Average Monthly Electric Bill with Solar Panels

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In these climate-crisis-aware times where reducing our carbon footprint is vital, where the ever-increasing electricity bills impact a family’s budget, and where the local grid can be shut down due to high winds to avoid dangerous wildfires -- homeowners may increasingly wonder what they could save on monthly electric bills by installing a renewable energy solar system.

Average US monthly electric bill and average US solar panel installations

Let’s first step back and give some broad stroke answers to this title question. Each homeowner’s circumstances including location, household energy consumption, area climate, and area electricity rates will, of course, cause variations from the US average, but for now let’s examine what we can learn from the US average estimates.

The US Energy Information Administration (EIA) and the National Renewable Energy Laboratory (NREL) have established that in 2021:

• The average US electric bill was $121.00,
• the average US residential rooftop solar system had a power output of 7.15 kilowatts (kW), the average US monthly usage was 886 kilowatt-hours (kWh), and that
  
• with an average of 4.5 hours of “peak sun” a 7.15kW system has a daily production of 32.2 kWh or a monthly production of approximately 965 kWh.

In broad strokes this would mean that the average US system can produce 965 kilowatt-hours per month which exceeds the 886 kilowatt-hours of US  average monthly usage, which means that the average bill of $121.00 would be covered. This means we could extrapolate that an average household would save approximately $121.00 per month in electrical bill payments (minus some possible baseline charges and/or utility taxes).

How to calculate your home’s average monthly kilowatt-hour (kWh) consumption and its cost

To calculate your case-specific monthly average bill you should review your twelve most recent electrical bills to find your monthly kilowatt-hour consumption and your area’s utility company charges per kilowatt-hour. (It’s important to use twelve consecutive months of electric bills so you can account for seasonal usage changes.)

Many utilities have introduced higher time of use (TOU) rates for the “peak use” hours of 4 to 9 PM when kids get home from school and parents return home from work. These higher rates will be accounted for if you add up all the kilowatt per hour charges on each bill and then add 1.) all the bills’ kilowatt hours of consumption together and 2.) all the costs your utility company charged per kilowatt-hour and then divide each of these two resulting numbers by 12 to get your household’s average monthly 1.) kilowatt usage and 2.) your household’s average monthly electricity cost.

How to determine whether adding a solar panel system to your home would save you money

To calculate the monthly savings, subtract the estimated electricity that will be generated by your new solar system from the above calculation of your current average monthly bill. Statistically this number will come out somewhere in the $100 to $150 savings range. However, if you are considering installing a larger solar panel array and generator/battery storage system, understand that you can greatly increase the value of the system to your family’s budget.

Briefly that means if you generate more free solar energy and use it for your power needs, then you will see larger monthly savings. If you do decide to design a larger solar system to collect more of the free, clean, renewable energy of the sun then there could be other increased benefits you might also want to consider.

Modernizing and adding to your home’s resale value

According to a Zillow study the average US home gained 4.1% in resale value when a renewable energy solar system was added. This is just one example showing that there’s more to consider than just your monthly electricity bill savings when considering installing a solar-powered generator system.

Along those same lines, if you are considering solar, now is the time to also consider modernizing your home for more cost savings by transitioning your home’s appliances from gas to electric. If you already have an electric stove, oven, water heater, clothes dryer, plus heat and cool your home with electric appliances, then this next section will not apply to your household -- however if your home is partially using natural gas appliances, then this next section will be of interest to you.

The trend is toward cleaner electric appliances for the home

The current trend is that many people and municipalities are now looking to reduce the use of natural gas appliances in existing home upgrades as well as new home builds because gas appliances are contributing to the climate warming greenhouse gas in our atmosphere as well as adversely affecting a family’s health by contributing unhealthful emissions to a home’s air supply. 

In other words, if your home doesn’t have electric appliances like heat pumps, water heaters, induction stoves right now, then converting to these cleaner appliances in the future would be smart from a home resale as well as family safety standpoint. So, while considering the installation a renewable energy solar system, also consider designing a system capable of  powering these new future electric appliances which would make your monthly energy savings with solar even greater.

It shouldn’t be ignored that the conversion to electric appliances will help to save the planet’s livability for future generations. By investing in a home solar energy system, it means a homeowner is much more likely to also convert to cleaner electric appliances either simultaneously, or soon. The financial point here is that if the conversion to electric appliances takes place around the time of the solar conversion, then those homeowners will not only save on their future electric bills but will also save on their future nonexistent natural gas bills. This can drastically increase a homeowner’s month energy bill savings.

While we’re talking about converting to electric appliances, LA Times environmental writer Sammy Roth in his 1/18/24 Boiling Point series on the climate crisis alluded to the importance of this topic when discussing the CA clean energy policies, we need to get right:

“If we can show it’s possible to start replacing gas plants with solar panels and wind turbines – and driving electric cars and transitioning to electric heating and cooking – there’s at least a chance of other states and other nations following suit. If we can’t, the odds of adverting global calamity fall dramatically.”

The stark reality is that fossil fuel powered appliances, vehicles, and power plants don’t just emit heat trapping greenhouse gases, they also emit particulate pollution that damage the hearts and lungs of humans and other living creatures as well as have other kinds of pipe leaks that can pollute our air, oceans, and drinking water. 

Roth continued,

“For decades, Exxon Mobil and some of its peers funded campaigns to convince the public that climate change wasn’t real, even as their own scientists helped prove that it was. That’s a big reason why global carbon pollution has continued to rise, 36 years after scientist James Hansen famously warned Congress that global warming had begun. If not for the fossil fuel industry’s profit-driven intransigence, we wouldn’t be faced with the daunting task of cutting emissions 43% over the next six years, which scientists say is necessary to avoid the worst consequences of the climate crisis.”

Humankind must look to cleaner future with appliances and electric vehicles

Humankind is looking toward a cleaner more hyper-efficient future where all homes will be safer for human habitation because we will no longer be using fossil fuel burning appliances that if they fail can poison the air quality inside homes and/or can kill families with carbon monoxide poisoning (the silent killer). 

Additionally, yet another startling safety hazard of natural gas appliances came to light just this last winter when it was learned that the weight of snow on natural gas lines can lead to home explosions and fire. 

In an ABC news report during the record-breaking 2023 snow year, it was tragically discovered that in the California Sierras the weight of snow on the on natural gas lines caused home explosions. The weight of the snow contorts the gas lines causing them to break, then the gas can seep underneath a house and is trapped by the heavy snowfall around the home. If there is an ignition source, the house can explode -- think gas appliance pilot lights on a home’s water heater, furnace, cook range, or even think of the open flames in lit fireplace. This was something that no one had anticipated and should be recognized as a family safety issue.

One last item that may contribute to more monthly savings if you do install solar. With a correctly sized solar system you could smoothly transition to a hybrid or fully electric vehicle and rack up even more savings in the transportation fuel bill category. With a generously sized whole-home solar panel and battery storage system, charging EVs or hybrid vehicles is possible -- meaning if a homeowner is considering solar now, they should also consider the future benefits a solar system can provide as we all move toward becoming a greener society.

Government incentives to transition to clean green solar energy

Then, of course, there are other factors that will influence savings when installing solar, like the very attractive government incentives that are now being offered. The US government created an incentive program to help people installing solar power systems because it is understood how crucial it is that we make this clean energy transition -- the faster the better.

Homeowners will need to check for additional state and local incentive programs, but the generous Federal Solar Tax Credit program is being offered through 2032 is 30% of the cost of the system, including installation. The 30% of cost is a dollar-for-dollar reduction in the amount of federal income taxes you owe for the year of the system’s installation. (The tax credit also allows the credit to be carried forward to the next year if needed.) Also, there is not a limit on the project amount, so if you install a larger more extensive, more expensive system, then the 30% of cost tax credit taken against your federal-income-tax-owed will be greater.

The Federal Solar Tax Credit includes these eligible expenses:

• The solar photovoltaic (PV) rooftop solar panel array
• The balance-of-system equipment, including wiring, inverters, and mounting equipment
• Energy storage devices that have a capacity of 3 kilowatt-hours (kWh) or greater. (If the storage is installed in a subsequent tax year to when the solar panel system is installed it is still eligible but is subject to installation date requirements.)
• The contractor labor costs, including onsite preparation, assembly, original installation, including permitting fees, inspection costs, and any developer fees
• Sales tax on the above eligible expenses

How to claim the federal solar tax credit

The following information is from a government website on the topic:

 “After seeking professional tax advice and ensuring you are eligible for the credit, you can complete and attach IRS Form 5695 to your federal tax return (Form 1040 or Form 1040NR). Instructions on filling out the form are available here.”

Homeowners should also check online for any incentives that their state or local governments (or even their utility companies) may offer. Let’s underline the fact that homeowners or business owners should always consult with a tax professional to see how the credits can be best used for their situation and additionally people should ensure that all related receipts are saved for their records.

Incentive programs significantly shorten the time it takes a solar system to pay for itself

Utilizing the 30% Federal Solar Tax Credit greatly speeds how fast a solar system will pay for itself. If the solar system costs $20,000 including equipment, installation, and sales tax costs the 30% credit taken against the person’s federal tax burden would be $6000, which means the solar system and installation has basically been reduced to approximately $14,000. Usually solar systems, depending on their size, can pay for themselves in 5 to 7 years, but with the head start offered by this government incentive program tax credit, homeowners will find that this estimated payback period is significantly shortened.

There are significant savings to be reaped by installing solar -- but some benefits are priceless

1. The long-term saving benefits of going solar -- like reduced energy bills -- can be calculated.
2. The increase to your home’s resale value can be researched and computed.
3. The value of modernizing your home’s appliances and vehicles from fossil fuel energy to clean self-generated solar energy can be measured and given a specific monetary value.
4. However, the added benefit of protecting your family’s health and safety and the planet’s long-term sustainability, those are benefits that are impossible to mathematically capture – these benefits are priceless. Note, however, that just because we cannot pin a monetary value to these benefits does not mean they should be removed from the calculations – think of them as life-extending, life-affirming bonuses in your solar investment equation.

If you decide to move forward with solar, please consider Nature’s Generator’s high-quality low-cost systems

When considering going solar, check out Nature’s Generator’s affordable whole-home solar generators and state-of-the-art monocrystalline solar panels capable of performing even in lower light conditions. Our panels and generators are designed to efficiently harness the clean renewable power of the sun to answer your home’s power requirements. Additionally, all Nature’s Generator systems are expandable, so you can customize your solar-powered system to specifically answer your household’s power needs.

Let us help you choose the right solar generator and solar battery system for your needs

The Nature’s Generator Powerhouse is our whole home solar generator system that can use both SLA and LiFePO4 battery-technology power pods to expand system capacity. Plus, our patented power transfer switches put the control of your solar-powered system at your fingertips.

To learn more about Nature’s Generator and the various equipment options you can reach out to our friendly customer service team at support@naturesgenerator.com, they are always happy to help with any questions.

Disclaimer:

This blog provides a brief overview of the federal investment tax credit for residential solar photovoltaics (PV). (For business information see the Federal Solar Tax Credits for Businesses.) This blog does not constitute professional tax advice or other professional financial guidance. The Treasury Department has a published Fact Sheet for additional information. This blog should not be used as your only source of information to make purchasing, investment, or tax decisions -- nor should it be used as the sole guide when executing other binding agreements.

* We want to give credit where credit is due. Professional writer, Diane Underhill, contributed research and content to this blog titled: Average Monthly Electric Bill with Solar Panels Thank you, Diane, for your contributions!