Did you know that the electricity rates that your utility charges increase every year?
According to the U.S. Energy Information Administration (EIA), retail residential electricity rates (the amount you pay per kilowatt-hour, or ¢/kWh) have risen across the nation at a rate of about 4% on average over the last 10 years. This rate change can vary significantly based on which state you live.
The EIA places the average U.S. residential monthly electricity bill at nearly $110 a month. Taking into account the increasing costs of energy, the EIA forecasts that in twenty years homeowners’ monthly electricity bills will rise to over $180. In the graphic below we’ve illustrated the EIA’s projections for the top five states with the highest electricity bills in the country: Hawaii, Maryland, Alabama, South Carolina, and Texas.
Electricity prices by state
Energy costs tend to add up quickly in states that require a lot of air-conditioning. Texas, for example, has one of the highest monthly power bills in the country. With large spikes in demand for air conditioning during summer months, energy bills in Texas can average $20 per month more than national averages. South Carolinians also spend a lot in an attempt to cool off. Currently the monthly bill in South Carolina is around $135 dollars a month. Extrapolating out the data, the EIA predicts that this could increase to approximately $258 dollars a month in 20 years.
Importing energy can also drive up costs, as is the case in both Hawaii and Maryland. Hawaii’s isolation forces the importation of power, while Maryland simply lacks sufficient in-state power production plants to meet demand. In both cases, the lack of in-state generation causes prices to rise. Currently, the EIA projects that the monthly bill for Hawaiians is around $190; twenty years from now the monthly bill could approach nearly $600 dollars — the highest in the country. In Maryland, the current average monthly bill is $136. In 20 years, the EIA projects that the monthly bill could increase to approximately $317 dollars a month.
Why state electric rates are changing
In Alabama, one of the explanations for high costs is that households tend to rely on electricity for both heating and cooling purposes. According to the Birmingham Business Journal, a spokesman for Alabama Power points to the high usage of electric heat pumps in the state. The EIA places the current monthly bill in Alabama at around $136 a month. In 20 years, electricity prices are projected to rise to approximately $271 dollars per month
While these bills might not seem like a lot today, the expenses can add up very quickly. Over a 20-year period, homeowners in these states will spend between $41,000 to $88,000 on bills to their utilities. Installing a solar panel system can be a great option for those interested in reducing their cost of electricity, and even in locking electricity rates for the long term. You can use our Solar Calculator to find out what your 20-year solar savings would look like. A solar shopper on EnergySage is typically a higher-than-average consumer of electricity. In fact, we’ve found that electricity bills for our solar shoppers tend to be anywhere from 40% to 120% higher than the EIA estimates, depending on which state the installation is taking place in. If you simply want to get more insight into your household’s day-to-day electricity use than your electric bill will give you, using a home energy monitor like the Neurio W1-HEM Home Energy Monitor or the CURB Home Energy Monitoring System is a great place to start.
Three Tips for Solar Shoppers
Homeowners who get multiple quotes save 10% or more
As with any big ticket purchase, shopping for a solar panel installation takes a lot of research and consideration, including a thorough review of the companies in your area. A recent report by the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) recommended that consumers compare as many solar options as possible to avoid paying inflated prices offered by the large installers in the solar industry.
To find the smaller contractors that typically offer lower prices, you’ll need to use an installer network like EnergySage. You can receive free quotes from vetted installers local to you when you register your property on our Solar Marketplace – homeowners who get 3 or more quotes can expect to save $5,000 to $10,000 on their solar panel installation.
The biggest installers typically don’t offer the best price
The bigger isn’t always better mantra is one of the main reasons we strongly encourage homeowners to consider all of their solar options, not just the brands large enough to pay for the most advertising. A recent report by the U.S. government found that large installers are $2,000 to $5,000 more expensive than small solar companies. If you have offers from some of the big installers in solar, make sure you compare those bids with quotes from local installers to ensure you don’t overpay for solar.
Comparing all your equipment options is just as important
National-scale installers don’t just offer higher prices – they also tend to have fewer solar equipment options, which can have a significant impact on your system’s electricity production. By collecting a diverse array of solar bids, you can compare costs and savings based on the different equipment packages available to you.
There are multiple variables to consider when seeking out the best solar panels on the market. While certain panels will have higher efficiency ratings than others, investing in top-of-the-line solar equipment doesn’t always result in higher savings. The only way to find the “sweet spot” for your property is to evaluate quotes with varying equipment and financing offers.
For any homeowner in the early stage of shopping for solar that would just like a ballpark estimate for an installation, try our Solar Calculator that offers up front cost and long term savings estimates based on your location and roof type. For those looking to get quotes from local contractors today, check out our quote comparison platform.