What Happens To The Average Monthly Electric Bill With Solar Panels?

When a homeowner gets solar panels, what happens to their monthly electric bill? In most circumstances, it goes down. How much it goes down depends on a number of variables, however.

Let’s explore the factors that impact the average cost of electricity for homeowners after upgrading their home with a solar installation.

How Much Is The Average Electric Bill In The US?

In August 2022, the average cost of electricity was 15.95 cents per kilowatt-hour (kWh). One year earlier, the average cost was 13.95 cents per kWh, which was also up from the 2020 yearly average of 13.15 cents per kWh.

Using the August 2022 average utility rates per kWh and the national average monthly use of 886 kWh, the average U.S. electric energy bill is around $141.32.

The U.S. Energy Information Administration (EIA) attributes the increase in electricity prices in part due to the wholesale price of natural gas, which now produces over 38% of the nation’s electricity.

What’s The Average Monthly Electric Bill With Solar Panels?

As for the average monthly solar electric bill, it’s hard to pinpoint an exact figure since many factors can affect the average cost. These factors include the size of your solar array and the region of the country where you live.

There’s also a smaller sample size of households from which to draw an average figure. Right now, solar power – including both residential and commercial – produces about 3% of the nation’s total electricity. The EIA predicts that renewable energy as a whole will grow from 20% of production in 2021 to 24% in 2023.

But, solar is cheaper for utility companies. Solar now costs 3 cents to 6 cents per kWh, while fossil fuels cost 5 cents to 17 cents per kWh. More solar energy generation – whether from residential, commercial or utility-scale installations – could reduce the cost of electricity for all customers.

What Happens To Your Electric Bill After Installing Solar Panels?

So, what can you expect from your utility bill after your photovoltaic array goes live? Here are the variables that can impact how much lower your electric bill will be.

The Amount Of Electricity You Use

One of the key components of any electric bill is how much energy you use. Your energy usage is the baseline number for the other factors affecting your electric bill.

Your Local Electricity Rates, Net Metering And Connection Fees

Many utility companies across the nation use some form of net metering credits to compensate customers with solar power for excess power they generate and add to the grid.

Your utility company’s connection fees and potential time-of-use (TOU) costs for using electricity during peak hours can also impact your bill.

Your Solar Energy Production

The energy your solar panels produce will likely offset a good amount of your electricity use. Let’s go back to that average monthly number of 893 kWh. The average-size home solar panel system produces 720 kWh – 900 kWh per month.

A grid-tied home will use some grid electricity at night and possibly during cloudy days, but it will also contribute excess electricity during the day. The amount of energy you produce and how much you pull from the grid, plus your utility company’s customer generation and TOU policies, will impact your savings. 

The Configuration Of Your Solar Array

A hybrid solar system – sometimes called “solar plus” – allows homes to use a solar battery for power during peak periods, thereby avoiding high TOU charges.

This may require using a load management system or energy storage system (ESS), which can allow a smart inverter to discharge the system’s battery during peak hours. 

A properly configured solar-plus system can also keep a home powered during an outage.

FAQs: Electric Bills And Solar Panels

Here are a few questions about electric bills and how they’re affected by solar panels.

Will I still have an electric bill if I go solar?

If you have a grid-tied home, you’ll likely have an electric bill even with solar panels. Most utility companies charge a fee for your home to connect to the grid. Off-grid homes won’t have an electric bill.

Why is my electric bill so high with solar panels?

If your electric bill is still high after adding solar, make sure your utility company has you on the right rate plan. Also, by checking your system’s app, you can be certain your solar equipment is functioning properly.

It’s also possible that solar isn’t reducing your bill as much because your utility company doesn’t have competitive net-metering policies. Whether you own or lease, a solar power purchase agreement (PPA) can also impact your bill. Finally, ensure you’re taking measures to reduce your overall consumption.

My electric bill is more complicated with solar. How do I understand all of this?

Because each utility company might use different terminology and have different policies, it would be wise to speak with a representative from your local utility company. In general, though, try to weigh how much electricity you generated and received compensation for versus the cost of your connection fee, applicable demand charges and other electricity usage.

Can I make money with solar panels by selling electricity back to the grid?

It’s rare today to make a profit selling electricity back to the grid. In the earlier years of solar panel development when utility companies and governments were incentivizing solar more, it was possible.

Will my solar panels pay for themselves?

You’re likely to save on your average monthly electric bill with solar panels. Eventually, those savings will match the cost of your solar panels. If you take advantage of rebates and the federal solar tax credit, it will take less time for your solar panels to pay for themselves.

The time required for the cost of your solar panels to match your energy savings is called your payback period. Think of it as the return on investment for going solar. Your payback period depends on a number of factors, but 6 to 10 years is a commonly cited range.

The Bottom Line: Average Monthly Electric Bills Will Likely Go Down With Solar

With a photovoltaic array producing clean energy for your home, you’re likely to save on your utility bills. Those savings will eventually pay for your solar array. But that payback period could also depend on your energy use and your utility company’s policies and incentives. If you’re not seeing any savings, be sure your rate plan is correct and that your equipment is working properly.

Rocket Solar does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.