Many people choose to go solar for two main reasons. Firstly, it helps to protect the environment, which is a great thing to do. Secondly, it can save money by reducing energy bills with solar panels. However, just installing solar panels on your roof is not enough to save money. It would help if you had a long-term plan to make the most of your solar investment and maximize your savings while lowering your monthly electric bill.
How To Save On Electric Bills with Solar Panels
If you’ve looked into solar power, you’re probably aware that solar panel systems can come with a considerable price tag. As a result, you may be curious about how investing in a solar panel system can lead to cost savings. Essentially, the idea is that the electricity generated by your solar panels will substitute the power you would have had to purchase from your utility. When you compare the monthly expense of your solar panels to the amount of electricity they generate, the cost per kWh for solar energy is lower than that of electricity from your utility. The method for determining these savings varies based on whether you obtain your solar panels through a loan or by paying for them outright.
Save On Your Electricity Bill With A Solar Loan:
Upon initial examination, it may appear that investing in solar panels will result in higher costs due to the need to pay both an electric bill and a monthly payment for the solar panel loan. However, while it is true that going solar with a loan will result in a second bill, the energy produced by the solar panels should significantly reduce the cost of the electricity bill, making the combined price less than the original non-solar electricity bill.
The objective is to strike a balance between having sufficient solar panels to generate the necessary power for your home and not having so many that the extra expense isn’t worthwhile. To calculate the optimal number of solar panels required for your home, you can refer to “How Many Solar Panels Do I Need On My Roof?” By reducing your reliance on the utility company’s power, you can lower your electricity bill by an amount that offsets the solar panel system payments.
Essentially, the payment toward your solar panel system should be regarded as an electricity payment, allowing for a comparison between the electricity cost from the utility company and the monthly expense of paying off the solar system.
Installing a solar panel system is an exemplary way to save money, as demonstrated by the following example:
- To save money, install a solar panel system. Example: Before going solar, imagine you spend $200 a month on your utility bill.
- After installing solar, your panels can cover 80% of your electricity needs.
- This means your monthly bill will be reduced to around $40 per month.
- If your solar loan payment is less than $160 per month, you’ll save money overall while paying for the system.
- Once the system is paid off, you’ll have no more loan payments while still benefiting from the electricity produced, resulting in significant long-term savings.
Save On Your Electricity Bill When Buying Solar Panels with Cash:
An alternative approach would be to purchase your solar panel system outright using cash. This option can prove advantageous as it guarantees that the system is fully paid for, and you won’t incur any additional expenses by financing it over an extended period.
The downside, however, is that it can be challenging to gauge your savings since you won’t have a monthly loan payment to compare your utility bill against. Nonetheless, you can perform some calculations beforehand to approximate the amount you’ll be saving each month.
Consider this example that can provide you with an understanding of the cost savings achievable through solar panels if you purchase your solar energy system outright:
- A solar panel system costs $25,000 upfront, with an average lifespan of 25 years.
- The average cost of the solar panel system is roughly $83 per month ($25,000 divided by 300 months).
- If the solar energy system offsets 80% of your needs, your electricity bill will be around $40 per month.
- Adding the $83 per month for the solar panel system to the $40 per month for the utility bill, the total amount paid for electricity is approximately $123 per month.
- However, since the system was paid upfront, the $83 per month is not coming out of your pocket each month.
- You can think of the $83 per month as a return on investment of $160 each month since you will be saving that much on your electricity bill.
- Over time, the savings will typically increase because the cost of electricity goes up.
- The amount paid for the system is fixed, and the amount of electricity saved each month remains the same, but the value of that saved electricity will increase over time.
- You will not be impacted as much by rising electricity rates.
How to Save Even More on Your Electricity Bills When Going Solar
When you install solar panels, your potential savings extend beyond the amount you’ll save on your electricity bill. There are various other means by which you can cut costs once you begin using solar panels.
Use Less Electricity:
If you reduce your overall electricity consumption, your solar panels are more likely to meet your needs, and you won’t have to rely as much on your utility provider, which incurs expenses. To decrease your electricity usage, you can inspect each room of your house and identify energy-efficient practices. This could mean doing things like:
- Upgrade to energy-saving Energy Star appliances
- Run your HVAC system less frequently
- Replace old light bulbs with LED lighting
- Unplug small appliances when not in use (power strips can assist with this)
- Only run full loads in your dishwasher, washing machine, and dryer
- Install low-flow faucets
- Use heavy curtains to help regulate temperatures
- Water your yard only as needed
- Keep your refrigerator at least three-quarters full
- Turn down your water heater temperature to 120 °F
Install Battery Storage:
Investing in battery storage is another option that allows you to store any surplus electricity generated by your panels for later use. In case your panels fail to produce sufficient electricity, you can use the stored energy from your battery rather than relying on the power grid.
Although getting battery storage installed can increase your initial costs, if your panels generate more electricity than what you require regularly, it can help you save money by eliminating the need to pay for excess electricity to your utility company.
Shift Usage to Strong Solar Hours:
To ensure that your solar panels produce enough electricity to meet all of your household’s electrical requirements, it is advisable to utilize electricity during peak sunlight hours. This approach guarantees that your panels are receiving sufficient sunlight to generate the power you need to consume.
Sign Up for Net Metering (If Available):
Through net metering, you can feed any excess electricity produced by your solar panels back into the electric grid. This surplus electricity is credited by your utility company, reducing your future monthly electricity bills.
Optimize Your Time-of-Use:
By aligning your energy consumption with peak and off-peak hours, a time-of-use electricity plan allows you to take advantage of reduced rates for your electricity usage.
An example of this is that you can:
- Run energy-intensive devices such as washing machines during non-peak hours.
- Invest in a smart thermostat and set specific times for air/heating to run during non-peak hours.
- Turn off any unnecessary power when you’re away to reduce peak-hour usage.
- Charge your electric vehicle during off-peak hours.
- Use electric vehicle chargers that allow you to program time-of-use hours to charge when rates are lowest.
The timing of peak and off-peak hours is subject to variation depending on several factors, including your geographical location, the season, your electricity provider, and other considerations. Typically, peak hours correspond to periods of the highest electricity demand, whereas off-peak hours coincide with times of lower demand.
Save On Your Electric Bill with Solar Panels
- Going solar is beneficial for the environment and helps save money in various ways.
- The most obvious way to save money is by reducing your electricity bill from your local utility company.
- Long-term savings should be considered when investing in solar panels, as savings often increase over time.
- Being energy efficient, upgrading to Energy Star appliances, and adjusting HVAC and water heater settings can help maximize savings.
- Battery storage can ensure solar electricity availability on days when panels aren’t producing enough energy to power the home, reducing reliance on utility companies.
- Maximizing panel efficiency by using electricity during peak sunlight hours can also save money.
- Net metering and time-of-use plans are two additional ways to save money.
- Net metering credits excess energy produced back to the utility company for a credit on the electricity bill.
- Time-of-use plans offer lower rates for aligning energy usage around peak and off-peak hours.
- Peak and off-peak hours vary based on location, season, electricity company, and other factors.
- Palmetto offers a Free Solar Design and Savings Estimate Tool to help homeowners determine potential savings.
Why is my electric bill so high when I have solar panels?
Solar energy is a sustainable and cost-effective alternative to traditional electricity sources. However, some factors can affect the performance of a solar system, leading to unexpected costs. Below are some common reasons why solar systems may not meet all of your electricity needs and may result in higher electric bills:
Insufficient solar system size: If your solar system is not large enough to meet your household’s electricity demand, you may need to purchase electricity from the grid to make up the difference. This can lead to higher electric bills than you expected.
High electricity usage: If you have a large household or use a lot of electricity during peak hours, your solar system may not be able to generate enough electricity to meet all of your needs, especially on cloudy days.
Not enough sunlight: If your home does not receive enough sunlight, your solar system may not generate as much electricity as possible. This can result in a higher electric bill. It’s important to check the Global Solar Atlas to understand the amount of sunlight your location receives and to optimize the solar system accordingly.
System malfunction: If your solar system is not functioning properly, it will not generate as much electricity as it should. This can also result in a higher electric bill. Regular maintenance and inspection can help prevent system malfunctions.
Non-optimal solar panel orientation or shading issues: If solar panels are not facing in the direction that receives the most sunlight or have shading issues from nearby buildings or trees, they will not generate the expected output. Proper installation and placement of solar panels can help maximize electricity production.
No net-metering agreement: If your utility company doesn’t have a net-metering agreement, you will not be credited for any excess electricity that your solar panel system generates. This means that you will still be charged for all of the electricity that you consume, even if your solar panel system generates some of it. It’s important to check with your utility company about their net-metering policy before installing a solar system.
By understanding these factors and taking the necessary measures to optimize your solar system, you can maximize its performance and save money on your electricity bills in the long run.
Frequently Asked Questions
Are solar panels on a house worth it?
Investing in a solar setup is a decision that depends on a variety of factors unique to each individual. Determining the practicality of this venture is essential before committing. If it is feasible for you, installing a solar system can result in significant savings on your electricity bill and significantly reduce your home’s carbon footprint in a few years. Ultimately, it’s up to you to weigh the benefits and costs and decide if investing in solar is the right choice for you.
Is it worth paying off solar panels?
Although it may take a few years, the cost of installing a solar panel system can be offset by the amount saved on electricity bills. In the long run, consumers can enjoy substantial savings, while also contributing to the planet’s well-being through reduced dependence on non-renewable energy sources.
What are the two main disadvantages of solar energy?
Solar energy has two major downsides: the initial expenses for consumers and the environmental repercussions of producing and disposing of solar panels. The price of a solar setup can easily surpass five figures, despite the federal tax credit being applied. The production of solar panels also generates a significant amount of greenhouse gases. However, the good news is that according to a report from the Office of Energy Efficiency & Renewable Energy, solar panels can offset their carbon footprint within one to four years of operation. Nonetheless, the options for recycling solar panels are limited, which can lead to an increase in waste output from the system.
How much will solar panels reduce my electric bill?
The amount by which solar panels can reduce your electric bill depends on various factors such as the size of your solar panel system, your energy consumption, local sunlight availability, and any applicable incentives or rebates. On average, homeowners can expect to save anywhere from 50% to 100% on their electricity costs after installing solar panels. It’s best to consult with a solar energy provider for a personalized assessment based on your specific circumstances.