How Much do Solar Panels Save?

Going solar has many benefits. When we talk about savings from the sun, you can expect lower monthly electricity bills and the possibility of long-term savings. On top of that, you are also doing your part to save the environment. Let’s break down each of the benefits of solar power.


Immediate Savings: Monthly Electricity Bills

By going solar, you’ll see a drop in your electricity bills. As Eric Bentsen, our senior sales application engineer, says, “Every solar watt you produce is a watt the utility company can’t charge you for.” But how much you save depends on various factors, such as your electricity usage, local utility rates, and the size of your solar panel system.

Here’s how to calculate your potential savings: the first step is to review your electricity bills from the last six months to a year. This allows you to account for seasonal changes. For each billing period, find how many kilowatt-hours (kWh) you used during that time – such as 900 kWh – along with your electricity charges. Once you have your average electricity use and costs, estimate your annual consumption and bills.

If you can’t access your electricity bills, the average electricity consumption for a US residential utility customer is 10,715 kWh per year, according to US Energy Information Administration (EIA). With this figure in hand, multiply it by the national average electricity rate of 15.46 cents per kWh (as of July 2022): 10,715 kWh x 0.1546 = $1,657. On average, a US household pays over $1,600 for electricity for a year.

In the above scenario, if enough solar panels were installed to cover your electricity needs, then you could save almost $1,600 / year (your utility company will likely still charge a monthly service fee). However, while some homes will be 100% solar-powered, others will still have electricity bills to supplement the usage.

The next step is to estimate how much electricity your solar panel system will generate. This will vary depending on the location and system size. National Renewal Energy Laboratory (NREL) offers PVWatts Calculator that estimates solar energy production based on your address and system size. The great thing is that this tool gives monthly forecasting of solar energy production. Living in an area where the weather changes throughout the seasons, you’ll see differences in energy production estimates, such as higher production in summer and lower during winter.

The last step is to find the gap between your energy consumption and energy production estimates. For example, your energy consumption is 10,715 kWh per year, and your energy production estimate is 8,000 kWh. Let’s also assume that your solar panel system includes batteries to maximize your solar energy consumption. (Solar energy production is the highest during the daytime, while your consumption may not be. Batteries allow to store solar energy for later use.) In this case, you can predict that roughly 75% of your energy use would be covered by solar.

Long-Term Savings

Since solar panels require only minimum maintenance and have a long life span, you can also get relief from rising electricity costs in the future. Although it is harder to calculate your long-term savings as it requires a forecast of utility costs over the lifespan of a solar panel system, EnergySage says most homeowners can save between $10,000 and $30,000 on electricity.

Residential electricity prices in the US have increased during the past decade. Research estimates a year-over-year increase of 6.1% in 2022. If you live in the US or Puerto Rico, online tools, such as Project Sunroof, give savings estimates for over 20 years.

Impact on the Earth

Solar isn’t only good for your wallet. Going solar does have several benefits for our environment. In 2021, 61% of electricity generation at utility-scale facilities in the US was from fossil fuels, such as coal and gas. Did you know solar energy produces up to 96% fewer CO2 emissions than fossil fuels? This means significantly less carbon dioxide is released into our atmosphere with solar energy, slowing down the Earth’s rising temperatures. A recent article by PV Magazine says that the average residential solar installation (approx. 7000 watts) can offset the carbon emissions equivalent to 180 mature trees. So, by going solar, you’ll help save the environment, too.

Interested in going solar? This article can help you get started on your journey.

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