This page documents exactly how the calculator on this site turns your monthly electricity bill into a system size, cost, payback period, and savings projection. The numbers the calculator shows you should always match what's described here — if you ever spot a mismatch, please tell us (see Contact).

1. From Monthly Bill to System Size

We divide your monthly bill by your region's electricity rate to estimate monthly kWh usage, then annualize it (× 12). We divide annual usage by (peak sun hours × 365 × 0.80) to get the recommended system size in kW. The 0.80 factor accounts for real-world derating: inverter conversion loss, wiring loss, panel soiling, and non-optimal tilt/orientation versus a lab-perfect panel. We floor the system size at 1 kW so the estimate never goes to zero for very small bills.

2. Peak Sun Hours

Peak sun hours is the number of hours per day a location would need at maximum solar intensity (1,000 W/m²) to receive the same total energy it actually receives spread across a full day. Our per-region peak sun hour figures are based on NREL's PVWatts Calculator methodology and published typical values. They are averages for a state or province — your actual roof's orientation, tilt, and shading will move your real output up or down.

3. Installation Cost

Installed cost per kW varies by region due to labor markets, permitting complexity, and local market competition. We use per-region cost-per-kW figures in the $2,650–$6,000/kW range depending on location, multiplied by the recommended system size to get gross installation cost. Get 3+ local installer quotes before treating any number on this site as a real price — a calculator cannot see your roof, panel choice, or local labor market.

4. Incentives — What We Do and Don't Assume

This is the part we are most careful about. The calculator has a single incentive input, verifiedIncentives, which defaults to $0 for every region. It is never populated with an incentive amount unless that program is currently active and linked to an official source on this page. Concretely, as of 2026-07-27:

US federal 30% residential credit: Applied to qualifying residential solar expenditures from 2022 through December 31, 2025. It does not apply to residential systems placed in service in 2026 or later. Source: IRS — Residential Clean Energy Credit. Because it does not apply to 2026+ installs, it is not subtracted from any 2026 estimate on this site.
Canada Greener Homes Grant & Loan: The Canada Greener Homes Grant is closed to new applicants. The Canada Greener Homes Loan has also stopped accepting new applications — its funding has been fully committed. Sources: NRCan — Greener Homes Grant (closed) and NRCan — Greener Homes Loan. Neither is subtracted from any current estimate.
State, provincial, and utility rebates: These change often and are administered by hundreds of different agencies and utilities. Rather than hardcode a number we can't keep verified in real time, we assume $0 unless you tell the calculator otherwise, and point you to the DSIRE database (US) or your provincial energy office (Canada) to check what's currently available where you live.

If you have a real, confirmed incentive, add it to your own budget on top of the "estimated net cost" figure the calculator shows — don't wait for us to bake it in, since we'd rather show you an honest $0 than a stale number.

5. Electricity Rate Escalation

Annual savings are projected forward assuming electricity rates rise 3% per year, a commonly cited historical average for US and Canadian residential rates over multi-decade periods. Your actual utility's rate history may be higher or lower than this — check your utility's rate filings for a more precise assumption.

6. Payback Period & 25-Year Savings

Payback period = net installation cost ÷ first-year annual savings (a simple, non-discounted payback — it does not account for the time value of money or financing interest). 25-year savings sums each year's escalating savings and subtracts the net installation cost. We do not model panel degradation, module replacement, inverter replacement, or maintenance costs in this projection — treat the 25-year figure as an upper-bound, not a guarantee. See our article on panel degradation for how real-world output declines over time.

7. Net Metering

Net metering policy (full, partial, or none) is shown per region as context, but it is not separately modeled in the annual savings calculation — the calculator assumes all generated electricity effectively offsets your bill at your local retail rate. In a region with partial or no net metering, your real savings will likely be lower than shown, since exported power may be credited at a reduced rate or not at all. See the net metering explainer on each region page and our net metering guide.

8. What This Tool Is Not

NorthSolarCalc is a free educational estimator, not an installer quote, a tax opinion, or investment advice. It cannot see your roof, your specific utility rate plan, your credit profile, or your tax situation. Always get 3+ quotes from licensed local installers, and consult a tax professional before assuming any credit or deduction applies to you.

Methodology & Data Sources