If you have Googled the words “solar energy” then chances are you have seen advertisements implying that you can make money with solar panels.
Yes, it’s that easy (they promise) - simply install some solar panels, produce your own electricity, and then sell it to the utility for cold, hard cash!
Unfortunately, this is not exactly how it works. Still, many people can achieve significant financial benefits by installing solar panels.
In this article, we’ll explain how you can “make money” with solar panels by offsetting multiple decades of utility bill spending with your own homegrown, emission-free electricity.
How To Make Money with Solar Panels
Unless you are planning to buy land and start a solar farm, the easiest way to “make money” with solar panels is to replace another expense in your life: your electric utility bill. Solar panels can help you save money on your utility electricity costs by significantly reducing the amount of grid power you must purchase each month.
With net metering, energy credits, and other utility solar programs (which we will explain more in-depth later) the solar power produced on your property can replace some (or all) of the grid electricity you purchase month after month for 25 years or more.
Although you will still have an electric bill with solar panels to pay grid transmission fees and other overhead charges, most homeowners can recoup the upfront costs of their initial solar investment within a decade. After this “break-even” point (also known as the solar payback period) your solar panels will not only have “paid for themselves” in offset utility electricity spending, but they can also continue to harness the sun and generate cost-saving clean energy for another 10 to 15 years or longer.
Essentially, as “a penny saved is a penny earned,” making money with solar panels as a homeowner is much more about how much you can avoid paying for electricity, rather than generating a new income stream.
How “Selling” Solar Energy to the Grid Really Works
If you’d like to make money by selling solar to the grid, unfortunately, installing a solar system on your home is not a one-way ticket to Profit Town. For most homeowners in the United States, you will never actually “sell” your solar to the grid, though you can be credited on your electricity bills for the power you produce.
Net Metering in the US
While exporting solar power to the grid during the day’s sunlight hours, your utility can monitor your energy production with a two-way meter. Unlike a traditional meter that only tracks your property’s electricity consumption, your two-way (or smart) meter can also measure your solar energy generation.
Under a basic net metering model, you will only pay for the difference between your property’s solar energy production and total electricity use, otherwise known as your “net” consumption.
For example, let’s say you and your family use 1200 kilowatt-hours (kWh) of electricity in May. In the same time period, your solar panels generated 1100 kWh of solar electricity that was sent into the energy grid. In an area with a 1-to-1 net metering policy, you would only be charged for 100 kWh of utility-supplied power on your May energy bill.
In a separate example, let’s say your panels generate 1100 kWh of solar power, but you only use 900 kWh of electricity in the same month. Here, your excess production (200 kWh) may be “rolled over” into your next month’s bill, at a full or partial value of its original worth.
Whenever your credits are redeemed, the actual dollar amount you will receive for your solar power may depend on when it was produced, the cost of local electricity, and the details of your state, city, or utility company’s net metering or net billing policy.
Redeeming Solar Energy Credits
While the structures of utility energy credit systems and net metering policies vary across the country, most follow a similar credit redemption process. At the end of each month, you will see your renewable energy credits, utility credits, or net metering credits (whatever they are called in your part of the world) automatically applied to your monthly electric bills.
While solar credits continue to roll over month to month, most electric utilities designate a moment in which any accumulated credits must be redeemed each year. Commonly known as a “true-up,” your first true-up bill is usually sent 365 days after your solar panels were first installed.
True-up payments are almost always made at avoided-cost rates, which are much less valuable than net metering credits. Like net metering or net billing credits, true-up payments are also typically completed in the form of utility energy bill reductions, rather than cash transactions.
Solar Panel Savings Calculator
Although you may have been hoping to find a solar panel profit calculator, saving money is a whole lot like making money, at least in our book. As every installation is different, the amount of money you can save over time with solar panels depends on two primary factors: your energy bills and your property’s solar potential.
While some homeowners do not use enough electricity or have enough viable installation space for solar panels to make financial sense, installing a solar power system has already helped hundreds of thousands of people in the United States save money on their long-term energy expenses.
To find out how much you can save, feel free to use our solar panel savings calculator to calculate the solar potential of your roof.
Verdict (and Alternative Ways to Make Money With Solar)
So, to definitively answer the question, “Can you make money from solar panels on your house?” the answer is no – you cannot make money by installing solar panels on your home.
Instead, solar panels can help you save money on your property’s ongoing electricity expenses by generating valuable renewable energy for 25 years or more. So, while not necessarily creating any cold hard cash, solar panels can help keep more money in your pocket to spend on all the other things in life.
With this in mind, there are plenty of opportunities to make money in ways related to solar energy. If you’d like to combine your passion for environmentally-conscious decision-making with a new source of income, here are a few things you can do to make money with solar:
- Join the hundreds of thousands of Americans working in solar by selling solar panels, starting a company, or fulfilling another role in the growing solar industry
- Support and invest in promising solar energy businesses
- Place a bet on whether or not the sun will rise again tomorrow
For homeowners and renewable energy industry professionals alike, Palmetto is here to help create a more sustainable, solar-powered future.