When it comes to going solar, most people cite two specific reasons. First, you can help save the environment, which is a great reward on its own. Second, you can often save money by lowering your energy bills thanks to the electricity generated by solar panels. (And who doesn’t love saving money?!)
However, saving money with solar isn't necessarily as simple as installing the panels on your roof and never thinking about them again. Having a long-term plan to make the most of your solar investment can help you maximize your potential savings with solar panels, and lower your monthly electric bill.
How To Save On Electric Bills With Solar Panels
If you've done any research into going solar, you likely know that solar panel systems can be relatively expensive. So, you might be wondering how investing in a solar panel system will actually help you save money.
Essentially, the idea is that the power you get from your solar panels replaces the power that you'd need to buy from your utility, and when you break down the monthly cost of your solar panels and compare that to how much power they produce, the cost per kWh for electricity from your solar panels is lower than electricity from your utility.
The way you can calculate those savings depends on whether you get your solar panels through a loan, or by paying cash upfront.
Save On Your Electricity Bill With A Solar Loan
At first glance, it might seem like you would be paying more if you invest in solar panels, because you are still on the hook for an electric bill in addition to a monthly payment toward your solar panel loan.
While it’s true that you will have a second bill when going solar with a loan, the amount of electricity you can produce with your solar panels should help offset your electricity bill significantly, so that the combined cost is less than your original non-solar electricity bill on its own.
The goal is to find a balance where you have enough solar panels to produce the energy you need to power your home, but not so many that it isn't worth the extra cost. (To calculate this for yourself, check out, “How Many Solar Panels Do I Need On My Roof?”) By reducing the amount of power you get from the utility, you can lower your electricity bill by an amount that offsets the payments you are making on your solar panel system.
Essentially, you have to look at the payment toward your solar panel system as an electricity payment. You can then compare how much you are paying for electricity from your utility company with what you spend each month paying off your solar system.
Here is an example of how you can save money by installing a solar panel system:
- Imagine you spend $200 a month on your electricity bill from your utility company before going solar.
- Your solar panel system can produce enough electricity to cover 80% of your needs.
- Because you need 80% less power from the utility, your monthly electricity bill is now down to roughly $40 per month.
- If your payment on the solar loan is less than $160 per month, then you’re saving money overall, even while paying for the solar power system.
- Once you pay off your system, you’ll no longer have a loan payment, even though your panels are still producing electricity, which increases your overall savings significantly.
Save On Your Electricity Bill When Buying Solar Panels With Cash
Another option is to buy your solar panel system upfront with cash. This option can be beneficial because you know the system is already paid for, and you’re not paying any additional amount to finance the system over time.
Unfortunately, it can be harder to see how much you are saving when you don't have a monthly loan payment to compare your utility bill to. However, you can do some calculations ahead of time to estimate how much you are saving each month.
Let’s look at an example that can give you an idea of the savings with solar panels you can have if you buy your solar power system outright:
- Imagine you paid $25,000 upfront to buy your solar power system, and the average lifespan of a solar panel system is roughly 25 years.
- Take the $25,000 installation cost and divide it by 300 months (25 years x 12 months) to get an average cost of roughly $83 per month.
- Like in our previous example, imagine you normally spent $200 a month on your electricity bill from your utility company, and your solar energy system offsets 80% of your needs. As a result, your electricity bill is now around $40 per month.
- Add the $83 per month that you paid for your system to the $40 per month you pay your utility company, and you’re paying a combined total of around $123 per month for electricity.
- Remember, though, you paid for the system upfront, so that $83 isn't actually coming out of your pocket each month. You can think of it as getting a return on your investment of $160 each month, since you’ll be saving that much on your electricity bill. (You paid $83 per month that your system is functioning, but it saves you $160 per month in energy costs, so you’re saving around $77 per month!)
- As an added bonus, your savings will typically increase over time, because the cost of electricity goes up over time. The amount that you paid for the system is fixed, and the amount of electricity that you save each month will be about the same, but the value of that saved electricity will increase over time. (And you won’t be impacted as much by rising electricity rates.)
How to Save Even More On Your Electricity Bills When Going Solar
The savings you get by installing solar panels aren't limited to just what you are saving on your utility bill. There are several other ways to save money when you start using solar panels.
Use Less Electricity
The less electricity you use overall, the more likely it can come from your solar panels and not from your utility, which you have to pay for. To use less electricity, you can go room-by-room through your home and find ways to be more energy-efficient. This could mean doing things like:
- Upgrading to energy-saving Energy Star appliances
- Running your HVAC system less often
- Replacing your old light bulbs with LED lighting
- Unplugging small appliances when you aren't using them (power strips can help)
- Running only full loads in your dishwasher, washing machine, and dryer
- Installing low-flow faucets
- Using heavy curtains to help regulate temperatures
- Watering your yard only when necessary
- Keeping your fridge at least three-quarters full
- Turning down your water heater temperature to 120 °F
Install Battery Storage
You can also invest in battery storage which stores any excess electricity your panels generate that isn’t immediately used by your home. Then, if your panels aren't producing enough electricity at any point, you can use your reserves from your battery instead of drawing power from the utility grid.
It does increase your upfront costs to get battery storage installed, but if your panels can regularly produce more power than you need, you can save money by not paying your utility for that electricity.
Shift Usage to Strong Solar Hours
If you want to ensure you will have enough electricity being produced by your solar panels to run all your appliances and other electrical needs, it is best to use your electricity during hours with plenty of sunlight. This way, you know your panels are receiving the sunlight they need to provide the power you are consuming.
Sign Up For Net Metering (If Available)
Net metering allows you to take the extra electricity your solar panels generate and add it to the electric grid. You then receive a credit from your utility company for that extra electricity, which can help lower your monthly electricity payment in the future.
Optimize Your Time-of-Use
For instance, you can:
- Run devices that use a lot of energy, like washing machines, during non-peak hours.
- Invest in a smart thermostat that allows you to set specific times you want your air/heat running, so you don't run it more than necessary during peak hours.
- Turn off any unnecessary power when you're away to reduce peak hour usage.
- Charge your electric vehicle during off-peak hours. (Some electric vehicle chargers allow you to program your time-of-use hours so they charge when rates are lowest.)
Peak and off-peak hours will vary based on your location, the season, your electricity company, and other factors. However, peak hours are usually when electricity demand is highest, and off-peak hours are when demand is the lowest.
Save On Your Electric Bill With Solar Panels
Going solar is not just great for the environment. It’s also great at helping you save money in various ways. The most obvious way to save money is by reducing your electricity bill from your local utility company.
When looking at investing in solar panels, it’s important to consider your long-term savings. You may start seeing some savings immediately, but your savings will often increase as the years go by.
If you choose to invest in a solar power system, you can also take additional steps to ensure you are taking full advantage of your potential savings. This includes being as energy efficient as possible by doing things like upgrading to Energy Star Appliances when yours need to be replaced, or adjusting your HVAC and water heater settings.
On top of being energy conscious, investing in battery storage can help ensure that you will have solar electricity available on days when your panels aren't producing enough energy to fully power your home. This stored electricity means you won't have to pay more to your utility to get the power you need.
You can also maximize the efficiency of your panels by using your electricity during hours with more sunlight.
Two other ways you can save money are net metering and time-of-use plans. Net metering allows you to give excess energy your panels produce back to the utility company for a credit on your electricity bill. Time-of-use plans give you the chance to get lower rates for aligning your energy usage around peak and off-peak hours.
If you're ready to install solar panels to save on your electric bills with renewable energy, talk to Palmetto today. You can get started with our Free Solar Design and Savings Estimate Tool to see how much you could save by going solar.