Welcome To Solar 101

Welcome to our Solar 101 Series, where we answer the question: "I've heard a lot about solar, but where do I start?". Dive in with us as we help you navigate a clean and surprisingly affordable energy choice that's becoming more accessible to every home and business nationwide.

Installing solar panels in your home is an excellent way to take control of your energy consumption and reduce your monthly utility bills. However, it can also introduce some changes to your billing statement that might need to be clarified initially.

In this article, we'll walk you through the various aspects of your post-solar utility bill, including net metering, time-of-use rates, fixed and demand charges, and available incentives. By the end of this article, you'll have a clearer understanding of your utility bill and how to use it to make informed decisions about your solar energy system.

Quick Note: Only some things we discuss below will apply to your bill. Our goal is to help you understand what might affect you, allowing you to understand the specifics better and have an educated conversation.

Net Metering and Solar Energy Credits

Net metering is a billing arrangement between you and your utility company that allows you to receive credit for the excess solar energy your system generates. When your solar panels produce more electricity than your home needs, your panels send back surplus energy to the grid. In return, your utility company provides you with energy credits, which can be applied to offset your future energy consumption.

To understand net metering better, let's break down the process:

Measuring Solar Energy Production: Your solar system will have a bidirectional meter that measures the energy you consume from the grid and the excess energy your solar panels send back to the grid. This meter allows your utility company to track your net energy usage accurately.
Earning Solar Energy Credits: When your solar panels generate more power than your home consumes, your solar panels send the excess energy back to the grid. You are credited for this surplus energy on your account, usually at the retail electricity rate. You can use these credits to offset your energy consumption when your solar panels aren't producing enough electricity to meet your needs (e.g., at night or on cloudy days).
Applying Credits to Your Utility Bill: Solar energy credits are applied to your utility bill, helping lower overall energy costs. Depending on your utility company and local regulations, unused credits may roll over monthly, saving you even more on your energy bills. However, it's important to note that some utility companies may have an annual "true-up" period, during which any remaining credits are either paid out at a lower rate or reset to zero.

Time-of-Use (TOU) Rates and Solar Power Generation

TOU rates are a pricing structure used by some utility companies to charge different rates for electricity based on the time of day you use it. TOU rates aim to encourage customers to shift their energy usage to off-peak hours when the demand for electricity is lower, thus reducing the strain on the electrical grid.

TOU rates can significantly affect your utility bill after installing solar, as they directly affect the value of the electricity your solar panels generate. Here's how TOU rates and solar power generation work together:

Peak and Off-Peak Hours: Under a TOU rate plan, electricity prices vary throughout the day, with higher rates charged during peak hours when the electricity demand is highest. Peak hours typically occur in the late afternoon and early evening when everyone is at home, while off-peak hours occur during the night and early morning. Some TOU rate plans also include a mid-peak period with intermediate pricing.
Solar Power Generation and TOU Rates: Solar panels generate the most electricity during the middle of the day when the sun is shining brightest. In many cases, this period of maximum solar production aligns with off-peak or mid-peak hours when electricity rates are lower. However, if your solar panels produce excess energy during peak hours, you could earn credits at a higher rate due to the increased value of electricity.
Maximizing Solar Savings with TOU Rates: You can maximize your solar savings by understanding TOU rates and adjusting your energy consumption habits accordingly. For example, you can shift energy-intensive activities like running your dishwasher or charging an electric vehicle to off-peak hours when electricity rates are lower. This way, you can use more of your system's solar energy and rely less on grid electricity during peak hours, when rates are higher.

If your utility offers TOU rates, it can be critical in figuring out your solar savings. By understanding how TOU rates work and aligning your energy consumption habits with your solar panel production, you can improve your solar energy system's financial benefits and lower your overall utility bill.

Repaired Charges and Demand Charges

In addition to the charges based on your energy consumption, your utility bill may include fixed and demand charges. Let's talk about these charges, as it is essential for accurately assessing the impact of solar on your utility bill.

Fixed Charges: These are the set fees you pay monthly to your utility company, regardless of your energy consumption. Fixed charges cover supporting the electrical grid, meter readings, and customer service. Installing solar panels can help reduce your overall energy costs, but it's important to note that fixed charges will remain on your utility bill even after going solar.
Demand Charges: Demand charges are fees based on your home's peak power usage during a specific period, usually measured in kilowatts (kW). These charges are more common for commercial and industrial customers, but some residential customers with larger solar installations might also have demand charges on their utility bills. Demand charges help reflect the cost of supplying the infrastructure needed to meet your home's peak energy demands.

After installing solar panels, your demand charges may change depending on your energy consumption patterns and the size of your solar energy system. For example, if the design of your solar panels focuses on offsetting your peak energy consumption, your demand charges could decrease, leading to added savings on your utility bill. However, if your solar system doesn't cover your peak energy usage, you may still have demand charges on your monthly bill.

Solar Renewable Energy Credits (SRECs) and Other Incentives

In addition to the savings, you can achieve through net metering and adjusting your energy consumption habits, various incentives can help offset your utility bill and make going solar even more attractive.

Solar Renewable Energy Credits (SRECs): SRECs are tradable certificates representing the environmental benefits of producing one megawatt-hour (MWh) of electricity from solar energy. In some states, utility companies must generate a certain percentage of their electricity from renewable sources, and they can purchase SRECs from solar system owners to meet their quotas. By selling your SRECs, you can earn more and further reduce your utility bill. The value of SRECs varies depending on market demand and location, so research the specific SREC market in your area to figure out your potential earnings.
Federal, State, and Local Incentives: Several federal, state, and local incentives can help lower the cost of installing solar panels and reduce your utility bill. The federal solar investment tax credit (ITC) is a popular incentive that allows you to claim 30% of your solar installation costs as a tax credit. Additionally, many states offer tax credits, rebates, or other financial incentives for going solar. To find out what incentives are available in your area, you can check the Database of State Incentives for Renewables & Efficiency (DSIRE).

Utility Company Rebates and Incentives: Some utility companies also offer rebates or incentives for customers who install solar panels. These programs can lower your upfront installation costs and yield a faster return on your solar investment. Be sure to check with your utility company to see if they offer any solar incentives.
[Image]

Tips for Lowering Your Utility Bill After Installing Solar

While going solar is an excellent way to reduce your energy costs, there are added steps you can take to maximize your savings and further lower your utility bill. Here are some simple tips to help you get the most out of your solar energy system:

Invest in Energy-Efficient Appliances and Devices: Upgrading to energy-efficient appliances, lighting, and electronics can significantly reduce your home's overall energy consumption, allowing you to use more of the solar energy your system generates and rely less on grid electricity. Start by using ENERGY STAR® approved products.
Install a Smart Thermostat: A smart thermostat can help you improve your home's heating and cooling, reducing energy waste and lowering your utility bill. You can use smart thermostats to adjust your home's temperature based on your daily schedule or occupancy patterns. Check out our Smart Thermostat Smart Home 101 article on how to get started.
Seal Drafts and Improve Insulation: Proper insulation and air sealing can help keep your home at a comfortable temperature year-round, reducing the strain on your heating and cooling systems and lowering your energy costs. Ensure your home is well-insulated, and check for drafts around windows, doors, and other openings.
Use Energy-Efficient Landscaping: Strategic landscaping can help lower your home's energy consumption by supplying shade in the summer and blocking cold winds in the winter. For example, planting trees, shrubs, and other vegetation near your home can help regulate its temperature naturally, reducing the need for heating and cooling.
Implement Smart Energy Habits: Simple habits like turning off lights when you leave a room (or using smart lighting), unplugging electronics when not in use, and running appliances during off-peak hours can help conserve energy and make the most of your solar energy system.

How It All Comes Together

Understanding your utility bill after installing solar is essential for maximizing your solar energy system's benefits and making educated decisions about energy usage.

You can accurately track your solar savings and improve your system's performance by learning about net metering, time-of-use rates, fixed and demand charges, and available incentives. Try following the tips in this article and closely watching your solar system's performance. As a result, you can take full advantage of solar energy's financial and environmental benefits.

If you're interested in exploring solar energy further or want to discuss solar panel installation for your home, check out our other Solar 101 articles.

Are you interested in solar? Don't hesitate to contact us with questions.

Are you a utility looking to offer a better solar experience for your customers? Check out our Solar Navigator Program.

Solar 101: Understanding Your Utility Bill After Installing Solar