How much is your electric bill after going solar?

One of the most common misconceptions about solar is that people who install panels no longer receive an electricity bill from their utility company. This isn't true in most cases: most solar panel systems in the U.S. are grid-tied, allowing customers to draw electricity from the grid when their solar panels aren't producing enough electricity.

If you choose to install a grid-tied solar panel system, you will continue to receive a monthly electric bill from your utility company - but how much will that bill be? In this piece, we'll review the primary factors determining how much you'll need to pay your utility company after installing a solar panel system, including solar electricity production, net metering policies, and fixed utility charges.

Property owners with grid-tied solar panel systems still receive electricity bills from their utility company, but charges on these electric bills vary widely from one property to the next depending on a few factors:

Solar electricity production

One of the biggest drivers of your monthly bill amount after going solar is how much electricity your solar panel system generates and whether that generation meets your consumption. If you're using more electricity than your solar panel system generates, your utility company charges you for the extra electricity you draw from the grid. Alternatively, if your solar panels produce more electricity than you use in a given month, you may see a credit on your electricity bill, depending on your utility company's net metering policy.

Net metering policy

Net metering is a solar incentive that compensates you for excess solar electricity generation. With net metering, if your solar panels produce more electricity than you're using, that electricity is sent to the grid in exchange for a credit. You can "bank" these credits and then use them at times when your solar panel system isn't producing enough (or any) electricity.

Net metering policies vary by state and utility company. Importantly, not every state requires utilities to provide net metering to their solar customers: states like Alabama, Tennessee, and South Dakota do not have net metering mandates. Therefore, utility companies don't need to compensate their customers for solar electricity sent to the grid. That said, most states currently have active net metering incentives, requiring any investor-owned utility companies (IOU) to offer credit to customers sending excess electricity to the grid.

However, it's more complicated than determining whether net metering is available in your area, as states offering net metering can have varying compensation structures. Some states and their utilities offer customers full credits, while others credit solar customers at a reduced rate. In some areas of the country, the credits you receive depend on the time of day you send solar electricity to the grid (like California's net metering 2.0).

Even if you generate enough solar electricity to meet 100 percent of your needs, you can still end up owing money to your utility company if you're receiving net metering credits that are lower than the rates you're paying when you draw electricity from the grid. Before signing any solar contract, it's important to know whether net metering is available and the credit you'll receive, as it will impact your future electricity bills and overall solar savings.

Fixed utility charges

In addition to varying net metering compensation structures, utility companies nationwide impose different fixed charges for their electricity customers, such as delivery or customer service fees. These charges remain the same regardless of how much electricity you consume from the grid and may or may not be covered by any net metering credits you bank from excess generation.

Before going solar, asking your utility company which charges you'll still be responsible for paying after installation is a good idea. Many solar companies can also provide example bills from past solar customers so that you can see your utility company's net metering incentive in action.

Ideally, you'll be able to eliminate your electric bill charges after going solar. You may even see some negative bills if you can carry over net metering credits month-to-month. But, as we've explained, this might not be possible if you don't have a great net metering policy, or if you can't install a large enough solar panel system. 

Even if you can't eliminate your entire electricity bill with solar panels, you can still drastically lower your electric bills. This can add up to thousands of dollars in savings over time––especially if your cost of solar is low or your electricity rates are high. 

When you purchase a solar panel system, you lock in your electricity rate for decades (solar panels typically last at least 25 years): Even if solar is only covering part of your overall usage, it helps keep your bills lower and it partially protects you from rising electricity rates in the future.

Solar savings vary widely––but most people who go solar will save between $20,000 and almost $100,000 on electricity over the lifetime of their solar panel system. 

Here's a quick breakdown of the type of savings you can expect, depending on how much you spend on electricity right now. But keep in mind that these numbers assume 100% electric bill offset, which, as we've outlined, isn't always the case.

*Assumes an annual electricity price increase of 2.5% based on the 10-year average inflation rate.