Home Energy Savings Calculator

Solar panels, home batteries and heat pumps cut energy bills in different ways. Solar replaces electricity you would otherwise buy, a battery shifts when you use that electricity, and a heat pump delivers more heat per unit of energy than a furnace or baseboard heater. This calculator combines your current electric and gas bills with the upgrades you select to estimate yearly savings and payback. The notes below explain the physics and the costs behind those estimates.

Solar production. A panel array produces roughly its size in kilowatts multiplied by your daily peak sun hours, 365 days a year, less 15 to 20 percent for inverter, wiring, heat and shading losses. A 6 kW system in a region with 4.5 peak sun hours therefore makes around 7,900 kWh a year, close to three quarters of the roughly 10,500 kWh a typical US home uses. Panels lose about 0.5 percent of output per year, so after 25 years they still produce close to 88 percent of their original output.

• Southwest (AZ, NM, NV): 5.5 or more peak sun hours
• California and the West: about 5.0
• Southeast (FL, GA, NC): about 4.5
• Midwest (IL, MI, OH): about 4.0
• Northeast (NY, MA, VT): about 3.5, often offset by higher electricity rates

Batteries. A battery rarely pays for itself on bill savings alone. It earns its keep where utilities charge more in the late afternoon and evening (time-of-use rates), where net metering credits for exported solar have been cut so storing your own power is worth more than selling it, and where outages are frequent enough that backup power has real value. Expect a battery to lengthen the payback of a solar project rather than shorten it.

Heat pumps. A gas furnace turns 80 to 98 percent of its fuel into heat. An air-source heat pump moves heat instead of making it, delivering about 2.5 to 3.5 units of heat per unit of electricity (a coefficient of performance, or COP, of 2.5 to 3.5); ground-source systems reach about 3.5 to 4.5. Efficiency falls as outdoor temperatures drop, but many cold-climate models are rated to keep heating well below 0°F. Savings are largest when you replace electric resistance, propane or oil heat, and smallest when you replace an efficient gas furnace where electricity is expensive.

Federal tax credits have ended for new installations. The One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025) ended the 30 percent Residential Clean Energy Credit (IRC 25D) for solar, battery and geothermal expenditures made after December 31, 2025, and the Energy Efficient Home Improvement Credit (IRC 25C) for heat pumps and other improvements placed in service after that date. Projects completed in 2025 or earlier could still claim them, and an unused 25D credit from those years can be carried forward. For anything installed now, budget without a federal credit and look for state rebates, utility programs and local incentives instead; the DSIRE database (dsireusa.org) lists them by state.

Doing the upgrades together. Pairing solar with a heat pump lets daytime solar production cover part of the new heating load, and replacing gas appliances can remove the fixed monthly gas connection fee entirely. Size a solar array for the electricity use you expect after electrifying, not the bill you have today, and get at least two installer quotes, because installed prices per watt vary widely between companies and regions.

Home energy costs represent a significant ongoing expense for American households, averaging $2,200-2,500 annually, but strategic efficiency improvements can reduce these costs by 20-30% or more. Understanding where energy dollars go—typically 50-70% for heating/cooling, 15-20% for water heating, 5-10% for lighting, and 10-15% for appliances—helps prioritize improvements for maximum savings. Energy efficiency investments often deliver returns exceeding 10-20% annually while improving comfort and reducing environmental impact, making them among the best home improvement investments you can make.

High-impact improvements targeting heating and cooling offer the greatest savings potential. Adding or upgrading attic insulation (R-30 to R-49) costs 1,500-3,500 for an average home and can save300-500 annually, providing a 10-20% return. Air sealing with caulk and weatherstripping costs 200-500 and saves100-200 yearly by eliminating drafts. Replacing an old HVAC system (15+ years) with a high-efficiency model costs 5,000-10,000 but can cut heating/cooling costs by 30-50%, saving400-800 annually. Programmable or smart thermostats (100-250) save180-200 yearly by optimizing heating and cooling schedules. For a $2,000 annual heating/cooling budget, these combined improvements could reduce costs to 1,200-1,400, saving600-800 yearly.

Water heating improvements offer excellent returns on modest investments. Insulating your water heater and pipes costs 30-50 and saves30-50 annually. Lowering water heater temperature from 140°F to 120°F costs nothing and saves $30-60 yearly while reducing scalding risk. Low-flow showerheads and faucet aerators (20-80 total) save150-200 annually on water and water heating. Replacing an old water heater with a heat pump model (1,200-2,000 after rebates) can cut water heating costs by 50-70%, saving200-350 annually. For homes with electric resistance water heaters, this upgrade alone can provide a 15-20% annual return.

Lighting and appliance upgrades complete a comprehensive efficiency strategy. Replacing incandescent bulbs with LEDs costs 1-5 per bulb and reduces lighting energy by 75-80%, saving70-100 annually for a typical home. LED bulbs also last 15-25 years, eliminating frequent replacements. ENERGY STAR appliances use 10-50% less energy than standard models: efficient refrigerators save 80-100 annually, clothes washers save50-70, and dishwashers save 30-40. Advanced power strips (20-40) eliminate phantom power drain from electronics, saving $50-100 yearly. The key to maximizing energy savings is prioritizing improvements by return on investment, checking state and utility rebates (federal residential energy tax credits ended for projects completed after December 31, 2025), and timing expensive upgrades like HVAC replacement to coincide with system failure rather than premature replacement. Starting with low-cost improvements and reinvesting savings into higher-cost upgrades creates a virtuous cycle that significantly reduces energy costs within 3-5 years.

The calculator starts from your monthly electric and gas bills and the electricity and gas rates you enter. They default to $0.14 per kWh and $1.20 per therm, but you should replace them with the prices on your own bills, because every savings figure scales with them. Electricity prices are assumed to rise 3% a year and gas prices 2.5% a year.

Solar. Yearly output is system size × regional peak sun hours × 365 × 85% system efficiency, falling 0.5% a year as panels age. Regional sun hours run from 3.5 a day (Northeast and Northwest) to 5.5 (Southwest). Every kWh produced is valued at your electricity rate.

Worked example with the defaults (6 kW at $3.00 per watt in the Midwest, 4.0 sun hours, no incentives):

• Year-one production: 6 × 4.0 × 365 × 0.85 ≈ 7,446 kWh, worth about $1,042 at $0.14/kWh.
• Installed cost: 6,000 W × $3.00 = $18,000. The federal credit field defaults to 0%, so the net cost is also $18,000.
• Simple payback is $18,000 ÷ $1,042 ≈ 17.3 years; with 3% yearly rate increases, cumulative savings pass the cost in year 15.
• Over 25 years you finish about $17,500 ahead of the upfront cost.

Battery. A battery is valued only for time-of-use shifting: 90% of its capacity is charged at 70% of your rate and discharged at 150% of it every day. The default 13 kWh battery at $1,000 per kWh saves about $478 a year and moves the combined break-even to year 17. Homes without time-of-use pricing, or that want a battery mainly for backup, will see less.

Heat pump. The heat pump's efficiency is HSPF ÷ 3.41. For a gas, propane or oil system, the model converts your heating bill into fuel (at your gas rate), multiplies by 29.3 kWh per therm and by the old system's efficiency (80% gas, 85% propane, 75% oil), then divides by the heat pump's efficiency. With the default 80 monthly gas bill and HSPF 10, the heat pump needs about 6,400 kWh (roughly895) to replace $960 of gas, saving only about $65 in year one. If upgrades never recover their cost within 25 years, the calculator says so instead of showing a payback year.