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Part VII: Solar ElectricityChapter 11. Grid-Tied and Off-Grid PV

PV Economics: Incentives, Payback, Net Metering

How to read a payback claim as of 2026, using official incentive pages and the export rate on your own tariff.

Difficulty
Beginner
Cost
Free
published

A payback claim rests on three numbers: what the system costs, what incentive you can actually use, and what a kilowatt-hour is worth on your tariff. As of 2026 those three numbers are not national facts. This page is how to read them. It is not tax advice, and it is not a quote.

Array size still starts from the electric bill. Whether the project is worth your time at all is the question on the why-build page. Landing the wires is still the electrician page. The links at the bottom are other people's projects, and this page does not retell them.

Difficulty

Level
Beginner
Time
An evening with a tariff and the current tax instructions
Skills
Separating a retail rate from an export rate

Cost estimate

Free

The reading is free. A grid-tied array is a construction project. Do not budget from a module price, and do not budget from a percentage a salesperson remembered.

Materials

ItemQtyNotes
The IRS instructions for the year you will file1Form 5695 and the residential clean energy credit page. The form instructions win if a summary page lags behind them.
Your utility tariff and interconnection rules1The schedule that prices energy you use and energy you export. A neighbor's bill is not this document.
A state or utility program page, if one existsOptionalConfirm it on the agency or utility site. A directory is a map, not the statute.

Incentives, as of 2026

Read the Internal Revenue Service pages, not a slide. The overview is the residential clean energy credit. The filing rules are the instructions for Form 5695. As of 2026 those instructions say you cannot claim the residential clean energy credit for expenditures made after December 31, 2025. The overview page describes a 30 percent credit for qualified property installed from 2022 through 2025, and it says that credit is not available for property placed in service after December 31, 2025. A leftover credit from an earlier year may still be a carryforward on the form. None of that is a cash rebate, and a credit you cannot use because you owe no tax is not a discount until a year you can use it.

State credits, sales-tax exemptions, property-tax treatment, and utility rebates are a different pile. They change on their own calendars. Start with your state energy office and the utility program page. DSIRE, kept at North Carolina State University, is a useful index of policies. It is not the law. If the index and the statute disagree, the statute wins. This page will not print a dollar rebate. A dollar figure here would be stale the month a commission changed it.

Ask whoever quotes an incentive which document, which tax year, and which line the number comes from. If they cannot point at a page, do not use the number.

What the tariff pays

As of 2026 there is no single national export rate. Your state public utility commission and your utility's tariff decide. Three patterns cover most bills, and the names get used loosely:

A retail net-metering tariff credits exported energy at or near the rate you pay for energy you buy, often only up to the energy you use in the billing period. A net-billing or export-credit tariff pays exports at a separate rate, frequently lower, printed in the schedule. A time-of-use tariff makes the hour matter, so midday exports and evening purchases are not the same product.

Kilowatt-hours you use while the array is producing avoid a purchase at the retail rate. Kilowatt-hours you send out are worth the export rate. A payback that prices every kilowatt-hour at retail is wrong when you export a lot. Shifting a load into the sunny hours, when that is safe and real, captures retail on those hours. It does not change the tariff.

Cost, tariff, then yearsThree boxes: installed cost, the tariff credit, and simple payback. The drawing says the rate is on the tariff.Installed costBefore any creditYour tariffUse and export may differSimple yearsCost over annual valueAs of 2026 the incentive and the export rate are on official pages.Look up the dollar amounts there.
Cost, then the tariff, then the years. The drawing has no dollar credit in it on purpose.

Simple payback from your own numbers

Net cost is the installed cost times one minus the incentive fraction you can actually use. Annual value is the kilowatt-hours that avoid a purchase or earn a credit, times the dollars per kilowatt-hour those kilowatt-hours are worth. Years are net cost divided by that annual value. The starters, 10,000 dollars, a zero incentive, 5,000 kilowatt-hours, and 20 cents, are arithmetic so the form has an answer. As of 2026 they are not an installed price, a tax credit, or a utility rate.

10.0 years

Net cost about $10,000. Annual value about $1,000. If exports and self-use are paid at different rates, run the form once for each rate and add the annual values yourself.

Simple payback ignores module aging, a future inverter, the time value of money, and a tariff that can be rewritten. It is the optimistic sketch. Use it to throw out a fantasy, not to promise a date when the array has "paid for itself."

Composite: retail on every kilowatt-hour

This composite is an invented bill, not a utility and not a house you can visit. The household prices the whole year of production at the retail energy rate. The tariff they actually take service under pays a lower export credit for midday surplus and retail only for energy they use on site. The sunny hours, which are the hours the array makes its best power, are the hours they are not home. The payback they told their family was the retail one. The bill they receive is the export one.

The lesson is to split the year into self-use and export before you divide cost by savings. Details here are round so they cannot be someone's diary. Real project write-ups stay in the links below.

  1. Read the IRS pages for the year you file

    Form 5695 instructions and the residential clean energy credit page. As of 2026, do not assume a new installation gets the credit that applied through 2025.

  2. Read the tariff, not a neighbor

    Find the energy rate you avoid and the rate, if any, paid for exports. Note time-of-use windows and any fixed charges the array will not erase.

  3. Check state and utility programs at the source

    Use an index only as a lead. The number you keep is the one on the agency or utility page, dated the day you read it.

  4. Run payback with the rate you will actually get

    Incentive fraction starts at zero until a document says otherwise. If two rates apply, run them separately. Treat the years as a sketch.

Further reading

These links go to outside sources. This book cites them by link and does not copy their words or pictures.

General education, not a permit or a stamped design. Follow the safety note in the guide, read the safety disclaimer, and hire a licensed trade when the work requires one.