Solar Payback by Electricity Bill: Why Higher Edison/PG&E Bills Mean Faster Payback

The Simple Truth: Higher Bills = Faster Solar Payback

One of the most common questions we get is: "How long will it take for my solar system to pay for itself?" The answer depends on one key factor: how much you're currently paying for electricity.

Here's the simple math: If you're paying $600/month to Edison or PG&E, you'll save $600/month with solar. If you're paying $200/month, you'll save $200/month. The higher your bill, the more you save, and the faster your system pays for itself.

In this guide, we'll break down solar payback periods for different electricity bill amounts, showing you exactly why higher bills mean faster payback—and why now is the perfect time to go solar, especially if you're paying $400+ per month.

Understanding Solar Payback

Solar payback is the time it takes for your electricity savings to equal the cost of your solar system. Once you've reached payback, every dollar saved is pure profit for the remaining 20+ years of your system's life.

Key Factors in Payback:

Your current electricity bill: Higher bills = more savings = faster payback
System cost: Larger systems cost more but produce more
Tax credits: 30% federal ITC reduces your net cost
Financing vs. cash: Financing adds interest but preserves cash flow
Rate increases: As utility rates rise, your savings increase, accelerating payback

Payback Scenarios by Monthly Electricity Bill

Let's look at real payback calculations for different monthly electricity bills. All examples assume:

30% federal tax credit applied
Cash purchase (no financing interest)
4% annual electricity rate increases
Southern California Edison or PG&E rates ($0.28-$0.35/kWh average)
Net metering credits applied

Scenario 1: $200/Month Electricity Bill

Current Situation:

Monthly bill: $200
Annual consumption: ~7,140 kWh (at $0.28/kWh)
Annual cost: $2,400

Solar Solution:

System size needed: 5-6 kW
Number of panels: 13-15 panels (400W each)
System cost: $15,000-$18,000
After 30% ITC: $10,500-$12,600

Payback Calculation:

Year 1 savings: $2,400
Year 2 savings: $2,496 (4% rate increase)
Year 3 savings: $2,596
Year 4 savings: $2,700
Year 5 savings: $2,808
Cumulative savings after 5 years: $13,000
Payback period: 4.5-5 years

Scenario 2: $400/Month Electricity Bill

Current Situation:

Monthly bill: $400
Annual consumption: ~14,280 kWh
Annual cost: $4,800

Solar Solution:

System size needed: 10-12 kW
Number of panels: 25-30 panels
System cost: $30,000-$36,000
After 30% ITC: $21,000-$25,200

Payback Calculation:

Year 1 savings: $4,800
Year 2 savings: $4,992
Year 3 savings: $5,192
Year 4 savings: $5,400
Year 5 savings: $5,616
Cumulative savings after 5 years: $26,000
Payback period: 4-4.5 years

Why Faster? While the system costs more, you're saving twice as much per month, so the payback is actually slightly faster.

Scenario 3: $600/Month Electricity Bill (FAST PAYBACK)

Current Situation:

Monthly bill: $600
Annual consumption: ~21,420 kWh
Annual cost: $7,200

Solar Solution:

System size needed: 15-18 kW
Number of panels: 38-45 panels
System cost: $45,000-$54,000
After 30% ITC: $31,500-$37,800

Payback Calculation:

Year 1 savings: $7,200
Year 2 savings: $7,488
Year 3 savings: $7,788
Year 4 savings: $8,100
Year 5 savings: $8,424
Cumulative savings after 5 years: $39,000
Payback period: 4-4.5 years

The Advantage: With a $600/month bill, you're saving $7,200 in Year 1 alone. That's 23% of your system cost recovered in the first year!

Scenario 4: $800/Month Electricity Bill (VERY FAST PAYBACK)

Current Situation:

Monthly bill: $800
Annual consumption: ~28,560 kWh
Annual cost: $9,600

Solar Solution:

System size needed: 20-24 kW
Number of panels: 50-60 panels
System cost: $60,000-$72,000
After 30% ITC: $42,000-$50,400

Payback Calculation:

Year 1 savings: $9,600
Year 2 savings: $9,984
Year 3 savings: $10,384
Year 4 savings: $10,800
Year 5 savings: $11,232
Cumulative savings after 5 years: $52,000
Payback period: 4-4.5 years

Exceptional Payback: With an $800/month bill, you save nearly $10,000 in Year 1—that's 20-24% of your system cost recovered immediately!

Scenario 5: $1,000+/Month Electricity Bill (ULTRA-FAST PAYBACK)

Current Situation:

Monthly bill: $1,000+
Annual consumption: 35,700+ kWh
Annual cost: $12,000+

Solar Solution:

System size needed: 25-30 kW
Number of panels: 63-75 panels
System cost: $75,000-$90,000
After 30% ITC: $52,500-$63,000

Payback Calculation:

Year 1 savings: $12,000+
Year 2 savings: $12,480+
Year 3 savings: $12,979+
Year 4 savings: $13,498+
Year 5 savings: $14,038+
Cumulative savings after 5 years: $65,000+
Payback period: 4-4.5 years

Maximum Value: At $1,000+/month, you're saving $12,000+ in Year 1—recovering 19-23% of your system cost in the first year alone!

Why Higher Bills = Faster Payback

The math is clear: Higher electricity bills mean faster solar payback. Here's why:

1. More Monthly Savings

The most obvious reason: If you're paying $600/month, you save $600/month with solar. If you're paying $200/month, you save $200/month. More savings = faster payback.

2. Better Cost Per Watt

Larger systems (needed for higher bills) typically have better cost per watt:

Small system (5 kW): $3.00-$3.60/watt
Medium system (15 kW): $2.50-$3.00/watt
Large system (25 kW): $2.00-$2.50/watt

This means larger systems are more cost-effective per unit of production.

3. Faster Tax Credit Recovery

With higher bills, your first-year savings are larger, so you recover a larger percentage of your system cost in Year 1:

$200/month bill: Year 1 savings = 19% of system cost
$600/month bill: Year 1 savings = 23% of system cost
$1,000/month bill: Year 1 savings = 19-23% of system cost

4. Rate Escalation Amplifies Savings

As utility rates increase 4-5% annually, higher bills mean larger absolute savings increases:

$200/month bill: $8/month increase = $96/year more savings
$600/month bill: $24/month increase = $288/year more savings
$1,000/month bill: $40/month increase = $480/year more savings

Higher bills = larger savings increases = faster payback acceleration.

Real-World Example: $600/Month Bill

Let's look at a detailed example for a homeowner paying $600/month to Edison:

Current Situation:

Monthly Edison bill: $600
Annual cost: $7,200
25-year cost (with 4% increases): $270,000+

Solar Solution:

System size: 18 kW
System cost: $54,000
30% ITC: $16,200
Net cost: $37,800

Year-by-Year Payback:

Year 1: Save $7,200 | Remaining: $30,600
Year 2: Save $7,488 | Remaining: $23,112
Year 3: Save $7,788 | Remaining: $15,324
Year 4: Save $8,100 | Remaining: $7,224
Year 5: Save $8,424 | PAYBACK ACHIEVED!

Payback: 4.5 years

Years 6-25: Pure Profit

Year 6: $8,760 savings
Year 10: $10,200 savings
Year 15: $12,000 savings
Year 20: $14,100 savings
Year 25: $16,600 savings
Total 25-year savings: $230,000+
ROI: 508% over 25 years

Financing vs. Cash: Impact on Payback

How you pay for solar affects your payback period:

Cash Purchase

$600/month bill example:

System cost: $54,000
After ITC: $37,800
Payback: 4.5 years
Best long-term ROI

Financed Purchase

$600/month bill example:

System cost: $54,000
Loan amount: $54,000 (you get ITC as cash)
Monthly payment: $350/month (20-year loan at 5%)
Monthly savings: $600 (electricity) - $350 (loan) = $250/month
Payback: ~5-6 years (when loan is paid off)
Still excellent ROI, preserves cash flow

Key Point: Even with financing, if your electricity bill is $600/month and your loan payment is $350/month, you're saving $250/month from day one!

Edison vs. PG&E: Rate Differences

Both utilities have high rates, but there are slight differences:

Southern California Edison (SCE)

Average rate: $0.28-$0.32/kWh
Time-of-use rates: Peak hours (4-9 PM) can reach $0.40-$0.50/kWh
High usage tiers: Can exceed $0.50/kWh

Pacific Gas & Electric (PG&E)

Average rate: $0.30-$0.35/kWh
Time-of-use rates: Peak hours can reach $0.45-$0.55/kWh
High usage tiers: Can exceed $0.60/kWh

Impact on Payback: Higher rates mean faster payback. PG&E customers with high bills often see slightly faster payback than SCE customers due to higher average rates.

Payback Comparison Table

Here's a quick reference table showing payback periods by monthly bill:

Monthly Bill	System Size	Net Cost (After ITC)	Year 1 Savings	Payback Period
$200/month	5-6 kW	$10,500-$12,600	$2,400	4.5-5 years
$400/month	10-12 kW	$21,000-$25,200	$4,800	4-4.5 years
$600/month	15-18 kW	$31,500-$37,800	$7,200	4-4.5 years
$800/month	20-24 kW	$42,000-$50,400	$9,600	4-4.5 years
$1,000+/month	25-30 kW	$52,500-$63,000	$12,000+	4-4.5 years

The Sweet Spot: $400-$800/Month Bills

While all bills show excellent payback, the $400-$800/month range offers the best balance:

Fast payback: 4-4.5 years
Significant savings: $4,800-$9,600 in Year 1
Manageable system size: 10-24 kW (fits most roofs)
Excellent ROI: 400-600% over 25 years
Financing friendly: Monthly savings often exceed loan payments

What About Lower Bills ($100-$200/Month)?

Even lower bills can achieve good payback, though it takes slightly longer:

$100/month bill: 5-6 year payback
$150/month bill: 5-5.5 year payback
$200/month bill: 4.5-5 year payback

Still Worth It: Even with longer payback, you're still saving money and protecting against rate increases for 25+ years.

Factors That Accelerate Payback

Several factors can make your payback even faster:

1. Higher Utility Rates

If you're on a high tier or TOU plan with peak rates above $0.40/kWh, your payback accelerates.

2. Rate Increases

As Edison and PG&E raise rates (typically 4-5% annually), your savings increase, accelerating payback.

3. Tax Credits

The 30% federal ITC reduces your net cost, improving payback. Install before it decreases!

4. System Efficiency

High-efficiency panels and microinverters produce more energy, improving payback.

5. Net Metering

Strong net metering policies (like in California) maximize the value of your solar production.

The Bottom Line

Higher electricity bills = Faster solar payback. It's that simple.

If you're paying $600+/month to Edison or PG&E:

You'll save $7,200+ in Year 1
Payback in 4-4.5 years
Save $230,000+ over 25 years
ROI of 500%+

Even if you're paying $200-$400/month, solar still makes excellent financial sense with 4.5-5 year payback and hundreds of thousands in lifetime savings.

The time to act is now. Every month you wait, you're paying hundreds or thousands to Edison or PG&E. With solar, that money goes toward paying off your system instead—and then it's pure profit for decades.

Ready to see your exact payback? Get a free assessment that analyzes your actual Edison or PG&E bills and calculates your specific payback period and lifetime savings.