In this article we will answer the question ‘if you have solar panels do you pay for electricity?’
The biggest reason people choose to go solar is the huge savings on energy bills. Some people even attempt to run their whole house using solar panels. If you are considering this option then it’s important to understand how billing works with home solar panel installations.
There are a few technical points to understand before taking the plunge. This will help to give you a better understanding of if you will pay for electricity or not. Plus help you in working with an installer for correctly sizing your solar array.
Do You Pay for Electricity if You Have Solar Panels?
Yes, it is likely you will still be paying for electricity after you install solar panels. This is because your house will still be connected to the main grid in order to deliver a reliable energy source.
You will need to lean on the main grid for electricity when your solar panels stop aren’t providing enough power. For example, you won’t generate any solar power at night.
This means you will pay for the electricity you draw more electricity from the main grid than your solar panels produce.
In fact, you will always receive an energy bill which shows your energy usage. Even if your solar panels produce all the electricity you use, your utility will still send you a bill. If you have a big enough solar array this can leave you nothing to pay or even leave you with credit to spend next month.
Generally, most homes can’t support a solar array big enough to completely off-electricity used from the main grid so you will be paying a bill from your utility company.
How Home Solar Panel Systems Work
Home solar panels work using a concept called Net Energy Metering (NEM).
This is a process that allows you to buy and sell energy with the main grid. Your solar panels will send electricity to your house to run appliances. But if there is any excess it is then sent to the main grid. In exchange for providing this electricity to the grid your utility company will credit your account. You are ‘selling’ energy to the grid.
The energy credit you receive enables you to store the economic value of your solar energy production for use at other times. When your home is using more energy than your solar panels can provide you will automatically start drawing electricity from the main grid. At this point, you are ‘buying’ energy, just like a normal home. To pay for this you will use any credit you have on your account. After this, you will start to pay for electricity just like you would without solar panels.
NEM allows electricity to flow both ways, in and out of your property, and this is recorded on a two way meter. At the end of a billing cycle this is ‘Trued-up’ and if you have used more electricity than your solar panels produce you will have a bill to pay.
How Much Are Energy Bills with Solar Panels?
There is no set amount for bills with solar panels. It comes down to many internal and external factors.
As you can imagine, your energy usage, size of solar array, and how much you pay for electricity are the biggest contributing factors. Let’s go through each aspect.
Total Energy Usage
The biggest factor in your final energy bill is always how much you use in your daily life. This can vary dramatically depending on your habits and number of people living in your house.
For example, a family of four uses a whole lot more power than a single person. In fact, the average US household uses around 30kWh electricity every day. That’s 11,000kWh a year.
With the average energy price at nearly $0.15 per kWh, we can work out a yearly bill of $1650 or $4.55 per day.
You can easily find your total energy usage from your latest bill. It should show you the total kWh used for a certain period. Use this to work out your daily electricity usage.
Solar Array Size
Knowing your energy usage each day you can start to comprehend the size of the solar panel system you need to offset this number.
Let’s take the average 30kWh per day. If you want to completely offset this you need to produce this amount of energy each day from your solar panels.
And remember it will only work efficiently in direct peak sunlight which lasts for about 4 hours each day. So we need to generate 30kWh in just 4 hours each day. The solar panels need to produce 7.5kW an hour.
An average residential solar panel produces 250 watts (0.25kW). So you’d need 30 solar panels to completely run your house from solar power.
Now that’s a lot of solar panels! Most people don’t have space for this amount so will install smaller systems. Based on the numbers above, you could install 15 solar panels which would cut your energy bills by 50% on a sunny day.
Energy Prices
The actual amount you pay (or save) is also dictated by your local energy prices. In areas with high energy prices, the investment in solar panels becomes even more attractive. This is because the savings on bills are increased meaning you get a quicker return on your initial investment.
It’s as simple as the amount of energy you buy from the main grid and how much you pay per kWh.
Imagine there are two people both buying 10kWh from the main grid every day to make up for the shortfall from your solar panels. Over a year that’s 3650kWh electricity they need to pay for.
- Person A is paying $0.15 per kWh which is $547.50 a year.
- Person B pays $0.10 per kWh which is $365 a year.
All things being equal except the energy prices, person A is paying $182.50 more a year in energy bills.
Location and Weather
The other important factor is where you live and the type of weather you get. The amount of direct sunlight a solar panel gets is crucial to its performance. They work at optimal capacity when facing South in direct sunlight. Any deviation away from this will lead to a reduction in output.
For example, if you live in an area with lots of cloud cover you can’t expect a solar array to generate as much electricity as in a place with over 300 days of sun a year.
That’s not to say, that solar panels don’t work well in less sunny climates but output is simply less. You would either require a bigger installation or pay more for your energy bills. Your local solar panel installers will have an insight into your location, plus you can check out Global Solar Atlas for performance predictions.
5 Ways to Reduce Electricity Costs
Using solar panels to reduce your energy bills is a wise financial investment. Especially as solar panel installations continue to fall each year. This combined with rising energy prices due to inflation and supply troubles makes the solar panels even more attractive. Afterall, after the initial cost, every kWh produced from then on via solar is completely free!
You can further decrease your bills by reducing your overall energy usage too. Don’t assume that because you have solar you don’t need to reduce energy usage. Here are some easy ways to minimize your electricity bills.
Efficient Appliances
If you’re investing in solar panels you should consider upgrading other energy-hungry devices at home. You don’t have to do this all at once but you can slowly make changes as and when you can afford it. An easy place to start is with your light bulbs.
Did you know that LED light bulbs use 70% – 80% less energy than traditional candescent bulbs? Plus switching old washing machines, heaters, and AC units can lead to huge savings.
Remember, the lower your overall energy usage, the less electricity you’ll need to buy from the main grid. You might also be able to reduce the investment required for a solar array!
Don’t Be Excessive
I’ve seen people get pretty reckless with their energy usage after installing solar panels. They think they have an unlimited supply of free energy so don’t bother monitoring their usage. In these cases, people are shocked that their utility bills actually rise because they leave all their appliances running!
Certainly, don’t start using more energy just because you have solar panels. By being careful and monitoring your solar energy supply you can multiply the savings you are making. Reducing your energy usage can have a nice compounding effect if you take a number of steps to make all round changes.
Use Electricity at the Right Time
You should check with your supplier about how much credit you receive for selling electricity to the main grid. Sometimes they will credit you a less amount per kWh than they charge. Plus some states have Time of Use tariffs which charge a higher rate for electricity at peak times. For example, electricity is more expensive between 6pm and 9pm.
In this case, it makes it beneficial to run your appliances and use electricity when your solar panels are generating electricity in the middle of the day. It will work out cheaper to use electricity directly from your solar panel than storing the value on the main grid for later. Avoid running washing machines, AC, dryers, power tools, and high draw electronics outside of peak sun hours.
Ensure Solar Panels Work Efficiently
Most of the time solar panels are low maintenance pieces of equipment. You can set and forget. There are no moving parts and anything that needs to be switched on or off.
That being said, you should still make sure they are working efficiently. This usually means ensuring they are nice and clean. Any dirt or debris on the glass front will stop light from hitting the cells and reduce output. It’s a good idea to have them professionally cleaned once or twice a year. Plus remove any build-up of leaves and other debris.
Increase Solar Array Size
If you’re not happy with the size of your electricity bill after installing solar panels then you could consider increasing the size of your system. Adding to an existing system is a way to instantly increase the power output. And as we know, this reduces the amount of electricity you will be buying from the main grid.
You should contact your original installer to discuss this job. You might find that you have already installed equipment in the available space. Remember, a solar array won’t cover your whole roof, it will generally only be efficient on South facing and sunny areas.
If You Have Solar Panels Do You Pay for Electricity Summary
I hope this article helps to answer your question about if you have solar panels do you pay for electricity.
The simple answer is yes. You will still receive bills after you put solar panels on your house. Most people will still have a balance to pay each year for extra power from the main grid. This amount will be specific to your home but you can expect a significant reduction in costs.
