Do You Pay Electric Bill With Solar Panels?

Installing solar panels on your home can significantly reduce your electricity bills. However, in most cases, it does not eliminate your electric bill completely. This article explains how utility billing works with solar panels, factors that determine your savings, and whether you can fully eliminate electric bills with solar.

How Utility Billing Works With Solar Panels

When you install a solar photovoltaic (PV) system on your roof, the solar panels generate electricity during daylight hours This electricity powers your home’s appliances and devices Any excess electricity that your solar panels produce gets fed back into the utility grid.

This process is called net metering. Your electricity meter tracks both the electricity consumed from the grid and excess electricity exported to the grid. Your utility company credits you for the excess electricity at the retail electricity rate

At night and on cloudy days, your home pulls electricity from the grid when your solar panels are not producing enough. The utility bills you only for your net electricity use at the end of each billing cycle.

So you continue to receive an electric bill after installing solar panels. But your bill is lower because your solar panels reduce the amount of electricity you need to pull from the grid.

Key Factors That Determine Your Electric Bill Savings

Several factors determine how much you can reduce your electric bills with solar panels:

Size of the Solar System

The size of your solar PV system, measured in kilowatts (kW), determines how much electricity it can produce. A system sized to match your home’s electricity needs can zero out your bills. Oversize your system to eliminate bills completely.

Sunlight Availability

The more sunlight your solar panels receive, the more electricity they can generate. Homes in sunnier climates like Arizona can see greater savings on electric bills compared to Seattle which has more overcast days.

Electricity Rates and Net Metering Policy

The retail electricity rate you pay and the net metering rate your utility credits for excess solar generation impact savings. Higher electricity rates and net metering compensation increase solar savings.

Loans and Incentives

Taking out a loan to purchase your solar PV system increases your monthly costs. Availing federal, state, and utility incentives reduces the system cost, increasing your return on investment.

Fixed and Non-Bypassable Charges

Even if your net electricity consumption is zero, you pay fixed monthly service charges and non-bypassable charges imposed by your utility. These charges cannot be offset with solar.

Can You Eliminate Electric Bills Completely?

It is possible to reduce your electric bill to zero in some situations. Here is what it takes:

• Size your solar system to produce more electricity than your home’s needs. A system sized at 120-130% of your annual usage canzero out bills in sunnier states.

• Add battery storage to store excess solar generation for nighttime use. Tesla Powerwall and LG Chem RESU are popular home batteries.

• Move to a state with high electricity rates and favorable net metering policies like California, Hawaii, Arizona.

• Avoid fixed and non-bypassable charges by disconnecting from the grid entirely and using solar panels with batteries in an off-grid system. This is complex and expensive.

• Oversize your system significantly and get compensated for exports if your utility pays fair rates for excess generation.

For most homeowners, the goal is optimizing the system size to maximize savings rather than eliminating electric bills completely. A system sized to cover 90-100% of your needs provides the best return on investment in most cases.

Average Electric Bill Savings Nationwide

On average, homeowners with solar panels save $83 per month on their utility bills nationwide. But the savings vary significantly depending on your specific situation.

In Hawaii, average savings amount to $191 per month. California and Arizona also see above-average savings at $113 and $104 respectively. States with the lowest average savings include Louisiana ($27), Idaho ($41), Mississippi ($41) per month.

The utility rates in your area have the biggest impact. Homeowners in high-price utilities like PG&E in California add solar to reduce expensive electric bills. Areas with cheap electricity like Louisiana see lower savings.

Additionally, sunnier states have greater potential to zero out electric bills completely with solar panels and batteries. Cooler and cloudier regions see more modest but still significant savings.

Key Takeaways on Solar and Electric Bills

To summarize, installing solar panels will reduce but not eliminate your electric bill in most cases. With a right-sized system, net metering credits, and optimal siting, you can potentially zero out your bill.

But it rarely makes economic sense to oversize your system just to eliminate the bill completely. The modest fixed charges are typically better than overspending on solar.

Focus instead on strategic sizing to offset 70-100% of your usage and maximize your return on investment. This provides substantial savings on electricity while keeping your solar system costs reasonable.

Consider adding a solar battery if you want backups for power outages or to increase self-consumption of your solar energy. Evaluate billing options from your utility to maximize your savings. And energy efficiency upgrades make your solar system more cost-effective.

With this approach, you can reduce your grid dependence and see significant, long-term savings on electricity costs with solar panels, even if you do not fully eliminate your utility bill.