Gaining Insight into Your Electric Bill Pre and Post Solar Transition

Gaining Insight into Your Electric Bill Pre and Post Solar Transition

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Understanding Your Electric Bill Before and After Going Solar

Energy cost savings is often the main reason why homeowners choose to invest in solar panels. However, it is important to understand how solar panels affect your electric bill both before and after installation. In this article, we will explain exactly how solar panels lower your electricity bill so that you have a clear understanding of the process.

Do you still have an electric bill with solar panels?

Yes, you will still have an electric bill before and after your solar panels are installed and producing clean energy. However, the amount you owe on your monthly bill will be significantly lower, or even negative, because the solar energy you generate replaces and offsets the cost of purchasing electricity from the utility grid.

Solar panels reduce your electricity bill in two ways. First, the solar energy you generate is used to directly power your home, which means you need to purchase less electricity from the utility grid. For example, if you use 19 kWh of electricity in a day and your solar system produces 6 kWh that directly power your home, then you only need to buy 13 kWh from the grid.

Second, under net metering, any excess solar energy you produce can be sent back to the grid in exchange for credit. This credit is then used to offset the cost of the grid electricity you purchase when your panels are not producing electricity. So, if your solar system produces 24 kWh of electricity during the day, 6 kWh is used to power your home while the remaining 18 kWh is exported to the grid for net metering credit. This credit more than offsets the cost of the 13 kWh you need to purchase from the grid at night.

Essentially, importing electricity from the grid causes your meter to move forward, while exporting solar electricity to the grid causes your meter to move backward. As a result, you will still receive a utility bill after installing solar panels, but you will only be charged for the minimal amount of grid electricity that your panels do not provide or offset.

Will solar panels pay for all my electricity?

Solar systems can be designed to produce 100% of your household electricity consumption, essentially replacing your utility electric bill with a lower, more stable payment for your solar system. It is important to differentiate between a solar bill and an electricity bill.

Your solar bill refers to the monthly payments you make for your solar system. If you choose to finance the system, your solar bill will be your monthly loan payments. If you pay in cash, your “solar bill” is essentially the net cost of your system spread out over its lifetime. For example, if you pay $17,500 for a solar system that is warranted for 25 years (300 months), you are essentially paying $58 per month for the electricity it produces.

On the other hand, your electricity bill refers to the monthly payments you make to your utility for electricity service. The goal of most home solar systems is to reduce the electricity bill as much as possible, so that you are only paying for your solar system. There are several advantages to paying for your solar equipment instead of an electricity bill:

– Solar loan payments remain the same every month, regardless of your consumption.
– They can be lower than your current average electric bill, providing savings from day one.
– Unlike utility rates, solar loan payments do not increase over time.
– You are investing in an owned asset that increases your home value, instead of buying electricity one kilowatt-hour at a time.

Ultimately, with home solar, you have control over where your electricity comes from and how you pay for it, which is something you won’t get from a utility company.

How much will my electric bill be with solar panels?

The amount of your electricity bill with solar panels depends on several factors, including the size of your system, your electricity consumption, the net metering policy, and the time of year. In many cases, solar systems can be designed to offset 100% of your bill, meaning you only pay for solar electricity or utility electricity, not both.

To calculate your monthly electricity bill with 1:1 net metering (where the value of excess solar electricity is equal to the price you pay for grid electricity), you can use the following formula:

Monthly electric bill = Cost of grid electricity imports – value of solar exports

For example, let’s say you have 1:1 net metering, a solar system sized to produce 100% of your average electricity consumption, and a utility rate of 17 cents per kWh. In the month of June, your consumption and production may look like this:

– You consume 260 kWh of electricity, which would cost approximately $44 at 17 cents per kWh. However, your solar system provides around half of that electricity, so you only need to buy 130 kWh from the grid, worth $22. This is the cost of your grid imports.
– Meanwhile, your solar system produces excess electricity and exports 480 kWh to the grid. Under 1:1 net metering, these exports are worth the same as your retail rate of 17 cents per kWh, totaling $82. This is the value of your solar exports.
– To calculate your monthly bill, subtract the value of your exports ($82) from the cost of your imports ($22):

Monthly bill = $22 – $82 = -$60

Instead of a $44 electric bill before installing solar panels, you now have a -$60 bill with solar panels, resulting in a $104 swing.

It’s important to keep a few things in mind:

– Annual net metering cycles: Most utilities have an annual billing cycle where net metering credits roll over from month to month. Rather than receiving a $60 check in place of your bill, you can use your $60 net metering credit (and any additional credits accumulated during the spring and summer) to offset fall and winter bills when your system produces less electricity than your home uses. At the end of the year, there will be a “true-up” period to reconcile the difference between your imports and exports.
– Non-bypassable or fixed charges: Many utilities have fixed fees or “non-bypassable charges” that cannot be offset by solar. These fees, usually around $15-20 per month, must be paid regardless of whether you have solar or not.
– Not all utilities offer flat rates and 1:1 net metering: If your utility has variable time-of-use rates or a net metering policy that is less favorable, calculating your power bill with solar may not be as simple. In some cases, using battery storage to avoid importing and exporting with the grid may be recommended to maximize bill savings.

In conclusion, while you will still receive an electric bill before and after installing solar panels, the bill will be significantly lower, if not zero. The aim of home solar systems is to reduce your electricity bill and provide long-term energy cost savings. Connect with an Energy Advisor to determine how much you can reduce your electricity bill with solar panels.

187 thoughts on “Gaining Insight into Your Electric Bill Pre and Post Solar Transition”

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