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The Savings Solar Panels Provide

Jessica PirroAugust 15, 20192000

Solar energy doesn’t just provide environmental benefits, but they also provide some serious benefits for the homeowners due to the savings over the lifetime of the solar-powered systems.

Do Solar Panels Really Save You Money?

There are so many cool and new investment opportunities that are on the market today, that it is easy to be hesitant when it comes to new products that boast promises of “saving you tons of money”. Solar panels aren’t any different, saving money by reducing your electric bill is one of the main appeals and selling points for homeowners to get solar-powered systems as a product and an upgrade for their homes. The answer to the question “do solar panels really save you money?” is yes, but how much you will save will depend on a number of factors. How many direct hours of sunlight and the size and the angle of your roof are both important, but your local electricity rates are going to play the biggest role in determining how much money a solar panel installation can save you?

How Much Do Solar Panels Save on Electrical Bills?

The first step to understanding how much a solar panel installation can save you is to calculate how much you are currently spending on your electricity each year. The average annual electricity use required for a U.S. household is 10,400 kilowatt-hours (kWh. Multiply that by the national average electricity rate as of April 2019 ($0.1326 per kWh) and you will find that the typical American family is spending just over $1,856 a year on electricity alone.

Then, you have to consider the volatile nature of electricity prices and determine what utility rates will be in years to come. When you compare the cost of utility electricity with home solar panels, you should keep in mind that you can expect electricity rates to increase annually. Over the past decade, national electricity costs have increased at a rate of approximately 2.2 % per year. Utility rate inflation is an added solar incentive when you generate your own energy with rooftop solar-powered systems. You’re locking in the cost of solar power at a constant rate so that you no longer have to consider variable utility rates.

Because of the nature of solar panels as an up-front investment, the only costs of solar power will be the cost of your solar panel installation and any added electricity costs in the rare event that your solar panels don’t completely offset 100% of your electricity use. Whether or not the solar-powered systems will completely offset your electricity needs is primarily determined by how accurately sized the solar-powered system is, then you can calculate how many solar panels are needed to secure the percentage.

To provide a snapshot for typical bill savings from a solar panel installation, the table below will offer state-by-state information for 20-year savings estimates with solar-powered systems. The data incorporates a number of assumptions:

The solar-powered system size is 6 kilowatts (the national average). The electricity demand is 10,400 kilowatt-hours per year (the national average). The utility rate of inflation is 2.2%. Percent needs to be met by the solar panels is 94%. The electricity rate is the state average as of April 2019 (according to EIA). The ownership of the solar panels is assumed.

State

Average Price (6 KW System)

Average Electricity Rate Per State ($/KWH)

20-Year Savings

Arizona

$12,852

$0.1295

$18,528

California

$12,432

$0.1805

$31,307

Colorado

$13,230

$0.1209

$16,066

Florida

$11,046

$0.1189

$17,766

Massachusetts

$14,272

$0.2261

$41,516

Maryland

$11,634

$0.1425

$22,897

New Jersey

$12,474

$0.1642

$27,315

New York

$13,482

$0.1756

$29,069

Texas

$11,970

$0.1201

$17,133

Washington

$11,844

$0.0972

$11,709

The 30% federal tax credit IS applied to the cost of solar power in the table above.

Do You Still Have an Electric Bill with Solar Panels?

Something the is commonly misunderstood about getting a solar panel installation is that your electric bill will no longer exist. Even if you get a solar-powered system that will completely offset your electricity use, you are still going to receive an electric bill from your utility as long as your property remains grid-connected. However, this doesn’t mean that you are always going to be paying money on your bill.

Thanks to a policy called net metering, which is available in most states, the solar energy that your solar panels are producing, that isn’t immediately is sent to the grid in exchange for credits on your electric bill. This allows you to draw energy from the grid during the night (when the sun isn’t and powered your panels) but not pay any extra money, as long as you draw back the same amount or less than you provided to the grid. When you receive your monthly electric bill, any net metering credits you used that month will be indicated and you aren’t going to be charged for the power. The remaining electricity that you pulled from the grid that wasn’t offset by net metering credits and wasn’t produced and used immediately at your home is where you might see small charges for electricity.

So yes, you will still be getting an electrical bill when you get a solar panel installation. Importantly, the bill might not ask you to pay anything, and may simply indicate how your usage was offset by net metering credits for the month. In the case where you provide more electricity to the grid than you pull, your utility will usually roll over your unused bill credits to the next month for you to take advantage of. But regardless of your solar panels are over or under producing a solar panel installation will most likely lead to lower average monthly electric bills, and your mat eliminates your monthly electric bill in some cases.

How Much Can Solar Panels Reduce Your Carbon Footprint?

Financial returns are a major solar incentive, but money isn’t the only thing that solar panels save. When you get a solar panel installation, you are also helping improve the environment and reducing greenhouse gas emissions.

The Environmental Protection Agency provides a formula to help you calculate how green practices result in carbon emissions reductions.

CO2 Reductions by Solar-Powered Systems Size

Solar-Powered System Size

Annual Solar Energy Production (kWh)

Carbon Emission Reductions Per Year (Metric Tons)

2kW

2,840

2.1

3kW

4,260

3.2

4kW

5,680

4.2

5kW

7,100

5.3

6kW

8,520

6.3

7kW

9,940

7.4

8kW

11,360

8.5

10kW

14,200

10.6

12kW

17,040

12.7

15kW

21,300

15.8

A good thing to use when thinking about carbon emissions is that a typical vehicle emits 4.7 metric tons of carbon dioxide every year. When you take into consideration that the national solar-powered system size average in the U.S. is 6 kW (6,000 watts), a solar-powered system comfortably offsets the emissions that are produced by one fossil fuel automobile in a year.

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