With renewable energy becoming more accessible and cost-effective, many homeowners are turning towards it. The sustainable and cost savings approach, PV panels are demanded more. But how much do solar panels save on electricity bills? Let’s find out about this!
How Much Do Solar Panels Save On Electricity Bills?
On average, the yearly savings with solar panels could be around $1,500. But this can largely vary on the basis of different factors related to panels, their output, and local rules and incentives.
Gilbert Michaud, a professor of environmental policy at Loyola University Chicago, said it’s worth looking into available options for solar right now.
“It makes a lot of sense financially because costs have gone down so much and the incentives are really strong. Most systems pay themselves off in about 10 years. Then, you have decades of free electricity after that,“ Michaud explained.
To calculate estimated savings on electric bills with solar panels, we need to consider the following factors.
- Our location
- Our energy usage
- Current average price offered by solar companies in our area
According to the US Energy Information Administration (EIC), a residential utility customer consumes around 10,715 kilowatt-hours (kWh) per year. On average, it is about 892 kWh per month.
The national average electricity rate is around $0.14 per kWh, as per EIC. According to this, the monthly electric bill of an American family is around $125. So, an average household could possibly save almost $1,500 per year on electric bills with solar panels.
In 25 years, a US citizen, on average, can save more than $37,500. However, this amount varies for individual solar energy systems. Their savings can vary from $10,000 to $90,000, on the basis of sunlight exposure, roof size, solar incentives, and local energy rates.
To reduce your electricity bill and generate good output, learn about these 8 benefits of cleaning solar panels.
Do Solar Panels Really Save Money?
Yes, installing solar panels systems saves money in the long run. A major factor is the units generated and the electricity tariff. Another thing is to have a net meter facility to supply electricity to the grid.
According to the COO of Sunson Energy, Arshi Chadha said, “Homeowners can save approximately 600 units of electricity monthly that can reduce their electricity bills by around ~ $75.2 with the installation of a 5-kW rooftop solar system in their homes.”
Suppose a 5-kW system generates around 20 kW/day or 600 units per month. With a tariff per unit of about $0.0739 kWh, the solar system will be producing power amounting to around $44.37 per month.
This amount is subjected to change on the basis of tariff amount in that region. Suppose the monthly electricity bill before solar system was around $94.12, then with the system it would be around $53.78, based on the rates mentioned above. Moreover, you could possibly earn with the net metering system.
Cross-Reference: How Much Money Rooftop Solar Systems Can Save for Households
Note: All the figures mentioned are assumption-based. They can change on the basis of place, rates, rules, and incentives in the region, along with other factors affecting solar panel efficiency and output.
Are your solar panels not reducing bills? Find out the possible reasons and solutions to it.
Is Solar System Cheaper than Electricity?
Installing new solar panels is cheaper than investing in natural gas, coal, or other fossil fuel options, according to the World Economic Forum (WEF).
According to a report by International Renewable Energy Agency (IRENA), in 2020, almost 2/3rd (62%), of the solar, wind, and other renewable energy sources introduced were more affordable than the least expensive new fossil fuels.
In its other report, Renewable Power Generation Costs in 2020, IRENA disclosed that the cost of renewable technologies are continuously falling year after year.
IRENA’s Director-General Francesco La Camera said, “Today, renewables are the cheapest source of power.”
Another report by Office of Energy Efficiency & Renewable Energy (ERE) on Concentrating Solar-Thermal Power Basics found a 16% fall in the cost of systems using mirrors to concentrate and reflect sunlight onto a receiver.
As per the Centre for Sustainable Energy (CSE), in solar photovoltaics using semiconductor materials, there has been a 7% drop in cost.
According to IRENA, there have been a drop of 85% in the price of utility-scale solar PV electricity, during 2020. And the International Energy Agency (IEA) confirms solar is now the the cheapest electricity in history.
Cross-Reference: Renewables were the world’s cheapest source of energy in 2020, new report shows
Do Solar Panels Give You Free Electricity?
Yes, it is possible to generate free electricity with solar panels. Sunlight is the free-gift of nature that we harness to generate electricity.
Some utility companies or government utility providers offer free electricity generation up to 300 units of free electricity per month. These are governmental schemes to encourage consumers to shift towards solar panels, but they are beneficial on our end too.
Find out what happens when you pay off your solar panels?
What happens to excess electricity from solar panels?
Also, with net metering, excess power generated gets transferred to the grid, are we get paid for it. Suppose at the month end, our electricity bill is $1,500 and we have earned around $900 through net metering. Our final bill will be around $600 only.
Is Solar Worth It If My Bill is Low?
Yes, without any doubt solar system is worth it even if you do not have high electricity bills. It not just helps with savings but also reduces our carbon footprint. So, talking about how much solar panels save on electricity bills, we now know it depends on a number of factors. But solar panel efficiency is the most important factor here. The more output your system makes, the higher savings you can make.
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