Can solar panels eliminate electric bill entirely? Or do you still need to pay to the utility company?
This is a common question that home and business owners ask before considering to pay thousands of dollars for a solar panel system that is supposed to save them money on the long run.
And since there’s some confusion and misinformation subject, I decided to write this short article in order to help from my experience in the field of solar energy systems as an electrical engineer.
Important Note: Check out the last section of this article to learn how 1,000’s of American home owners installed complete solar power systems without paying from their own money!
Let’s jump in!
Can Solar Panels Eliminate Electric Bill?
Solar panels can eliminate your electric bill almost entirely, if the system was designed and installed well enough to offset your monthly electricity usage, and worked efficiently and reliably.
I say “almost entirely”, because since your home or business is still connected to the utility grid through a meter, then you still get the bill itself.
And although your electric bill with a solar system might go close to zero dollars, but it usually had some unavoidable charges or fees, which we will discuss in the next section.
But generally speaking, even with the bill you get, it is more feasible and rewarding on the long run to install solar panels to generate electricity for your loads.
Also, there are solutions that can help you install a complete solar system for a $0 cost, which I will tell you about in the last section below.
5 Costs That Might Add to Your Electric Bill with Solar Panels
Un-bypassable Fixed Utility Fees
This is the unavoidable reason of getting charged by the electric company despite having installed solar panels.
As long as your electric system is still connected to the grid through a meter, then you will pay this amount of money, which differs from one electricity provider to another.
Some call it “Basic Service Fee”, and some companies give it a different name.
These account mainly for the fact that even if your solar panel system generates electricity that equals or exceeds your monthly usage, you are still using the utility company’s assets like the meter, the lines, the transformer, …etc., in order to ensure consistent and reliable supply of energy to your loads.
The way solar panel systems usually work is that they generate electricity during the day that is enough to supply your 24 hours of loads.
But since your system usually doesn’t come with batteries that would store the energy for night usage, then you need to treat the grid as such.
This means that you give the extra generate electricity to the grid during the day, and you withdraw the same amount during the night in order to supply your appliances.
And the meter will read both ways, and if you end up withdrawing the same amount you put into the grid, then you don’t have to pay for the electricity usage.
And this metering method is called Net Metering.
However, because you are still using the company’s assets as a storage battery, and these assets require continuous maintenance, in addition to their setup cost, then the company would still charge you for that usage, hence the name Basic Service Fee .
And that fee is different from one utility company to another, ranging from $10 to $30, in addition to any sales tax that might apply on that service.
But in some places, there’s another fee that is called “Capacity Reservation Fee”, which might add to your bill, and its value depends on the size of your solar system.
For example, it could be $5 per kilowatt system installed.
This means that if you have a 5kW system, then this fee would be 5X5=$25 per month.
The only way to get rid of these fees is to go off-grid, but you need to install batteries in order to store electricity during the day and use it at night or on cloudy days, but that adds up to the cost of installing the system, and makes the payback period longer.
These are the unavoidable fees, and they are relatively small compared to the savings that you would make when you install a solar panel system, and I don’t consider letting them a hurdle in your way of going green with solar panels.
Don’t forget that many states and countries offer tax credit for consumers who install solar panels.
Difference Caused by The Metering Method
In addition to the unavoidable fees mentioned above, if you have solar panels, you might still pay for electricity, although your solar system generates what equals or even slightly exceeds your consumption during a certain month.
This is because some utility companies don’t adopt the net metering strategy, but instead, they utilize the Time-of-Use metering method.
This method is usually adopted by companies that have peak hour tariff.
In a peak hour tariff, an electric company charges a certain rate per kWh withdrawn from the meter during certain hours when the demand is low, and they charge a higher rate during the peak load hours (e.g. from 4pm-9pm)
In this case, your monthly bill is not just calculated based on the kWh’s given to, and taken from the grid like it is with the net metering.
Instead, they calculate the price of the kWh’s given from your solar system to the grid based on the rates of the hours this energy was given, and then they will calculate the price of the withdrawn kWh’s based on the rates of the hours you took electricity from the grid.
And in case that your solar panel system has given the grid during a certain month the same amount of electricity you withdrew in the same month, but your has given to the grid most of its product during the low demand (low rate) hours, and you withdrew from the grid the most of your usage during the peak hours (high rate), then you end up paying for that difference.
The solution to this problem?
The solution could be during the system design and installation stages, where the solar company installs the panels (or part of them) facing the south-west side, instead of installing them facing the southern side.
This will reduce the total generated number of kWh’s of electricity, but it will shift part of the generation (and selling to the grid), from early morning and midday hours into the after noon hours when you sell at the high rate.
But then this depends on how much space you have on the roof that is facing this side.
The Cost of an Underperforming Solar System
If your system wasn’t designed properly, or if it was designed properly, but it is not generating enough electricity, to offset all of your consumption, then you are required to pay for the extra kWh’s you withdraw from the grid.
This is a major reason whey your electric bill might be so high with solar panels.
Some of the reasons why your system might be underperforming are:
- Some components of the system like panels or cables are deficient.
- Panels are covert with dust or dirt and need cleaning.
- Shading because of plants that were not taken into account when the system was designed, or because of new obstacles that create shade on part of the panels.
Cost of Short & Cloudy Days
Now the system might be designed to let you enjoy an annual bill that avoids charges because of electricity kWh’s usage, but that doesn’t mean that every single month your system will generate exactly as much as you would consume.
The solar system is usually designed based on your total consumption during the past twelve months, and it is supposed to generate you over a complete year the same amount of the expected consumption during the same year.
But that does not equally apply from month to month.
For example, during September and October, your monthly electric consumption and bill would usually be lower than it is during the months of November and December, due to whether conditions and how the affect your behavior.
But on the other hand, the generated amount of electricity your solar panel system can produce during September and October might exceed the amount generated during November and December due to shorter and cloudy days in the last two months of the year.
Your solar system would usually be designed to supply more electricity than your consumption during September and October, give it to the grid, and the utility company will keep the additional amount as credit to be rolled over to the following months.
And when you withdraw more than what you give to the grid during November, they will offset the additional consumption with the credit you have.
However, you might still consume more than what you have given in total even after taking the credit into account, and in that case, you end up paying for the remaining kWh in a certain month despite having the solar system.
Increased Consumption of Electricity
As I explained in the previous point, your solar panel system was designed based on your total consumption of the previous year.
The company would assume that you would have the same consumption during the coming years, and they design the solar system to generate a certain amount of electricity during the whole year that equals your total consumption of that year.
However, your behavior might change and your electric energy consumption might increase, either because you started spending more time at home, you have more people with you, you switched from a gas boiler to an electric boiler or water heater, …etc.
And that would cause your electricity consumption go higher than the amount of electricity your solar panels generate.
You would withdraw the additional need from the utility meter, and you would be billed for it.
The solution could be in this case to either contact the solar company to see if it was possible to expand the system, or to try to lower your consumption using devices that can lower electric bill.
Conclusion – You Still Get a Much Lower Bill with Solar Panels
As I clarified above, you still get an electric bill when you have solar panels installed, but solar panels can eliminate the electric bill value almost entirely if the system was well-designed, installed, and maintained.
The one cost that is unavoidable is the first one of the five above, which is a low fee that does not undermine the benefits of making big savings with the solar panel system.
Not to mention the tax credit that some countries and states offer for residential and commercial consumers who install solar panels to generate electricity.
On the long run, it is well worth it to install solar panels and save money with them.
Convinced but You Need Someone to Take You by The Hand?
Here’s the great news!
There are many solar companies that can help you design the system, get the utility approval, build the complete system, commission it, and connect it to your electrical panel and to the utility meter.
But there’s something even better…
I promised you earlier that I will tell you how 1,000’s of American home owners installed a complete solar power system without paying anything from their own money, and how you could potentially do the same.
How is that possible?
It is through companies like SunPower, the leading solar company that can help you find financing options based on your location, in order to build your solar panel system for no down payment.
If you are interested in discussing solutions for your case, no strings attached, you can visit SunPower’s site here, enter your Zip code, and complete a 1-minute survey about your location and monthly bill.
SunPower’s qualified team will contact you shortly in order to arrange for an appointment to discuss the available options and see what suits your situation the best.
I hope that might article was helpful and insightful, and answered your question about on whether solar panels eliminate your electric bill or not.
If you still have any question or need any help, please, tell me in the comments’ section below, and I will do my best to help you out 🙂