How Much Money Can I Save With Solar Energy?

Lowering electricity bills is one of the main reasons why consumers may decide to install rooftop solar panels. Every household is different—from the size of the home, to the number of people living in it, to the electricity needs of those people, to where the buy their electricity—so calculating an average amount of savings from going solar is nearly impossible. This U.S. Department of Energy (DOE) Solar Energy Technologies Office (SETO) blog post will walk you through calculating the solar payback period, or how long it takes for a rooftop solar system to pay for itself. When calculating the amount of potential savings, there are several factors to consider. 

The Amount of Electricity You Produce

First, assess your home’s solar rooftop potential. If there are trees near your home that create excessive shade on your roof, rooftop panels may not be an option. The size, shape, and slope of your roof are also important factors to consider. Typically, solar panels perform best on south-facing roofs (anything between southeast and southwest) with a slope between 15 and 40 degrees, though other roofs may be suitable, too. 

The Amount of Electricity You Consume

Check your utility bill to find out how much electricity you consume on average every month. The Utility Rate Database maintained by the DOE Energy Information Administration shows current electricity rates in your area. Your solar savings will also depend on how much the utility will compensate you for the excess solar energy you send back to the grid. This is different for every utility.

How You Finance Your System

The Lawrence Berkeley National Laboratory’s Tracking the Sun report contains residential solar installation costs around the country, which can help you expect how much to pay. There are several options for how to finance your system. 

If you pay cash for your solar system, the payback period refers to the length of time required before the system has paid for itself and all future power produced is free. You can get a personal loan with fixed interest rates and monthly payments. Another option is to use a power purchase agreement, or PPA, which means you do not own the solar panels on your roof but still benefit from the clean power it produces. In both of those cases, you may have immediate savings on what you pay for electricity.

Incentives

If you buy or take out a loan for a solar system, you may be eligible for the federal residential solar energy credit, which is a tax credit that can be claimed on federal income taxes for a percentage of the cost of a solar photovoltaic (PV) system. If you financed your system through a power purchase agreement, the owners of the system would be eligible for tax credits, which they could pass along to you in the form of a cheaper bill. In some instances, these third-party system owners can receive additional credits not available to homeowners, which can lower your bill even further.

Many states also have incentives for rooftop solar customers. The Database of State Incentives for Renewables & Efficiency, known as DSIRE, is the most comprehensive source of information on incentives and policies that support renewable energy in the United States. By entering your zip code, DSIRE provides you with a comprehensive list of financial incentives and regulatory policies that apply to your home. The database is operated by the N.C. Clean Energy Technology Center at N.C. State University and was funded by DOE.

The U.S. Department of Energy provides more information on the amount you could save HERE.

Source: U.S. Department of Energy