Now, I’m sure you’ve heard once or twice about how solar panels can save you a ton of money – and that’s great news of course. But here’s the real question: How do these savings actually show up on your electric bill?
Does going solar mean you’ll wipe out your electricity costs entirely, and you’ll never have to deal with an electric bill again?
In this article, I’ll share the facts, clear up any misconceptions, and explain how your solar panels really work with your electric bill. By the end, you’ll know exactly what to expect when it comes to your savings and how solar can work for you financially.
How Solar Panels Work With Your Electric Bill
After you’ve installed your solar panels, you can almost guarantee that your upcoming electric bill will be much lower than before…
That’s because by supplying your home with solar power, you’ll no longer fully depend on the grid for electricity. The less power you buy from your electric company, the lower your monthly utility costs will be – this is the first way your solar panels work to reduce your electric bill.
The other way solar can help you cut your bills is by “selling” any excess energy your solar panels produce back to your utility company – a system called net metering.
In return, you receive “energy credits” that can offset or even fully eliminate your electric bill.
Oftentimes, surplus credits that exceed your bill (i.e. a negative bill) often roll over to future bills, but this depends on your utility provider’s policies.
The same goes for the exact amount of energy credits you earn, as it is also determined by those policies.
For instance, in Utah where the Avail Solar team and I are based, Rocky Mountain Power offers a credit rate of around $0.06 per kilowatt-hour (kWh), as of writing. Crunching the numbers, a system that generates 500 kWh of excess energy would earn you $30 in credits.
We can’t deny this setup provides savings. But seeing that the credit rate sits at roughly half the full retail electricity rate, I personally believe the system could be improved to benefit homeowners and consumers even more – but that’s a conversation for another day.
Will I Still Receive an Electric Bill After Going Solar?
As I mentioned earlier, your electric bill can be reduced or even eliminated. But in most cases, you’ll still likely receive an electric bill and may still have to pay your utility company, largely because of these circumstances or factors below.
Size of Your Solar System
If your system is designed to meet all of your energy needs, you could potentially eliminate your electricity bill completely.
But if you end up consuming more than what your panels can produce, you’ll certainly need to purchase electricity from the grid to cover the difference.
For example, if you have a 15 kW system but your household uses 20 kW of electricity on average, you’ll have to buy 5 kW worth of energy from the grid – meaning your bill won’t be zero.
Beyond system size, remember that your solar panels won’t generate power past sunset. So, unless you have a solar battery for nighttime use – or you’re one hundred percent confident that net metering rates can offset the cost of buying electricity after dark – you’re likely to still have a balance on that electric bill.
Net Metering Policy
All is well when your utility provider offers 1:1 net metering. In this setup, every kilowatt-hour (kWh) of excess energy you produce is worth the same as what you would pay for that amount of energy from the grid…
Say, your house draws 1,000 kWh of electricity from the grid. Sending back excess energy of 1,000 kWh would sufficiently cover what you drew from the grid, thus, leaving you with a $0 bill.
Unfortunately, many utility companies offer a much lower credit rate for excess energy. For example, where a credit rate of $0.06 per kWh (compared to a retail rate of $0.12) applies, you’d only get $60 in credits – you’d still owe the difference on your bill.
Fixed and Nonbypassable Charges
Fixed charges are fees that you pay to your utility company simply for being a customer. At times, you may find them named as “customer charges” or “service charges”.
On the other hand, nonbypassable charges include specific costs that the utility company needs to cover, such as renewable energy programs, government charges, and delivery charges.
Both types of charges are similar in a sense that they aren’t based on the amount of electricity you consume – unlike “supply charges” or “generation charges”.
Can net metering help cut off fixed and nonbypassable charges? Definitely, provided you’ve accumulated extra energy credits to offset them entirely. Otherwise, these charges stay on the bill either in full or at a reduced amount.
How Much Will I Save on My Electric Bills With Solar Panels?
In the bigger picture, it’s not how much less your electric bill will be after going solar that matters, but rather, how much you’ll save in the long run. And that boils down to how quickly you can recoup the initial investment you’ve made in your solar panels.
On average, U.S. households save around $30,000 to $40,000 over the lifespan of their solar panels, which is typically around 25 years. Spread that over the said period and you get about $100 to $130 in savings per month.
Of course, your actual savings will depend on many factors. Beyond those I mentioned in the previous section, such as your solar system size and specific net metering policies in your area, these factors also include the cost of electricity and seasonal variations.
Let’s put things into perspective through an example.
Say, you’ve acquired your solar panels through a 10-year solar loan, with monthly payments of $160, and your average electricity bill before going solar is $180/month.
If you’re solar system is designed to meet 100% of your energy needs, you’d be able to effectively turn what was once $180 in electricity expense into $180 in solar savings.
Subtracting the loan payment from this, you get $20 (180 – 160) in net monthly savings during the loan period.
The best part, once the loan is paid off (after 10 years), you’ll save the full $180 every month. And over the remaining 15 years of the panel’s lifespan, your savings would add up to $32,400.
Even if you factor in maintenance or inverter replacements (which usually cost a few thousand dollars over the system’s life), the savings are still massive.
The bottom line is that solar panels are likely to help you keep your money in your pocket rather than hand it over to utility companies, which is undeniably satisfying, especially for someone who wants more control over their finances.
Now, if you find yourself in an unusual situation where your electric bill is higher after going solar – without any savings at all – check out for issues like changes in household activity, faulty appliances, or energy leaks. We’ve previously covered why your electric bill could double in a month, so be sure to have a look.
Should I Still Invest in Solar if It Can’t Fully Cover My Electric Bill?
Yes, you should still invest in solar even if your system can’t fully cover your electric bill.
Primarily, going solar protects you from those unexpected electricity rate hikes – well, we know the rise is coming, but the surprise is always how much. With solar, you’re locking in a more predictable cost for a large portion of your energy needs, which means real savings over time.
And for those who care about the environment, investing in solar also helps reduce your carbon footprint, cutting down on harmful emissions that contribute to climate change. It’s a win for both your wallet and the planet.
In the end, solar might not cover every single bit of your bill, but by merely looking at these benefits, the fact remains – it’s a smart investment with long-term rewards, and definitely worth it.
Ready to Turn Those Electric Bills Into Solar Savings?
By now, you shouldn’t be surprised to learn that it’s entirely possible to turn your electric bills into solar savings – and it all starts with having a solar system designed to offset your energy consumption.
With Quote for Solar, you can easily connect with a certified solar panel professional who can design a system tailored to your specific energy needs and goals, while also considering your local weather, policies, and net metering arrangements.
No need to endlessly search for the best installers in your area – just simply request a quotefrom us, and we’ll quickly provide you with three competitive quotes from reputable, pre-screened solar installers in your vicinity.
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