One of the most common misconceptions about solar is that people who install panels no longer receive an electricity bill from their utility company. This isn’t true in most cases: the majority of solar panel systems in the U.S. are grid-tied, allowing customers to draw electricity from the grid when their solar panels aren’t producing enough electricity.
If you choose to install a grid-tied solar panel system, you will continue to receive a monthly electric bill from your utility company – but how much will that bill be? In this piece, we’ll go over the primary factors that determine how much you’ll need to pay your utility company after installing a solar panel system, including solar electricity production, net metering policies, and fixed utility charges.
Factors that impact electricity bill charges after solar
Property owners with grid-tied solar panel systems still receive electricity bills from their utility company, but charges on these electric bills vary widely from one property to the next depending on a few factors:
Solar electricity production
One of the biggest drivers of your monthly bill amount after going solar is how much electricity your solar panel system generates, and whether that generation meets your consumption. If you’re using more electricity than your solar panel system generates, your utility company charges you for the extra electricity you draw from the grid. Alternatively, if your solar panels produce more electricity than you use in a given month, you may see a credit on your electricity bill, depending on your utility company’s net metering policy.
Net metering policy
Net metering is a solar incentive that compensates you for excess solar electricity generation. With net metering, if your solar panels produce more electricity than you’re using, that electricity is sent to the grid in exchange for a credit. You can “bank” these credits and then use them at times when your solar panel system isn’t producing enough (or any) electricity.
Net metering policies vary by state and utility company. Importantly, not every state requires utilities to provide net metering to their solar customers: states like Alabama, Tennessee, and South Dakota do not have net metering mandates, therefore, utility companies don’t need to compensate their customers for solar electricity sent to the grid. That being said, the majority of states currently have active net metering incentives, requiring any investor-owned utility companies (IOU) to offer some form of credit to customers sending excess electricity to the grid.
However, it’s a bit more complicated than just determining whether net metering is available in your area, as even states offering net metering can have varying compensation structures. Some states and their utilities offer customers full credits, while others credit solar customers at a reduced rate. In some areas of the country, the credits you receive depend on the time of day you send solar electricity to the grid (like California’s net metering 2.0).
Even if you generate enough solar electricity to meet 100 percent of your needs, you can still end up owing money to your utility company if you’re receiving net metering credits that are lower than the rates you’re paying when you draw electricity from the grid. Before signing any solar contact, it’s important to know whether net metering is available and the amount of credit you’ll receive, as it will impact your future electricity bills and overall solar savings.
Should I go solar if my utility company doesn’t offer net metering?
Do you live in an area without net metering incentives? Don’t give up just yet – thanks to solar batteries, you can store your excess solar electricity in an on-site battery to use in the future, rather than drawing it from the grid. Adding storage to your solar panel system will cost more upfront, but can help maximize the value of your solar energy generation.
Fixed utility charges
In addition to varying net metering compensation structures, utility companies across the country impose different fixed charges for their electricity customers, such as delivery or customer service fees. These are the types of charges that remain the same regardless of how much electricity you consume from the grid, and may or may not be covered by any net metering credits you bank from excess generation.
Before going solar, it’s a good idea to ask your utility company which charges you’ll still be responsible for paying after installation. Many solar companies can also provide example bills from past solar customers so that you can see your utility company’s net metering incentive in action.
Do you need to offset all of your electricity costs with solar?
Ideally, you’ll be able to eliminate your electricity bill charges after going solar (and potentially even experience a negative electricity bill month after month). However, this may not be the case if you have an unfavorable net metering policy, or if your solar panel system isn’t large enough to produce all of the electricity you need.
That said, even if you can’t eliminate your entire electricity bill with a solar panel system, you can still drastically reduce electricity bill costs, which can add up to thousands of dollars in savings over the lifetime of your solar panel system. Electricity bill offset is only one factor that influences your potential solar savings: solar panel system costs, payback period, and utility electricity rates (present and future) are equally important factors to consider when deciding whether it’s worth it to go solar.
If electricity is particularly expensive in your area and/or you have a high monthly bill, a solar panel system sized to cover only half of your electricity bill can still lead to substantial savings. Furthermore, when you purchase a solar panel system, you lock in your electricity rate for decades: even if this solar electricity is only covering a part of your overall consumption, it helps avoid costs that you would otherwise be paying your utility company and helps protect you from rising electricity rates in the future.
Find out how much you can save with solar
Every property and every solar panel system is different: the best way to see how much you can save with solar is to compare multiple options. Sign up on the EnergySage Solar Marketplace to compare multiple custom quotes from pre-screened, local installers. These quotes will include estimates of your electricity bill post-solar, along with 20-year savings estimates.