Why Your Monthly Bill Isn’t the Whole Story: A Focus Annual Solar Savings

While there are plenty of great reasons to go solar — cleaning up your energy use, reducing your reliance on the grid — the ability to save monthly through lower energy bills is still the most powerful. 

If you switch on your solar panels for the first time in November, you might feel little hope that your solar panels will live up to their savings promise. If you switch them on in July, you might feel like you’ve hit the jackpot.

Solar panel production is affected by the changing of the seasons. And that’s why, to truly understand the savings potential of solar panels, you need to take the whole year into account. Monthly snapshots can be a bit misleading.

Seasonal solar savings: changes throughout the year

It’s natural to think of savings in monthly increments — that’s how we pay most of our bills, after all. But, solar energy production is inherently tied to the available sunlight: Longer days and fewer clouds? More clean electricity generated from your roof. Shorter, cloudier days? Less electricity generation. That’s what drives the differences in seasonal solar savings.

Spring and summer: building a credit bank 

During the long days of June and July, your system is likely over-producing. In many areas, this excess electricity earns you bill credits when it’s sent back to the grid, possibly building a bank you can pull from in the fall and winter. Your monthly bill might be the bare minimum (for example, just a connection fee), or even zero.

Fall and winter: use credits to offset lower production

As the sun sits lower in the sky and winter weather moves in, production naturally dips. Meanwhile, your energy usage might actually spike if you use certain types of electric heating or spend more time indoors with the lights on. In areas where you can build a bank of credits, you can offset your bill with them through the winter. If you haven’t had a summer to build a bank of credits, your bill might be higher than expected. Seeing a higher utility bill in January can be jarring, but it doesn’t mean your panels aren’t working.

Why you need an annual view

Focusing on solar savings over a full 12-month cycle is the only way to get an accurate return on investment (ROI). Here’s why the annual perspective matters.

• Net metering balance: If your utility provider offers net metering, those credits you can bank in the summer offset the higher costs in the winter. You’re essentially using the grid as a giant battery.
• Averaging out the weather: One rainy March doesn't define your system's performance. Annual data smooths out the anomalies of an unusually cloudy month or a particularly harsh winter.
• Match performance with the design: Most solar systems are designed with annual production and offset in mind. Annual performance is the most meaningful standard to judge a solar system against.

How to calculate your true solar savings

To see the real impact on your wallet, stop looking at your monthly statement in isolation. Instead, try this.

1. Total your annual spend: Add up your electricity costs for the last 12 months.
2. Compare to pre-solar totals: Compare that number to what you paid in the year before you went solar, adjusting for any major rate hikes from your utility company and any major new electricity use at your home (like a new electric vehicle or hot tub).
3. Factor in the credits: Look at your banked credits at the end of your utility's true-up period.

The bottom line

By shifting your mindset from "What did I save this month?" to "What did I save this year?", you’ll have a much clearer — and much more satisfying — understanding of your clean energy investment.

Don't let a cloudy December get you down. The sun always comes back, and over the course of a year, those rays can add up to real savings.

If you’re considering solar, reach out for a free quote and solar savings estimate today.

Annual solar savings frequently asked questions

Why is it important to look at annual savings?

Solar production and any associated energy bill savings can fluctuate throughout the year. Annual production and savings are a better measure of a solar system’s performance than any one month.

Do solar panels always save you money?

Some homes may be unsuitable for solar and an overpriced system may never recoup its cost or save more than its lease payment.

Disclaimer: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors.