How Much Money Do Solar Panels Save You On Electric Bills?

The first step to understanding how much solar power system can save you is to calculate how much you are currently spending on electricity every year. Let’s make USA as an example, the average annual electricity use required for a U.S household is 10,649 kilowatt-hours (kWh). Multiply that by the national average electricity rate as of October 2021 ($0.1411 per kWh) and you’ll find that the typical American family is spending just over $1,500 a year on electricity alone.

Then, you have to consider the volatile nature of electricity prices and determine what utility company rates will be in years to come. When you compare the cost of utility electricity with home solar, you should keep in mind that you can expect electricity rates to increase annually. Over the past decade, national electricity costs have increased at a rate of around 1.3% per year. Utility rate inflation is an added incentive for solar: when you generate your own energy with a rooftop photovoltaic (PV) system, you’re locking in energy costs at a constant rate so that you no longer have to consider variable utility company rates.

Because of the nature of solar as an up-front investment, the only costs associated with a solar system will be the installation costs and any added electricity costs in the event that your panels do not completely offset 100% of your electricity use. Whether or not your system will completely offset your electricity needs is primarily determined by how accurately you size your PV system – you can calculate how many solar panels you’ll need to secure that percentage.

To provide a snapshot for typical energy bill savings from a solar installation,i will do below calculation for you:

System size: 6 kilowatts (kW)

Standard sunshine time:6 hours(5.91 hours at Los Angeles)

Complete set solar system efficiency:85%

6000watt*6hours*85%=30600WH=30.6KWH

Electricity rate:$0.1411 per kWh

One day can save bills:30.6KWH*0.1411=USD4.3

One year can save USD4.3*365=USD1569.5