One of the questions we hear most frequently is whether installing solar panels in your home or business can truly eliminate your electric bill. The most important aspect of answering this question is to understand how a traditional electric bill functions compared to a solar energy bill. What are the differences? How much do solar panels reduce electricity bills? In this article, we’ll explain how to answer these questions and more, as we discuss how solar panels can eliminate your electric bill.
Let’s start by talking about how a solar bill differs from a typical energy bill. One of the biggest advantages of installing solar panels is being able to get away from the standard monthly electric bill. Most solar customers receive what’s known as a “true-up statement” at the end of each 12-month period, although they still usually receive monthly bills as well — we’ll get into the three common types of monthly solar bills in a moment.
The annual true-up statement details a number of important aspects of your billing cycle, including your energy charges and credits, as well as compensation that you might have earned throughout the year. Depending on your contract and your actual energy usage, it’s not uncommon to owe money on this statement, and it’s not unusual to receive roll-over credit either.
How much do solar panels save on electricity bills? The first step toward answering this question is to clarify how you acquired your solar cells. One common option is to lease solar panels from your provider. If you use this option, you will pay the same sum every month for your solar energy bill. Your solar provider calculates your monthly lease payment on how much power your solar panels produce, and your monthly payment likely will not vary throughout your contract.
Another route is to purchase your solar panels through a solar loan. Again, this option will also see you pay the same amount each month, with the crucial difference being that you will own your solar panels once you’ve finished paying off your loan. In this way, a solar loan functions much like any other loan.
The third common option is to enter into a solar power purchase agreement or PPA. In this scenario, your solar provider finances, designs, and installs your solar system, and you provide them with a predetermined rate for each kilowatt-hour produced by your panels.
Regardless of which option you choose, another important aspect to understand is the concept of tiered pricing. If you cross a certain threshold with your monthly power usage, your utility provider may increase your costs per kilowatt-hour. The more you depend on your solar panels to provide your power, the less you’ll need to pay on the occasions when you need additional power from the utility company.
Net metering is a common alternative to tiered pricing. With net metering, you send any extra electricity generated by your solar panels into the grid operated by your utility company. You then receive credit on your bill in exchange for providing power to the grid. This can be a great way to save even more money on energy because you can effectively cash in your credits whenever you need to pull additional power from the grid. And if you never need excess energy, these cost savings will instead be returned to you in the form of either a financial credit or a rolled-over kilowatt-hour balance.
All told, one of the biggest advantages of solar is the way it can help you create a predictable and consistent bill. Especially compared to a typical electric bill that can vary widely from month to month, your solar energy bill will be the same every month if you purchase your panels with a solar loan or lease them from your solar provider. Even solar PPAs are far more predictable than a standard electric bill.
Finally, let’s quickly discuss the Database of State Incentives for Renewables & Efficiency, otherwise known as DSIRE. This is an excellent money-saving resource that helps you find incentives, tax credits, and other helpful solar energy policies in your area. Depending on your location, DSIRE can help take a big bite out of your solar energy bill by identifying programs you may qualify for.
If you still have questions about the effect of solar panels on your electric bill, contact LGCY Power today. Our expert Energy Consultants can help you figure out what the best solar options are for your circumstances, and get you on the path to clean energy independence.