Solar energy is now occupying centerstage for being an environment-friendly and renewable energy source. It also comes with another huge benefit for the consumer – bringing down the electricity bill and saving money.
As the electricity rates are increasing at a steady pace each year, installing a solar system is an attractive proposition for the consumer. Embracing new technology, especially when it boasts of multiple benefits, is not easy for most people. It is normal to feel skeptical and suspicious. The ideal approach in this circumstance is to look at the pros and cons of installing a solar system impartially.
This article is an attempt at helping you in this regard.
Do you really save money with solar installation?
The short answer is yes. Installing a solar system can make a significant drop in the electricity bill of domestic consumers and save thousands of dollars in a year. However, the amount you will save depends on many factors.
Such as the hours of direct sunlight available and the angle of your roof. This, along with the efficiency of the solar system installed, affects the quantity of the energy generated. Your energy consumption and electricity rate also affect savings. Another important factor is the compensation rate offered by the local electricity company.
By optimizing your electricity consumption and maximizing your solar installation, it is possible to reap rich rewards as promised in the advertisements. And, it is possible to achieve this balance without compromising on your energy needs. A better understanding of local rebates and incentives offered for solar installation can help in maximizing the return on investment.
How much do you save with solar panels?
The first step in estimating your savings with solar panels is to understand how much electricity you are using now and how much you are spending on electricity. The average annual electricity use for a US domestic consumer is 10,972 kilowatt-hours. By multiplying this with the electricity rate of your region, you will get your average spend on electricity in a year.
Again, the lifespan of a solar panel is 20-25 years. So, while calculating the electricity bill savings for the solar system, it is pertinent to take into account the rise in energy tariffs over the years. Though it is difficult to estimate the increase in electricity rate that much into the future, on an average, the electricity rates have gone up at the rate of approximately 2.2% every year. On the other hand, the cost of generating solar energy remains the same throughout the period as the bulk of the expenditure on solar installation is upfront.
Now that you have the total amount you would be spending on electricity for the next 20 years, you just need to find its difference with the cost of solar installation. And, there you get the amount saved.
Solar panel savings statistics
Here is an outline of a typical electricity bill savings from a solar panel installation. The average power bill is calculated for a domestic connection with a system capacity of 6KW. The annual electricity consumption is taken as the same as the national average of 10,972 kilowatt-hours. The electricity rate increase is pegged at 2.2% per year. It is assumed for the calculation that the solar installation will be able to meet 94% of the energy needs of the consumer, while the rest is met by the grid.
Can solar panels eliminate electric bills?
It is a false impression that you can do away with electricity bills by installing solar panels. Whether your solar installation will be able to meet your entire energy demand depends on how good your estimation of your future energy requirement is. And, how much solar energy you are capable of generating. The ideal conditions for solar power generation include bright sunny days year-round and ample rooftop or yard space for solar panels.
Even if you manage to generate your entire energy demand from the solar installation, you will still receive an electricity bill as long as you continue to be connected to the grid. This is necessary if you want to sell the excess energy to the local electricity company. However, getting an electricity bill need not mean you will have to pay.
To promote solar installation among domestic consumers, most states have introduced the concept of net metering. This helps you to sell the extra energy produced to the utility company and in return, you are given credits that may be used against later usage. This arrangement works like this.
When it is sunny and your solar installation is generating more electricity than you want, you can send the extra energy to the grid. You are compensated for the energy sent to the grid with credits. At night or on rainy days when the sun is not shining and the solar installation is not generating energy or sufficient energy to meet your energy demand, you are allowed to use energy from the grid. You are allowed to pay for the energy used from the grid using the credit accrued from the sale of extra energy generated earlier. This means, as long as you are accumulating enough credit to pay for the energy used from the grid, your electricity bill will remain zero.
However, if you do not have enough credits to pay for the energy consumed from the grid, you will receive a bill for the balance amount.
Some states make a direct payment for the extra energy sent to the grid instead of giving it as a credit to the consumer. In that case, whenever you use electricity from the grid, you will receive a bill for the energy consumed.
In short, your average electric bill with solar panels installed may be zero or a small amount. As at least some of your energy needs are met by the solar installation, your monthly bill will be lower than earlier.
There is no doubt about the numerous benefits of solar power in bringing down greenhouse gas emissions and pollution levels. However, these are not the main selling point for residential consumers of solar energy. Saving money on utility bills is one of the main attractions that appeal to potential customers and prompts them to switch to solar power.