How Solar Payback Is Calculated
The payback period is the number of years it takes for cumulative electricity bill savings to equal the net out-of-pocket system cost. The net cost reflects applicable state incentives and utility rebates (the federal §25D credit expired for 2026 purchases; a lease or PPA may still capture 30% via §48E, for systems placed in service by December 31, 2027). The formula is:
Payback (years) = Net System Cost / Annual Electricity Savings
First-year savings are what a system’s output is worth at the price you would otherwise pay: the kilowatt-hours it offsets times your rate, less whatever your utility credits exports below retail. All three inputs differ significantly across states and utility territories, and the installed price that completes the payback arithmetic comes from your own quote — which is why, since October 17, 2026, this study prints no modelled payback.
A critical assumption in any payback arithmetic is the rate path. Holding today’s rate flat is the conservative case; if rates rise, a system pays back sooner and 25-year savings run higher; if rates fall, as Florida’s average did over the past year (EIA), payback runs longer.
6-State Electricity Rate Comparison
Table 1 keeps the one input of the earlier payback model that a primary source publishes: each state’s average residential electricity rate. Installed cost, system size, first-year savings and payback were our own model assumptions (an assumed price per watt × a typed system size) and were withdrawn on October 17, 2026: the national median price per watt Berkeley Lab publishes is not a local price.
| State | Rate (state average) |
|---|---|
| Arizona | 15.38¢/kWh (EIA, July 2026) |
| Florida | 15.03¢/kWh (EIA, July 2026) |
| Georgia | 16.27¢/kWh (EIA, July 2026) |
| North Carolina | 15.16¢/kWh (EIA, July 2026) |
| Texas | 15.88¢/kWh (EIA, July 2026) |
| California | 33.61¢/kWh (EIA, July 2026) |
Source: EIA Electric Power Monthly Table 5.6.A (July 2026, released 2026-09-24; state-average residential price, not a utility tariff).
Export credits: Arizona, Georgia and North Carolina utilities credit exported power far below the retail rate: APS at 5.554¢/kWh (Rate Rider RCP, from September 1, 2026) and TEP at 5.13¢/kWh (Rider R-14 RCP, from October 1, 2025); Georgia Power at 7.2188¢/kWh (the 2026 solar avoided-cost rate of 3.2188¢ plus the 4¢ renewable generation adder; Georgia Power rooftop-solar FAQ; Rate RNR-11, for 2026); Duke Energy Carolinas at 4.53¢/kWh (Rider RSC, effective July 1, 2026), so a home that exports part of its output saves less than the retail rate alone suggests. Duke Energy Progress’s export credit was not verified.
Why This Study Does Not Price a California Payback
California has the highest residential electricity rate of the six states, averaging 33.61¢/kWh (EIA, July 2026, state average) — more than double Texas’s 15.88¢. Intuitively, a high rate should produce the fastest payback. NEM 3.0 (Net Energy Metering 3.0), which took effect for new solar customers in California in April 2023, breaks that link: excess solar power exported to the grid earns only the CPUC Avoided Cost Calculator’s hourly export value instead of the retail-rate credit available under NEM 2.0, so a California system is worth what its owner uses on site, and much less for what it exports. Pricing that needs a self-consumption share no utility or regulator publishes. Earlier versions of this study printed California paybacks (withdrawn 2026-09-30) and California installed costs from our own model (withdrawn 2026-10-17). For how export credits work, see our NEM 3.0 solar economics tracker.
State Incentive Comparison
| State | State Tax Credit | Sales Tax Exemption | Property Tax Exemption | Net Metering Policy | Utility Rebates Available |
|---|---|---|---|---|---|
| Arizona | 25% (up to $1,000) | Yes — full exemption | Yes — 100% | Net billing — exports credited below retail (APS Resource Comparison Proxy; SRP export price plans) | Limited |
| North Carolina | None | Yes — full exemption | Yes — 80% exemption | Duke Energy: new customers on Residential Solar Choice or Bridge rider, monthly exports credited at avoided cost (retail-credit rider closed 2023-09-30) | Duke Energy (NC): PowerPair one-time incentive for solar plus a battery, up to $9,000 (limited capacity) |
| Florida | None | Yes — full exemption | Yes — 100% | Investor-owned utilities: retail kWh credit, year-end excess paid at as-available rate (Fla. Admin. Code R. 25-6.065); municipal utilities and co-ops set their own terms | FPL: limited |
| Texas | None | Yes — full exemption | Yes — 100% | No statewide net metering — buyback set by the retail plan or local utility (PUCT) | Austin Energy: $4,000 (from July 1, 2026) |
| Georgia | None | Yes — full exemption | Yes — 100% | Georgia Power: instantaneous netting, exports at solar avoided cost (monthly netting closed to new customers) | None (Georgia Power states it offers no residential solar rebate) |
| California | None | Yes — full exemption | Yes — 100% | NEM 3.0 Net Billing Tariff — exports credited at the CPUC Avoided Cost Calculator’s hourly value (D.22-12-056) | LADWP, PG&E: varies |
Source: DSIRE database (April 2026); EIA state incentive summaries; utility tariff schedules. Utility rebate column checked 2026-10-20 on each utility’s own page: Austin Energy, Georgia Power, Duke Energy. Utility rebate column checked 2026-10-20 on each utility’s own page: Austin Energy, Georgia Power, Duke Energy. Net metering column (checked 2026-09-16): APS solar transition (RCP); SRP solar price plans; Public Utility Commission of Texas; Georgia Power RNR-11 tariff.
System Size Sensitivity Analysis
Payback does not scale with system size in a simple cost-per-watt model: a larger system costs proportionally more and offsets proportionally more, so size alone does not move the answer. Real quotes are not that tidy: fixed costs such as permitting and interconnection weigh more on a small system, and a larger system exports more of its output, which Arizona’s net billing, Georgia Power and Duke Energy credit below the retail rate (Table 2), so an oversized system can take longer than a per-watt model suggests. Earlier versions of this page printed a size table and metro figures from that model; they could not be sourced and have been withdrawn. To test a size against your own quote, use the payback calculator.
The Battery Storage Question
Adding a battery storage system extends payback on its own economics — the battery itself does not produce power and must be justified by backup value or time-of-use rate arbitrage. In Florida, where time-of-use rates are limited, battery ROI is primarily a resilience calculation. In Arizona, where APS has aggressive peak-demand charges from 3–8pm, a battery that shifts solar consumption to peak hours can improve the combined system’s economics, but this study does not model time-of-use rates, so it puts no number on that gain.
Compare Quotes in Your State
Related Reading
Related research & tools
Frequently Asked Questions
How long does it take for solar panels to pay off in the South?
We print no modelled payback figure: the national median price per watt Berkeley Lab publishes is not a local price, and the payback turns on your installed price, how much of the system's output you use yourself and your rate (each state's average residential rate is EIA's July 2026 figure in Table 1). Utilities in Arizona, Georgia and North Carolina credit exports below retail, so paybacks there run longer for homes that export; California's is withdrawn under NEM 3.0 as well. The federal Section 25D residential credit expired for systems installed after December 31, 2025; a lease or PPA may still capture 30% through the Section 48E commercial credit (for systems placed in service by December 31, 2027).
Which Southern state has the best solar return on investment?
We do not rank the states on payback, because a payback needs your own installed price, and the national median price per watt Berkeley Lab publishes is not a local price. What the sources do show: the average residential electricity rate (EIA, July 2026) is highest in California (33.61 cents per kWh) and lowest in Florida (15.03 cents) among the six; Florida's investor-owned utilities credit exports at retail while Arizona, Georgia and North Carolina utilities credit them far below it; Arizona is the only one of the six with a state income-tax credit (25%, capped at $1,000).
What factors most influence solar payback period?
The five dominant factors are: (1) electricity rate — at the same cost and output a higher rate pays back faster, but only for power used on site or credited at retail: California has the highest rate of the six, yet NEM 3.0 credits exports far below it, which is why this study does not price a California payback; (2) installed price per watt — the input your own quote sets, so compare at least three itemized quotes; (3) net metering policy — retail-rate credit vs. avoided-cost buy-back rates can materially lengthen payback; (4) sun hours — which vary by location (NREL's PVWatts estimates production for any U.S. address); (5) available incentives — state/utility rebates typically reduce net system cost (the federal §25D credit expired for 2026 purchases; a lease or PPA may still capture 30% via §48E, for systems placed in service by December 31, 2027).
Methodology
- Rates: EIA Electric Power Monthly Table 5.6.A, July 2026 (released 2026-09-24, eia.gov): each state’s average residential price — a state average, not a utility tariff. Texas retail prices vary by retail electric provider.
- Incentives and net metering: state statutes and utility tariffs as listed in Table 2 (DSIRE and the utilities’ own filings), each with its citation.
- Federal credit: the residential §25D credit expired for homeowner-purchased systems installed after Dec 31, 2025, so a 2026 cash purchase carries the full cost basis; leased/PPA systems may still capture 30% via the §48E commercial credit (for systems placed in service by December 31, 2027).
- What is not here: installed cost, system size, first-year savings and payback. The national median price per watt Berkeley Lab publishes is not a local price, and every such figure this study once printed came from our own model (an assumed price per watt times a typed system size, valued at the state-average rate).
- Correction (2026-09-26): earlier versions of this table used rates it described as February 2026 EIA figures (they were not) and an annual-savings column that could not be reproduced from its stated method.
- Correction (2026-09-30): California paybacks, and the ranges and medians that included them, were withdrawn: the model set no export credit or self-consumption share, so it could not price NEM 3.0.
- Correction (2026-10-17): the remaining modelled figures — installed cost, system size, first-year savings and payback for every state — were withdrawn: the national median price per watt Berkeley Lab publishes is not a local price. The rates, statutes and export-credit disclosures stand.
- Retitled (2026-10-20): formerly “Solar Payback Periods Across the South”. With the modelled payback figures withdrawn, the study was renamed for what it contains: state electricity rates and net-metering and incentive rules. The URL is unchanged.
