Solar panels have become increasingly popular in recent years. As a sustainable and cost-effective source of electricity, they can help reduce (if not eliminate) your energy bills at home. In fact, according to a study on the Cost-Benefit for a Net Metering Scheme based on Solar PV, having them can help you save up to $800 a year! But amidst this enthusiasm for renewable energy, a common question arises: Do you still get an electric bill with solar panels?
This article explores the relationship between solar panels and electric bills. From how they affect your bills to the mistakes to avoid when estimating your solar savings, everything you need to know is down below.
How Do Solar Panels Affect My Electricity Bill?
The main reason why solar panels are so popular is because they can have a positive impact on your electricity bills. By installing them in your home, they’ll be able to generate electricity by converting sunlight into usable power. You can then use this power to meet your household energy needs. This will help reduce your dependence on the traditional power grid.
Moreover, when your solar panels produce more electricity than you consume, the excess energy can be exported back into the grid or stored in a battery. This allows you to use them when your solar panels are not producing enough power, such as at night. As a result, your electricity bill can be significantly reduced or even eliminated, saving you money in the long run and reducing your dependence on the traditional power grid.
Can Solar Panels Reduce Electricity Bills to Zero?
In theory, solar panels have the potential to eliminate your electrical costs. As mentioned above, if they produce more electricity than you need, you can save it for later use. With an appropriately sized solar panel system, you’ll be able to cover your entire electric expenses, thus resulting in zero bills.
However, consider that several factors can affect your ability to achieve this zero-bill scenario (more on this below). The main challenge lies in the timing of consumption. Solar power is generated during the day, so there’s a limit to how much electricity you can use during these hours.
On the other hand, most people consume over 70% of their electricity at night. If you’re one of them, you’ll need to use the excess power generated by your solar panels during the daytime. If your system is not large enough to handle this demand, you might still rely on traditional power grids.
How Long Until Solar Pays for Itself?
The time it takes for solar panels to pay for themselves (aka, the payback period) varies depending on many things. But on average, solar panel systems pay for themselves within 5 to 7 years.
Bear in mind that this timeframe can be shorter depending on certain factors, including high electricity rates, generous incentives, and the size of your system. For example, a study made by Caroline Camarena-Gamarra, Johnny Nahui-Ortiz, and Jose Calle-Maravi observed that a 3.25-kWp Photovoltaic System installed in a university campus in Lima, Peru only lasted for 4.3 years. Technological advancements and decreasing solar panel costs can also contribute to shorter payback periods.
At any rate, it’s essential to consider long-term savings and the environmental benefits of solar energy when evaluating the payback period. That way, you can better ensure your solar panels continue generating free electricity beyond their initial investment.
Factors Influencing Your Electric Bills with Solar Panels
While solar panels can help reduce your electricity bills, several factors come into play when determining the extent of savings and the final amount you pay. Understanding these factors gives you a clearer picture of how the panels impact your electric bills. Here are some key factors to consider:
- Size and capacity of your solar panel system. As mentioned above, the size of your solar panel system directly affects the amount of electricity it can generate. A more extensive system with more panels will produce more electricity, potentially offsetting a more significant portion of your energy consumption and reducing your bills accordingly.
- Electricity consumption and usage habits. Your energy consumption patterns play a crucial role in determining the impact of solar panels on your bills. If you use a significant amount of electricity during daylight hours when solar panels generate power, you can maximise the benefits of solar energy. Conversely, suppose your energy consumption is higher during non-sunny hours, such as at night. In that case, you may still rely on the grid and receive a bill for that portion of electricity.
- Seasonal variations and weather conditions. Solar panels are most effective in sunny conditions, and their output may vary throughout the year. During sunnier seasons like summer, your solar panels may generate more electricity, potentially leading to more significant savings. Conversely, during cloudy or winter months, energy production may be lower, and your reliance on the grid may increase.
- Utility rate structures and policies. The utility company’s rate structure and policies can impact your electric bills. Some utilities offer favourable net metering programs, allowing you to receive credits for excess solar energy fed back into the grid. These credits can be used to offset future electricity consumption. Understanding your utility’s specific policies can help you assess the financial benefits of solar panels.
- Energy efficiency measures. Energy efficiency measures within your home can complement the benefits of solar panels. By reducing overall energy consumption through energy-efficient appliances, optimising insulation, and practising energy-conscious habits, you can reduce your reliance on the grid and lower your bills.
- Financing options and upfront costs. The financial aspect of solar panel installation is an essential consideration. The upfront costs of purchasing and installing solar panels can vary depending on system size, quality, and installation complexity. Financing options, such as loans or leasing arrangements, can make solar panels more affordable and manageable. It’s vital to assess the financial implications and potential return on investment based on your specific circumstances.
- Local regulations and incentives. Different regions have varying regulations and incentives related to solar energy. These may include tax credits, grants, or other incentives that can reduce the overall cost of installing and operating solar panels. Familiarise yourself with the local regulations and explore available incentives to maximise the financial benefits of solar energy.
These factors will help you understand how solar panels influence your electric bills. Consulting with solar energy professionals and thoroughly assessing your energy needs and usage patterns can help you make informed decisions about solar panel installation and achieve optimal savings.
Oversizing Your System
The concept of a net-zero electricity bill largely depends on balancing the amount of power you generate and the power you consume. As we’ve mentioned, one of the main challenges with solar power is the timing of power generation and consumption.
Solar panels produce electricity during the day when the sun is shining. But as mentioned above, most households consume more power during nighttime.
Now there are two ways to work around this issue:
- Oversize your solar panel system
- Install a solar battery
Oversizing refers to installing a solar panel system with a higher power generation capacity than your home typically requires. This does not mean filling every inch of your roof with solar panels but instead strategically installing additional panels to generate more electricity than your home’s average usage.
Benefits of Oversizing
Opting for an oversized solar panel system can offer several advantages for homeowners. These include:
- Maximum energy production. An oversized system can generate more electricity than your household consumes, allowing you to produce excess energy. This surplus energy can be fed back into the grid, earning you credits or financial compensation through net metering programs. It provides an opportunity to make your solar investment work harder and maximise the energy production potential of your property.
- Future-proofing against increased energy demands. Over time, your energy consumption patterns may change. Adding new appliances or expanding your living space might lead to higher electricity needs. Installing an oversized solar panel system ensures that your energy production capacity is well-suited to handle future demands, eliminating the need for additional installations or upgrades.
- Protection against energy price fluctuations. With an oversized system, you can offset significant energy consumption, reducing reliance on the grid. This can provide a hedge against rising electricity prices, as you will be less affected by rate increases. It offers long-term cost stability and protects you from the potential financial strain caused by escalating utility rates.
- Environmental benefits. Generating more solar energy with an oversized system means significantly reducing carbon emissions. Producing excess clean energy contributes to a greener environment and helps combat climate change. It’s an opportunity to make a positive environmental impact beyond your immediate energy needs.
- Flexibility for future energy usage. An oversized solar panel system opens up possibilities for utilising surplus energy. Consider expanding your energy consumption by incorporating electric vehicles, heat pumps, or other electric-powered technologies into your home. This flexibility allows you to embrace additional sustainable technologies without worrying about exceeding the capacity of your solar panel system.
Considerations When Oversizing
While the benefits of an oversized system are appealing, there are a few critical considerations. These include:
- Available space. Ensure you have enough roof or ground space to accommodate the additional solar panels required for an oversized system. Assess any shading issues that might impact energy production.
- Upfront cost. Oversizing your system can be expensive. Evaluate your budget and financial goals to determine if the long-term benefits outweigh the higher upfront costs.
- Net metering policies. Understand your utility’s net metering policies. Oversized systems may produce excess energy, but net metering regulations and compensation rates vary. Determine how you can benefit from feeding surplus energy back into the grid.
- Energy consumption patterns. Analyse your historical and projected energy consumption. Oversizing is most beneficial if you expect increased energy needs or plan to incorporate additional electric-powered technologies.
- System performance and warranty. Ensure that the solar panel manufacturer and installer provide appropriate warranties and guarantees for an oversized system. Consider the performance degradation rate over time to ensure optimal long-term efficiency.
Consulting with a solar professional is crucial for assessing whether or not your home is viable for an oversized solar panel system. So before investing in one, best set an appointment with your trusted provider first.
Installing a Solar Battery
Battery storage systems can store the excess electricity your solar panels generate during the day for later use. They serve as an electricity bank, allowing you to deposit and withdraw unused energy when needed. This can make you less reliant on traditional power grids, lowering your electricity bills if not wiping them out.
However, it’s essential to consider the cost of battery storage. Batteries can be quite expensive and would increase the total upfront cost of your solar panel system. So before adding one to your system, consider this cost.
Benefits of Installing a Solar Battery on Your Electricity Bills
Storing solar electricity in batteries offers several benefits that can reduce your electricity bills. Here are the key ways battery storage can help:
- Time-of-use optimisation. By storing excess solar energy during high solar production and low electricity demand periods, you can use that energy during peak electricity rates. This allows you to avoid drawing electricity from the grid during expensive peak hours, leading to significant savings on your electricity bills.
- Energy self-sufficiency. With a battery storage system, you can become less reliant on the grid. Using the stored solar energy when your panels aren’t producing, such as at night or during power outages, can avoid purchasing electricity from the grid, reducing your overall consumption and subsequent bills.
- Demand charge management. Commercial users often face demand charges based on their highest peak electricity usage during billing. By storing solar electricity in batteries and strategically discharging it during peak demand periods, you can reduce your peak demand from the grid, effectively lowering demand charges and minimising your electricity bills.
- Backup power during grid outages. Battery storage systems can provide emergency backup power during grid outages. Instead of relying on generators or being entirely without power, you can use the stored solar energy to keep essential appliances running, minimising the need for costly alternative power sources.
- Maximising solar investment. Storing excess solar electricity in batteries allows you to utilise the energy generated by your solar panels entirely. Instead of exporting unused energy to the grid, you can store it and optimise your solar investment by consuming more self-generated electricity.
Other Tips to Minimise Your Electric Bills With Solar Panels
Even if solar panels don’t eliminate your electric bills, you can still maximise their benefits and minimise your electric bills. All you have to do to follow these tips:
- Optimise energy usage. Make a conscious effort to use electricity during daylight hours when your solar panels generate the most power. Schedule laundry, dishwashing, and running appliances during peak solar production. By aligning your energy usage with solar generation, you can minimise reliance on the grid and maximise the benefits of your solar panels.
- Practice energy-efficient habits. Adopt energy-saving practices such as turning off lights when not in use, unplugging electronics when not needed, and using energy-efficient appliances. These simple habits can reduce overall electricity consumption, allowing solar panels to cover more of your energy needs.
- Invest in energy-efficient appliances. When it’s time to replace or upgrade your appliances, opt for energy-efficient models. Appliances with high energy efficiency ratings can significantly reduce electricity usage, further enhancing the effectiveness of your solar panels.
- Conduct regular maintenance. Keep your solar panels clean and free from debris to ensure optimal performance. Regularly inspect them for any signs of damage or shading that could affect their efficiency. Maintaining your solar panels in good condition can maximise energy generation and minimise potential disruptions.
- Monitor your energy consumption. Install a smart energy monitoring system to track your electricity usage in real time. These systems provide insights into your energy consumption patterns, allowing you to identify areas where you can further optimise energy usage and adjust accordingly.
- Educate yourself about utility programs. Stay informed about utility programs and incentives that can help you maximise the benefits of your solar panels. Some utilities offer time-of-use rates or special tariffs that provide additional financial advantages for solar panel owners. By understanding these programs, you can adjust your energy usage to take advantage of lower rates during specific times of the day.
- Maintain a backup power source. While solar panels can significantly reduce your dependence on the grid, it’s still beneficial to have a backup power source in case of extended periods of low sunlight or unexpected power outages. A backup power source, such as a battery storage system or a generator, can provide electricity when your solar panels are not producing enough or the grid is down. This ensures an uninterrupted power supply while minimising the impact on your electric bills.
Why Do I Have a Large Electricity Bill Even After Installing Solar Panels?
Even with a solar panel system installed, you might still receive a sizable electricity bill by the end of the month. This could be due to the following reasons:
- Insufficient solar panel capacity. Suppose your solar panel system is undersized for your energy needs. In that case, it may not generate enough electricity to cover your entire consumption. Assess whether your system’s capacity aligns with your energy usage patterns and consider upgrading if necessary.
- Inefficient energy usage habits. Even with solar panels, wasteful energy habits can lead to higher electricity bills. Say you’re not practising energy conservation measures, such as turning off lights when not in use or using energy-efficient appliances. In that case, you may still consume significant grid electricity.
- High electricity demand during non-sunny periods. Solar panels produce electricity when exposed to sunlight. If your energy consumption is higher during non-sunny periods or at night, you will rely more on grid electricity, leading to higher bills.
- Net metering limitations. Net metering allows you to offset your grid electricity consumption with excess solar energy, but it has limitations. Some utilities may have caps on how much energy you can feed into the grid or lower compensation rates for excess energy, reducing the financial benefit.
- Utility rate structure and policies. The structure of your utility’s electricity rates and policies can affect your bills. Time-of-use rates, demand charges, or other factors can contribute to higher costs, irrespective of your solar panel installation.
- Maintenance and system issues. If your solar panel system is not functioning optimally due to maintenance issues, shading, or technical problems, it may not generate as much electricity as expected, resulting in higher grid electricity consumption.
- Additional energy consumption. Changes in your lifestyle (from adding more appliances to expanding your home) can increase your overall energy consumption, even with solar panels. It’s essential to reassess your system’s capacity to accommodate these changes.
To address these issues, review your energy usage habits, consider energy-efficient upgrades, and ensure your solar panel system is appropriately sized and well-maintained. Monitoring your energy consumption and consulting with solar professionals can also help identify any underlying issues and optimise your solar investment for maximum cost savings.
Common Errors in Estimating Solar Savings by Homeowners
While switching to solar power has many advantages, it still has downsides. For example, miscalculating your savings can give a false impression that solar panels are far less cost-effective than they actually are. Here are two mistakes to avoid while crunching the numbers:
Putting Too Much Emphasis on Net Feed-in Tariff Rates
While sending excess energy back to the grid helps reduce your overall bills, there are more effective ways to maximise your savings. In fact, most Australian utility companies only offer around 8 cents per kWh of exported power.
This shows that utilising your generated electricity more efficiently can lead to more significant savings. For instance, NSW’s current electricity rate is around 25.78 cents/kWh. Using energy instead of exporting it can reduce your expenses by that amount!
Misunderstanding Your Solar Savings on Your Electrical Bill Breakdown
In most electrical bill breakdowns, solar savings only account for the savings you made exporting power to the grid. Thus, your bill may not fully reflect it, and you might think your solar panels aren’t helping you save more money.
For example, say you don’t have a solar panel system and consume up to 700kWh monthly. If the rate in your area is 24.98c/kWh, then your monthly bill will be around $174.86 per month.
Now let’s say you decided to install solar panels in your home. Assuming it generates 50% of the electricity you need for a month, you can reduce your consumption by half. This means you’ll end up paying just $87.43 per month!
Moreover, if you export this electricity back to the grid and the utility company decides to pay you 10c/kWh, you can save a further $35 per month.
In short, instead of $174.86 per month, you’ll just have to dish out $52.43 per month for your electric bills. That means you save up to 71% of your money!
So back to the main question: Do you still get an electric bill with solar panels?
The answer is yes, you might still get one. But by understanding the insights and following the tips listed above, you’ll be able to ensure the amount of money you’ll have to dish out is minimal at best. So take control of your electricity bills and maximise the benefits of solar energy by diving into our guide.