Solar panels aren’t just great for the environment; they can also give you serious savings over the lifetime of your solar panel system.
So the real question is that do solar panels really save money? We will try to answer in this article by examining all the aspects.
How Much Do Solar Panels Save You in 2020?
With various exciting investment opportunities available in modern times and age, it’s very easy to get sceptical about any new product that boasts of “saving you tons of money”. Solar panels are no exception to this. Saving money by cutting down on your electric bill is one of the main features and selling points for a solar product as a utility and home upgrade.
Well, the simple answer to the question “do solar panels really save you money?” is a resounding yes. However, how much you will end up saving depends on a number of factors.
Factors like direct hours of daily sunlight your house receives and the size and angle of your roof are extremely important and also local electricity rates will end playing the biggest role in determining how much money you will be installing a solar panel.
How Much can you Save Through Solar Panels?
The first step to understand how much money solar panels can save for you is to calculate how much actual money you are currently spending on electricity per annum.
In general terms, the average annual electricity consumption for a U.S. household is 10,400 kilowatt-hours (kWh). If you multiply that by the national average electricity rate ($0.1326 per kWh) then you’ll find that a typical American family spends something over $1,856 per annum on electricity.
If you consider the volatile nature of electricity prices and calculate what the utility rates are going to be in the years to come. Then the picture becomes even clearer. When you are comparing the cost of utility electricity with that of the home solar.
You should also keep in mind that electricity rates are going to increase annually.
For example, over the past decade, national electricity costs have kept on increasing at a rate of approximately 2.2% per annum.
Utility rate inflation surely acts as an added incentive for using solar panels. When you start generating your own energy using a rooftop PV system, you are eventually locking in the energy costs at a constant rate and you no longer have to consider the volatility of the utility rates.
If you consider the solar panels as an up-front investment, then the only costs associated with a solar system will be the cost of installation. The added electricity costs that you will accrue in case your panels do not completely compensate for your electricity use.
The efficiency and effectiveness of solar panels to completely offset your electricity needs depend primarily on how accurately you size your PV system is and you will have to also calculate. How many solar panels you will need to secure that percentage.
To give you a glimpse of typical bill savings from a solar installation, we have provided the following table which offers state-by-state data for 20-year savings estimates by using solar panels.
The Number of Assumptions and hence is just an Approximation.
|AVG. PRICE (6 KW SOLAR SYSTEM)||AVG. ELECTRICITY RATE PER STATE ($/KWH)||SAVINGS (20-YEAR)|
Size of the System: 6 kilowatts (the national average)
Demand: 10,400 kWh per annum (the national average)
Inflation in Utility rate: 2.2%
Percent needs to be met: 94% (EnergySage)
Ownership of the solar panels has been assumed.
Electric Bills with Solar Panels:
A common misconception that people have about installing solar panels is that the panels will completely negate your electric bill. Even if you install enough solar panels to completely compensate for your electricity use. You will still be receiving an electric bill as long as your property remains grid-connected. However, this also doesn’t mean that you always have to pay money on your bill. Let’s see why:
There is a policy called net metering, which is available across most of the states. As per this policy, the energy that your solar panels produce which you are not using immediately is sent to the grid and you get credits on your electric bill in exchange.
You can then draw energy from the grid during the night (when your solar panels are not producing electricity) but don’t have to pay any extra money. You just have to make that you draw back the same amount or less than you provide back to the grid. When you get your monthly electric bill. The net metering credits you consumed that month will be highlighted and you will not be charged for that.
The surplus electricity that you used from the grid that wasn’t compensated by net metering credits is where you might incur small charges for electricity consumption.
Therefore, the fact is that you will still receive an electric bill after you install solar panels.
However, the bill may not require you to pay anything, and may just simply highlight how much of your energy usage was offset by net metering credits in that particular month.
Moreover, in case you end up providing more electricity to the grid than you used back, your utility will generally roll over your unused bill credits to the next month and you can keep enjoying the benefits. Hence, installing solar panels for energy production will almost certainly lead to a substantial reduction in average monthly electric bill charges, and in some cases, it may completely eliminate your monthly electric bill.
Reduction in your Carbon Footprint:
Financial returns can prove to be a major incentive for going solar, but that’s not the only thing that solar panels save. When you install a solar panel at your home, you are also contributing to the wellness of the environment by reducing greenhouse gas emissions.
That’s why the question of how much can the solar panels save, can be answered two ways: the total amount of money it saves from your electricity bill and how much harmful emissions it can reduce.
A great comparison can be made about carbon emissions by taking into consideration that a typical vehicle emits 4.7 metric tons of carbon dioxide each year. If you take into account that the national system size average in the U.S. is 6 kW, a solar panel system easily compensates the emissions produced by one automobile being run on fossil fuel in a year.
Hence, regardless of whether you consider finances or carbon emissions, a solar panel system truly has the potential to generate big savings for homeowners. The deciding factor in this will surely be the cost of electricity, which is very volatile depending on where you stay.
Nonetheless, you can take this for sure that if you live in a state which has middle- to upper-level utility rates, installing solar panels will be a risk-free investment that can generate major returns in the long run. If the emissions are taken into consideration, as the size of panel systems increase, so do the reductions in CO2 levels surrounding the environment, eventually making solar panels an eco-conscious investment too.