Installing solar panels on your home can significantly reduce your electricity bills. But how much you save depends on several key factors. This article examines these factors so you can better understand the potential savings solar can provide.
Solar Panel System Size and Electricity Usage
The size of your solar panel system and your household’s electricity usage are directly related to the amount of potential savings. Generally, the larger the solar system, the greater the portion of your home’s electricity needs it can offset, leading to increased savings.
During your solar quote, we will size your system based on your historical electricity usage. The goal is to size it to meet 80-100% of your needs while avoiding overproduction. Overproducing solar energy gets exported back to the grid at a lower rate.
To determine the right size, we will examine your monthly electric bills over an entire year to account for seasonal changes in usage. Understanding your electricity needs will help optimize the system design.
How Local Electricity Rates Affect Solar Savings
Electricity rates vary significantly across utility companies and states. Areas with high rates will see greater savings by going solar. The national average is around 13 cents per kWh, but rates in states like California and Hawaii often exceed 20 cents per kWh.
Check your electric bill to find your rate, measured in cents/kWh. This rate gets applied to your usage each month to determine the electricity portion of your bill. With solar, you reduce the kWh purchased from the utility company, resulting in savings.
Locations with higher electricity rates will realize bigger savings for each kWh of solar energy produced. This will lead to a faster return on your investment and even more savings for the energy produced by your solar panels.
How Sunlight Availability Affects Solar Production
The amount of sunlight your area receives annually also impacts solar savings. This determines how much energy your solar panels can potentially produce.
Sunnier states like Arizona, California and Texas will produce more solar energy compared to northern states. However, even in less sunny areas, solar panels can still provide substantial savings.
Modern panels operate even in low, diffuse light. But more sunlight equals more solar production and greater savings. Most solar companies use sun maps and site assessments to evaluate your specific location.
Federal and Local Solar Incentives
Tax credits, rebates, solar renewable energy credits (SRECs) and other incentives can further reduce your solar costs. These incentives bring down your net costs, resulting in higher overall savings.
The federal solar tax credit is 30% of your system costs in 2023. Many states and utilities also offer additional rebates and performance-based incentives. One of our clean energy experts will inform you of incentives available in your area to maximize savings.
Many states even allow net energy metering, where excess solar energy gets sold back to the grid for bill credits. Overall, incentives are a key factor in solar savings and payback.
System Warranties and Production Guarantees
Reputable solar companies will offer strong 25-year product and performance warranties. This ensures your panels and equipment will be covered for defects, optimizing system production over decades.
Some companies also guarantee a certain level of solar production. This protects against underperformance and gives you peace of mind.
When getting solar quotes, look for long warranties and production guarantees. It keeps your system operating at peak efficiency for maximum savings.
Financing Options and Payment Terms
There are several options to finance solar panel installation without large upfront costs. These include solar loans, PPAs, leases and more. The financing terms impact your out-of-pocket costs as well as how savings get realized over time.
Shorter financing terms get your system paid off faster, allowing you to realize the full savings sooner. Rates are typically lower to finance a solar project than other available loan types. This means you can take advantage of low rates and invest the extra money into other projects. Make sure to compare all solar financing options and terms upfront as there is no clear best option for each homeowner.
Long-Term Maintenance and Repair Costs
While solar systems require little annual maintenance, they are made up of several components that may potentially fail over the life of the system. At Cubix Power, we provide a 20-25 year warranty on solar panels and components.
Proper maintenance is key to maximizing production and returns over your system’s lifetime. The most important thing you can do to maximize your solar panel performance is to keep your solar panels clean. Dirt, dust, and other debris can prevent sunlight from being absorbed by the panel.
Expected Lifetime of Solar Panels
Today’s solar panels are built to last for many years to come. Manufacturers guarantee around 80% efficiency of the panels after 25 years. By investing in solar, you are installing a long-term power asset for decades of electricity savings.
Make sure your solar provider offers strong 25 year product and power output warranties. This ensures decades of optimized performance and financial returns from your system.
Predicting Your Actual Savings
With these key factors in mind, solar providers use detailed savings estimators to predict your actual returns. This accounts for your specific home energy use, solar system size, electricity rates, incentives and more.
The best way to get an accurate savings estimate is to get a detailed quote from a reputable solar company. Contact us, and one of our clean energy experts will gladly give you a free, no-obligation quote.
You can also use our solar savings calculator, which will give you an idea of how much you can save based on our past customers.
Most homeowners see a 5-15 year estimated payback period for their solar investment. And you can potentially realize over $30,000 in lifetime electricity savings while also increasing your home’s value. By understanding the key factors covered here, you can set optimal expectations for the long-term solar benefits for your home.
- The size of your solar panel system and your household’s electricity usage directly impact potential savings. Generally, the larger the system, the greater the portion of your needs it can offset.
- Local electricity rates play a big role. Areas with high rates will see greater savings by going solar. Check your electric bill to find your rate measured in cents/kWh.
- Sunlight availability determines how much energy your solar panels can potentially produce. Sunnier states will produce more solar energy and savings.
- Federal and local solar incentives like tax credits can further reduce your costs, resulting in higher overall savings.
- Compare several financing options to determine which is right for you.
- Proper long-term maintenance is key to maximizing production and returns over your system’s lifetime.
- Work with solar providers to get detailed savings estimates based on your specific home energy use, system size, electricity rates, incentives, and other factors.
- Most homeowners see a 5-15 year payback period on their solar investment and over $30,000 in lifetime electricity savings.
How much do solar panels reduce electricity bills?
On average, most solar panel systems will reduce electricity bills by 80-100%. The exact savings depends on factors like your system size, electricity usage, rates, and more. Get a quote to estimate your specific savings.
How long does it take for solar panels to pay for themselves?
The payback period for solar panels is typically 5-15 years. After this timeframe, your solar system will have paid for itself in electricity savings and provide decades more of free power.
What is the lifetime of solar panels?
Modern solar panels can operate efficiently for 25-30 years or longer. Top panels come with 25+ year product and power output warranties. This allows decades of electricity production.
Do solar panels work on cloudy days?
Yes, solar panels can still generate clean energy even on cloudy days and in low light. Solar production levels will be lower than on sunny days, but solar will still offset a portion of your electricity usage.
Can solar panels save money in northern states?
Absolutely. While sunnier states produce more solar energy, northern states can still see significant savings from going solar. Solar works in all 50 states.
Do solar panel systems require maintenance?
Solar systems need little maintenance. But it is best to get in the habit of checking your solar panel output and visually inspecting your panels annually.
What incentives are available for going solar?
The federal solar tax credit is 30% for systems installed in 2023. Many states and utilities also offer additional rebates, net metering programs, SRECs, and other incentives to reduce costs. Utah Solar Incentives, Idaho Solar Incentives, California Solar Incentives, Texas Solar Incentives.