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

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.

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32 thoughts on “How much do solar panels save?

  1. Joshua Rodenburg

    Your graphics are amazing and so helpful when I am trying to teach others about solar. Thank you for the time spent organizing the graphics and content of this blog. Like many others have said, your commonly asked questions section is very helpful as I know I definitely had those questions. I appreciate your honest assessment of the current solar panel industry. Solar is definitely helpful and will only continue to get cheaper and more efficient. If some are on the fence right now, I hope the details in time with persuade them to learn more about the long term benefits of solar.

  2. Leigh Ann Kristiansen

    The savings on your monthly utilities is substantial and the tax incentives are fantastic. Some states more than others. Your best bet is to get online quotes to shop and compare. A local provider will reply with a prompt quote. There is no need to overpay for the panels and install!

  3. Hardy

    Residential solar panels don’t merely help me save more money on utility bills, but they also aid in minimizing my carbon footprint. Solar panels initially cost more; nonetheless, they will offer me more rewards over time.

  4. JH

    A tip for all – when you look at the cost of solar – work it down to how much cents/KWh – eg take the monthly cost/ KWh produced by solar. a quote I received was 9.5c/kwh – I currently pay only $10.5c/kwh without a 25 year commitment – so tell me how is 0 free down now ever a good deal? Oh yes, but the cost of elecrtricty is climbing at 4% a year…. BUT.. the cost of solar is coming down even faster – google cost of solar trends in the past 10 years and you will see that the cost of solar has come from 25c/kwh down to about 5c/kwh (solar companies are charging us 9-10c/kwh) – a great margin! but imagine those folks who locked in 5 years ago when the cost of solar is 10c/kwh and probably locked in at 15 or even 20c/kwh… for 25 years… I will be crying if I were they… unless solar companies are coming out and giving me 5c/kwh, it is not worth to lock in a 25 year contract. it is too risky

  5. mike dunham

    If solar panels are free for low income how do the 20 years work and do you maintain panels and install them at no cost along with meters? What about the battery’s for back up. I have been told they are also are no cost? How does that work out ? I am on a fixed income!

    1. Liz

      There is no battery included with solar panels.
      So there is no storage and NO back up power. Ever. Unless YOU buy a system outright with your own money costing thousands. You are leasing a system that is installed “for free”. There is no “back up” power stored for you in an emergency. Ever. When the power goes off so does SOLAR. In California the grid is fragile, not maintained and PG&E will start rationing power starting November 2021. Solar only saved my next door neighbor $20.00 a month over the last 7 years and they are responsible for the yearly cleaning of the panels which costs $175.00. The panels are a scam. You are “leasing” them from the Solar company for 30 years, that’s why the savings is so very low in your power bill, you are paying for the panels. When you sell your house the new buyer must sign papers to assume your debt to the Solar panel installers. Solar is only helping the power companies. NOT THE CUSTOMERS.

      1. Carly

        So far as I can tell, the best deal for the homeowner and the environment is to own your own solar panels. We will likely take out a loan to buy our panels and purchase a battery for backup as well.

  6. Sabrina Addams

    It’s great that solar power can help you to decrease greenhouse gas emissions, and you can calculate how much by using the EPA’s metric converter. My uncle is thinking of looking into getting solar power and is wondering how much money and energy it could save him over the span of 10 years. It’s great that you said he can save a lot by doing so for the environment and his wallet.

  7. Greg

    Ernesto, while some insurance policies have an increase in premium you are not correct that ALL policies increase by this much. You should really take the opportunity to go let a few companies compete for your policy and see if you can translate this new policy into even MORE savings out of your yearly budget. I have found that the customers I have helped can actually many times get a better policy price than they were paying before they went solar!


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