How much will I save with solar panels?
One of the first questions that come to mind for someone considering solar panels is: How much money do solar panels save? While the question might seem one-dimensional, solar savings go far beyond reduced electricity bills. Today, we will be looking at how solar saves you money.
The easiest way to figure it out is by looking at your energy bill. The average American family spends nearly $1,500 a year on electricity costs from fossil fuel sources. That means installing a solar panel system that can cover 100% of your needs would result in over $100 in potential savings every month. Take our survey to win a free year of solar!
Much of the initial attraction of doing solar panels is to reduce the cost of monthly electric and utility bills. The more your system produces, the more you can save with solar panels. Typically, a residential solar setup produces anywhere from 350-850 kilowatt-hours (kWh) per month. The average home uses approximately 909 kWh of energy per month (according to U.S. Energy Information Administrations), so owning solar can save you upwards of 90% on your monthly electric bills.
Because of the nature of solar panels as an up-front investment, the only costs associated with a solar system will be the cost of your installation 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.
To provide a snapshot for typical bill savings from a solar panels installation, the following table offers state-by-state data for 20-year savings estimates with solar. The data incorporates a number of assumptions:
Typical Starter Systems
- System size: 6 kilowatts
- Electricity demand: 10,649 kilowatt-hours per year (the national average)
- Utility rate inflation: 2.2%
- Percent needs met by solar panels: 96%
- Electricity rate: State average as of October 2020 (according to EIA)
- Ownership of the solar panels is assumed
Owning Your Own Solar Panels
By owning your own solar system, you qualify for tax deductions from the government. In 2021, the government lets owners deduct 26% of the cost of installing a rooftop solar-electric generator, including the cost of any necessary remodeling or retrofitting work associated with the solar installation, from your federal income taxes. Thus, if you were to spend $10,000 dollars on your system, you will receive a $2,600 tax credit. As an added bonus, many states allow for households with solar units to qualify for a deduction on their state income taxes as well.
How will you actually experience those solar savings?
Solar savings come from a lot of angles, but most of them fall to one big question: who owns your power?
Right now, the power company owns your power. And they can decide when that price goes up or how much you get. A solar system on your house gets you out of some or all of that relationship (some customers prefer to get systems that reduce their electricity need but not outright eliminate the need for the public power grid).
But how you install your solar system and who you get it installed through can really change up your future savings.
Solar Purchase is the easiest to understand: you buy it, you own it. When you don’t own your solar, you’re playing a shell game with your power bill. Instead of paying the power company.
Because there are a variety of factors to determine your savings, it’s hard to know how much money you’ll save exactly. Luckily, at Solar Smith, we’re here to make sure you’re saving as much as you can. How solar panels are made?