how much do solar panels save

How much do solar panels save?

Most solar shoppers can save between $10,000 and $30,000 on electricity over the lifetime of a solar panel system. Solar panels aren’t just good for the environment – you can benefit from serious savings which can vary based on a number of factors including your location, current energy usage trends, and the solar panel system.  Most importantly, solar savings are influenced by the price you pay for electricity.

How much will solar panels save you? Key points to consider

  • Solar panels cost money upfront, but will save you money on energy bills in the long term
  • The average home can save between $10,000 and $30,000 over the lifetime of your solar panel system
  • Generally, higher local electricity prices means higher potential for solar savings
  • Start comparing custom quotes on the EnergySage Marketplace to see your estimated savings from solar power

Do solar panels really save you money?

The simple answer to the question “do solar panels really save you money?” is yesThat being said, how much you’ll save depends on a number of factors. Direct hours of daily sunlight and the size and angle of your roof are both important, but local electricity rates play the biggest role in determining how much solar can save you. Why? Because the more you pay for electricity, the more you can offset by producing your own solar energy.

With so many trendy investment opportunities available in today’s day and age, it’s easy to be skeptical of new products that boast promises of “saving you tons of money.” Solar panels are no different – saving money by reducing your electric bill is one of the main appeals and selling points for solar as a product and home upgrade.

How much money do solar panels save you on electric bills?

The first step to understanding your solar savings is to calculate how much you are currently spending on electricity every year. For 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, the following table offers state-by-state data for 20-year savings estimates with solar. The data incorporates a number of assumptions:

  • System size: 6 kilowatts (kW)
  • Electricity demand: 10,649 kWh per year (the national average)
  • Utility rate inflation: 1.3%
  • Percent needs met by solar panels: 97% (EnergySage Marketplace average)
  • Electricity rate: State average as of October 2021 (according to EIA)
  • Ownership of the solar panels is assumed

Solar panel savings estimates by state

Average price (6 kW solar system)Average electricity rate per state ($/kWh)20-year savings
New Jersey$12,166$0.1603$22,401
New York$13,673$0.1836$25,918

*Note: the federal solar tax credit IS applied to the above table

  • Cheap solar panels vary in quality: usually, a higher price reflects a higher efficiency rating and therefore higher quality. 
  • Polycrystalline solar panels are typically cheaper than monocrystalline panels. 
  • Your payback period may be longer if you shop for solar panels with the lowest price tag. 
  • Solar shoppers should use the EnergySage Marketplace to browse for solar panels based on price, efficiency, brand, quality, and more. 

Do you still have an electric bill with solar panels?

In summary, yes, you will still receive an electric bill after installing solar panels. Importantly, the bill may not ask you to pay anything, and may simply indicate how your usage was offset by net metering credits for the month. In the case where you provide more electricity to the grid than you pull, your utility will usually roll over your unused bill credits to the next month for you to take advantage of. Regardless, installing solar panels will almost certainly lead to lower average monthly electric bill charges, and may eliminate your monthly electric bill in some cases.

How much can solar panels reduce your carbon footprint?

Financial returns are a major incentive for leveraging renewable energy, but money isn’t the only thing that solar panels save. When you install solar, you’re also improving the environment and reducing greenhouse gas emissions. That’s why the question “How much can solar panels save?” can be answered two ways: how much money solar can save and how much CO2 it can save (avoid being emitted into the atmosphere).

The Environmental Protection Agency provides a formula to help you calculate how various green practices result in carbon emissions reductions. The below table converts solar power energy production into greenhouse gas offsets using the metric converters 7.44 × 10-4 metric tons CO2 / kWh of energy produced and the national average for solar panel production ratio, 1.42 kWh / watt of power.

CO2 Reductions by Solar System Size

System size (kW)Annual Solar Energy Production (kWh)Carbon Emission Reductions per year (metric tons)

A good comparison point to use when thinking about carbon emissions is that a typical vehicle emits 4.7 metric tons of carbon dioxide every year. This means that a 6 kW (6,000 watts) solar panel system comfortably offsets the emissions produced by one fossil fuel automobile in a year. In addition to significant bill savings, a solar system comes with the satisfaction of “taking a car off the road,” so to speak.

Commonly asked questions related to how much money solar panels save

Why is my electric bill still high with solar panels?

Although solar panels are a form of renewable energy, they still produce a finite amount of electricity—an amount that’s consistent with the size of your system. If you require more energy than your solar panels are capable of producing, you will still owe money on your electric bill. And in some cases, it may still be high if you significantly increase your energy usage or if your system was not sized properly to meet your energy needs. If your bill suddenly increases and you haven’t increased your usage, make sure to contact your installer–they’ll likely want to inspect your system to ensure everything is working properly.

How long does it take for solar panels to pay for themselves?

There are many factors that affect a solar panel system’s payback period including the initial cost of the system, financial incentives, your average electricity usage, and the estimated electricity generation. Some of these factors are easier to calculate than others, but on average, it takes between 7 and 8years for most homeowners who shop for solar on EnergySage to get their solar panels to pay for themselves. Read this article to find out if switching to solar is worth it for you.

What are two disadvantages of solar energy?

Two disadvantages of solar energy include its high upfront costs and intermittency. While investing in renewable energy pays off in the long run, this technology is typically more expensive than traditional energy generators when it comes to installation. Luckily, there are financial incentives, such as tax credits and rebates, available to help alleviate the initial burden. Additionally, intermittency can be an issue since renewable energy resources aren’t available 24/7, year-round. For example, solar panels produce less electricity at night and on overcast days. Learn more about how solar panels work to uncover the science behind them. 

Solar panels can create big savings

Ultimately, regardless of whether you’re looking at finances or carbon emissions, a solar panel system will generate big savings for homeowners. The deciding factor will primarily be the cost of electricity, which varies significantly depending on where you live. Nonetheless, a good rule of thumb is if you live in a state with middle- to upper-level utility rates, solar will be a risk-free investment with major returns.

If you’re looking for customized estimates not only around potential solar savings but also around the cost of a solar panel system, try our Solar Calculator. If you’re ready to start looking at quotes and installation costs from pre-screened solar contractors in your area, check out the EnergySage Solar Marketplace.

core solar content
cost/savings content

32 thoughts on “How much do solar panels save?

  1. Ernesto Pena Jr

    Another thing to consider when purchasing a solar systems is the increase of your insurance cost will be $600 to $1000 higher on your insurance per year, multiplied x 20 years your @ at least another 12k in expenses over the life of the panels. The solar people don’t tell you about that.

  2. Karl

    Malinda’s comments are on point. It is very important for consumers to understand the rate structure that their utility company uses. Quiz your installers hard on this. It makes more sense to get an undersized system and figure out other ways to reduce your consumption as opposed to putting an over-sized system on your roof.

  3. Karl

    The prices quoted are for the entire system, not just for the panels. I have a 5.14 kw system. I paid for the 20 year lease up front. The total amount was just over $8,400, and it included the panels, racking the inverter, and all the wiring. I basically wanted the system to cover about 50% of my utility costs. It has performed as advertised and saved me close to $1,000 per year for the past seven years according to my calculations. If you live in an area with net metering, there is less of a need for battery storage because you can reduce your load from the grid during peak times so that most, if not all, of your usage us covered by your panels. This depends on the size of your system. As far as other maintenance and equipment replacement, most systems have a 20 year warranty. That doesn’t mean it stops working after 20 years. It just means the owner would need to cover the cost of any maintenance after the warranty period is up. Most systems are guaranteed to produce at 80% of what they are rated for 25 years. The newer inverters typically carry a 12-15 year warranty. Most cost as much as a water heater to replace at that point. So maintenance costs are minimal for at the time that the system is under warranty. The only thing I can think of that might need to be done is cleaning them occasionally, and that won’t cost much. I have never cleaned my panels in the seven years I have had them. The rain usually does a good enough job. My point is that if someone is telling people that there are additional costs of $10,000 or more, I would be very skeptical. Because in the seven years I have had my panels, I haven’t spent one dime beyond my initial investment. At the end of 20 years, I was informed that they would likely sell me the system for $1 since the technology would have advanced quite a bit. I will hit my break even point sometime in year 8, not year 20. By my calculations, my net savings will be close to $13,000. And the panels would still continue to work. They just won’t be as efficient as the when they were first placed on my roof, that’s all.

  4. malinda walters

    This is a great article however it fails to address the fact that if you live in California (don’t know if this is different in other states) PG&E will charge delivery charges for any power that goes over their infrastructure. This includes power you sell back to the grid. In California the delivery for energy is approximately twice the cost of generation. So if you sell power back during the day you pay delivery charges at say (2xGeneration rate X) and get credit for the power you provide at Generation rate X. Then you will pay X back to PGE for that power. Meaning it will cost you more money to give power back to the grid. I see many reviews on Yelp for installers where the customer is upset when they found out they still have a $1500 Delivery bill from PG&E after they oversized their system. Buyers should be aware of this potential issue.

  5. Alfred Lippe

    You left out the rest of the cost. $11,000 to 12,000 is just for the panels. Add another $10,000 for the storage, transformers, rectifier, etc., plus battery replacement and other maintenance, and you just break even over yhe 20 year life of the system. Then you have to replace it and start again with the “savings”.

  6. Yacelys Mendez

    It is a fight with the monopoly of electricity company. Making solar panels expensive is a way they are sure people will continue to depend on electricity. It is just like gas and electric cars. You hardly find where to charge your car. These huge companies provide billions of dollars to the government.

  7. soubhik dutta

    I don’t understand why 6 kw solar panels take about 17000 dollars or more in most American states. In india a similar system is installed in 2000 dollars. Even Canadian solar panels are available in united states at those prices
    If the capital costs of 6 kw solar in California would be 3-4 grand then people would have accepted gladly

  8. Daniel Martinez

    For most homeowners who decide to install solar panels at home, monthly savings is usually what matters most. Solar can significantly reduce, or almost eliminate your monthly fixed costs.

  9. Amy Winters

    I’m glad you mentioned that energy you produce but don’t use with solar panels will be exchanged for credits on your electrical bill. My husband and I have been thinking of ways we can help the environment. I didn’t realize that extra energy produced from our panels could benefit us, so thanks for pointing that out!


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