How Do Solar Panels Work With Your Electric Bill

According to the U.S. Energy Information Administration, an average American household spends around $430 each on utilities, where $114 is spent on electricity alone. With rising energy costs, it just makes sense that homeowners begin to turn to cheaper, cleaner, and renewable sources such as solar power. 

With plenty of benefits that solar energy provides, the idea of generating your own electricity from the sun sounds appealing. But the question is – how do solar panels work with your electric bill? In this article, we’ll answer key questions, such as whether they can actually reduce energy costs and how billing operates when you have solar panels. We’ll discuss how you can earn money from generating electricity from the sun and whether solar panels are worth the investment.

Let’s get to it…

Do Solar Panels Really Reduce Electricity Bills?

One of the main reasons why homeowners invest in solar panels and solar generators is to reduce their electricity bills. Solar panels harness energy from the sun and then convert it into a current that common household appliances and electronics can use. As you generate power through solar panels, you will have less dependence on electricity from your local utility company, which results in a reduction in your electric bill.

However, you must note that the extent of the reduction in your electric bill depends on several factors. These factors include the size of your solar panel system, the amount of sun your location receives, the energy consumption of your household, and the local electric rates. In states like California or Arizona, where there is plenty of sun, the potential of generating solar power is higher, which could lead to greater bill reductions versus other locations with lesser sunlight.

How Does Billing Work When You Have Solar Panels?

Although it is possible to be completely independent from the local grid, in most cases, when homeowners install a solar panel system, their homes remained tied to the electric grid. This connection allows users to get power from the grid when their solar panels are not generating enough electricity (e.g. during night time or cloudy days) and also to send excess electricity to the grid when the solar panels have generated more than the power supply needed.

Plenty of states in the US (34 states, Washington DC, and 3 territories) have a policy called net metering, which plays a vital role in how solar panels work with your electric bill. To quickly explain, net metering allows solar panel owner to receive credits on their electric bill for the excess electricity they generated and send to the local grid.

To give you a better idea, here’s how net metering typically works:

• Daytime - Your solar panels may generate more electricity than your home uses when the sun is high. The excess electricity is then sent to the grid, and your meter will run backwards, earning you credits.

• Nighttime - When your solar panels may not be producing enough electricity, you use the credits you’ve accumulated during the day to draw electricity from the grid without incurring extra charges.

• Monthly Billing - Your electric bills will reflect your net energy consumption, which is the total energy you have drawn from the grid minus the energy that your solar panels sent back to the grid. If your solar system generated more electricity that you used, you may not owe anything or may even receive credit on your bills.

Do You Get Money from Electricity When Using Solar Panels?

While the main financial benefit of installing solar panels for your home comes from reducing your electric bills, there are some cases where you might also earn money. This is possible if your solar power system produces more electricity than you consume over a billing period. It’s important to note, however, that regulations and policies vary based on your location and your local utility company.

In areas that have net metering, excess energy credits might roll over month to month. If your solar panels consistently produce more energy than you use, some electric companies may pay you for this surplus (although the rates paid for the excess electricity may be lower than the rates charged for consumption). 

There are also certain states and utility companies that offer performance-based incentives or what is called feed-in tariffs that pay homeowners with solar panels for the electricity they generate.

Can Solar Panels Provide All My Electricity?

To quickly answer, solar panels can to provide all the electricity you need for your household. However, the possibility of this depends on several factors:

• System Size: You need to ensure that solar panel system needs to be large enough to meet your household's energy needs. This involves considering your average electricity consumption and the amount of available roof space for panels
• Sunlight Availability: The amount of sunlight your location receives directly impacts your system's efficiency. More sunlight means more potential electricity generation.
• Energy Consumption Patterns: If your energy consumption is high, you may need a larger solar system or additional energy-saving measures to achieve 100% solar power.
• While it's possible for solar panels to provide all your electricity, achieving this consistently can be challenging, particularly in areas with variable weather conditions. Many homeowners find that a combination of solar panels and energy storage solutions, like batteries, or other renewable power sources like wind turbines, helps them maximize their use of solar power and minimise reliance on the grid.

Are Solar Panels Really Worth the Expense?

Investing in solar panels involves significant upfront costs, which can be a deterrent for many homeowners. However, several factors can influence whether solar panels are worth the expense for you:

• Cost of Installation: While the initial cost can be high, various federal, state, and local incentives, including tax credits and rebates, can substantially lower the overall expense.

• Energy Savings: Over time, the reduction in your electricity bills can offset the initial investment. Depending on your energy consumption and local electricity rates, the payback period can vary.

• Increase in Property Value: Homes with solar panels often see an increase in property value. Prospective buyers may be willing to pay more for a house with lower ongoing energy costs.

• Environmental Impact: Solar panels provide a renewable energy source, reducing your carbon footprint and contributing to a more sustainable future.

Solar panels offer a viable and increasingly popular solution for reducing electricity bills and contributing to a more sustainable energy future. While the initial investment can be substantial, the long-term savings, potential financial incentives, and environmental benefits make solar panels an attractive option for a growing number of homeowners. By understanding how billing works with solar panels, the potential to earn money from excess electricity, and the feasibility of running a house entirely on clean, renewable solar power, you can make an informed decision about whether solar panels are right for you.

All in all, the value of solar panels is not just in the financial savings, but also in the positive impact on the environment and the increased energy independence they provide. As technology advances and the costs of solar installations continue to decrease, more and more homeowners are finding that solar panels are a worthwhile investment.

If you have questions about solar panels and solar generators, our support team at Nature’s Generator are happy to attend to you.

* We want to give credit where credit is due. Professional writer, Ishna Sablaya, contributed research and content to this blog titled: How Do Solar Panels Work With Your Electric Bill thank you, Ishna, for your contributions!