With electricity prices expected to rise over the coming years, homeowners are searching for ways to save on utility bills. As trends are shifting towards incorporating sustainable energy sources into daily life, many are considering investing in solar energy. Not only does it provide a way to reduce the expense on bills, but it can also significantly improve the value of the property.
Though prices of panels vary from place to place, trends seem to be in favor of solar because prices are dropping across states. A lower price tag may be enough to attract some people. And the greater incentive comes from the fact that there’s a way to make money from them.
In this article, I’ll go over exactly how you can calculate your electricity savings from using solar panels, how to properly invest in solar energy, and how you can actually make money (in a sense) by installing solar panels for your home.
Disclaimer: The information provided in this article and accompanying material is for informational purposes only. It should not be considered legal or financial advice.
Do I save money?
Going solar is a major step towards a greener approach to living. One of the main advantages of installing solar panels is the reduction of your electric bill. So, yes you do save money!
However, exactly how much you save is greatly influenced by where you live. The number of hours of direct sunlight, the angle of your roof, and the size of the panel all play an influential role in determining your savings.
Your local electricity rate also has a big impact, if not the greatest impact on how much you can save. Before you can calculate your savings, you need to first understand your expenditure.
Understanding the numbers
Every homeowner knows how important it is to manage the budget. Understanding how much energy you use, and where it’s being used is the first step to understanding how much you can save with a PV (photovoltaic or solar) system.
Several factors affect your residential energy consumption. These include the size, type, and age of your home, the number of people, the appliances you own, and how well your house is insulated.
On average, a typical household utilizes approximately 10,000 kilowatt-hours (kWh) of electricity in a year. You can multiply that by your local electric rate to calculate the total cost of your electricity.
Unfortunately, calculating the exact utility bill isn’t quite that straightforward. Since the price of electricity continuously fluctuates, you can only calculate an estimated annual expense this way. Remember there are additional costs related to administration, transmission, and distribution that contribute to the final amount.
You can also take a look at your personal electricity bill from your utility company to find out the exactly how much electricity you use, and how much you spend on average.
Is it worth it to install Solar Panels?
Knowing how you spend annually will help you decide what to do next. Most people understand that solar energy is not going to solve all of their energy needs. However, it will greatly reduce the amount of energy you need to buy.
A typical residential solar panel array can produce 5kW, which can cover up to 75% of an average household’s electric needs. The remaining required power can be acquired through the grid.
Everyone knows that solar panels help to save on the utility bill. But, because of the considerable up-front investment required in installing a solar power system, the ultimate question for almost all consumers is: “How long will it take to pay back the cost of installation?” On average, it may take between 7 to 11 years. But the payback period depends on your consumption and the price of electricity you purchase from the grid.
Will I still get an electric bill?
People often believe that once you invest in a PV system, you won’t receive a utility bill. This, however, is not always true.
Remember that when your solar panels do not completely fulfill your electric needs, you still use power from the grid. This usually occurs at night when the sun isn’t powering the panels or during winter when there are fewer hours of daylight.
Related Article: Do Solar Panels Work in Winter?
The right way to invest in a solar power system
By understanding your yearly energy consumption, you will be able to determine your electricity needs. This way, you can determine the size of the solar power system that you should install.
You can check this link to find out how many solar panels you’ll need.
Or, you can also employ the services of a professional solar installation company to calculate how many panels you will need, tailored just for your home.
What are the benefits?
Many of you probably grew up in households with parents constantly reminding you to turn off the lights. Before, this was a simple and effective way to lower the electric bill. But today, it’s a way to make money.
With the use of a solar power system, any electricity that you don’t consume is immediately set off to the grid. For this reason, those who reside in places with a considerable amount of sunshine find it beneficial to invest in solar farms.
But for a regular homeowner, net metering is a method to make a profit of a PV system. If you are expecting to get a check from the electric company, this is not the way it works.
What is net metering?
Throughout the year, your PV system creates a varying amount of electricity, sometimes more than you need and not enough at others. These peaks and valleys in energy production influence your utility bill.
When the solar power system generates more electricity than you need, the excess is fed into your electric utility’s grid, and your meter actually runs in reverse. Your utility bill shows a credit based on the net number of kilowatt-hours you contributed to the grid.
On the other hand, whenever you’re experiencing a power deficit, you can draw the difference from the utility company. So whenever you use energy from the grid, you won’t have to pay extra as long as it’s the same amount or less than what you provided to the grid. This is known as net metering.
Can I really make money from solar panels?
When you receive your monthly electric bill, the usage and metering credits will be indicated. In fact, you may not have to pay for anything. In general, most homes can build up significant credit during the summer. That’s when excess electricity is produced.
During the colder months, this cycle is reversed. As consumption exceeds production, the credit is eventually depleted during winter. This ebb and flow of solar energy are why houses remain connected to the grid. It ensures that your shortages are met while any excess you have is utilized efficiently.
Keep in mind that the rate you receive for credits is slightly less than the retail price of the electricity you generally pay. Even if you have a generous contribution, the utility provider is not likely to pay cash for the credits. However, most will allow you to donate them to someone else.
So the next time you’re thinking about a Christmas or birthday present, maybe you should gift them some of your electric credits!
About the Author: Michelle Joe
Michelle Joe is a blogger by choice. She loves to discover the world around her. She likes to share her discoveries, experiences, and express herself through her blogs. Currently, she is associated with theScoop Solar Team.