More and more homeowners are adopting solar power systems to reduce their reliance on traditional utility providers. Unfortunately, the intricate clean energy systems come with equally intricate billing practices. Read on to learn how to read your solar electric bill and gain a clear understanding of the charges, credits, and savings associated with your solar power system.
Understanding Your Electric Bill After Installing Solar
Residential solar arrays rarely eliminate electricity costs, but they reduce them. These grid-tied systems draw energy from the national grid when your solar panels are not producing energy. To understand your electric bill after installing solar, follow these eight simple steps:
- Identify your billing period to track your energy usage and solar production over a specific timeframe.
- Determine your monthly net metering credits and understand how the credits are calculated to offset your energy charges.
- Monitor your solar generation, usually represented in kilowatt-hours (kWh), to determine the amount of energy produced by your solar panels during your billing period.
- Examine your usage charges. Compare the number of kWh your home consumed from the grid against the solar energy your system generated. If your solar production exceeds your usage, you may have a reduced charge or credit for the excess energy.
- Review your billing details for additional charges such as connection fees or service charges. These fees are set by your utility company and usually the same every month.
- Calculate your savings by comparing your current solar electric bill to your traditional energy bills before solar to assess your reduction in grid energy consumption and your financial benefits from net metering credits or reduced charges.
- Track your system’s performance using the built-in monitoring tools provided with your solar system. Compare your solar generation with the estimated production of your system to ensure optimal operation.
- Ask for clarification if you have questions about specific items or calculations on your solar electric bill by contacting your utility provider.
Utility companies have their unique bill formats, details, credits, and offerings. It is important to review your bill carefully and consult your solar installer or utility company if you need help to understand your electric bill.
How Are the Rates Structured?
Rate plans, like sales tax and average home prices, vary in structure depending on your state and local utility company. There are three main types of charges solar customers encounter:
- Fixed charges are not usage-dependent. These monthly charges remain constant each billing cycle and cover the cost of maintaining the electric grid infrastructure and providing your basic grid-tied services.
- Energy charges represent the total amount of electricity in kWh you consume during your billing cycle. Typically, rates vary depending on the time of day or the amount of energy your home uses.
- Demand charges are set by some utility companies and are based on the highest electricity usage level during a specific timeframe.
Your monthly energy charges typically fall into one of two rate categories: Time-of-Use or Tiered Rates.
Time-of-Use Rates
Time-of-use (TOU) rates vary depending on the time of day. Costs are typically higher during peak demand hours and lower during off-peak and overnight hours. This common rate structure incentivizes shifting your system’s energy usage to non-peak hours when electricity costs are lower.
Most solar installers equip home systems with smart monitoring technology to automatically shift energy usage with peak and non-peak hours. However, depending on the size of your system home air conditioners and other heavy-usage equipment can increase your utility bills without a change in your consumption habits.
Tiered Rates
Utility companies have different price levels based on energy consumption, incentivizing conservation and efficiency. Lower energy consumption places you in a lower tier with reduced rates. However, if your home uses more energy within a particular billing cycle, you move into one of the higher tiers with progressively higher rates.
What is Net Metering?
States incentivize grid-tied solar systems with net metering and many allow you to earn credits, lowering your utility bills. If your solar energy production exceeds your consumption, your system can feed the excess energy back into the grid, a process known as net metering.
Credits vary depending on your state’s net metering policies and your utility company. Some programs credit solar energy exported to the grid at the same rate as a kWh drawn from the grid, resulting in a one-to-one credit for each kWh of solar energy. Unfortunately, some programs use different rates or have additional net metering fees.
How is Excess Solar Energy Credited to Your Account?
Your state’s specific net metering process typically credits excess energy generated by your photovoltaic system. There are four steps in the process:
- Your solar PV system measures the electricity you consume from the national grid and the excess energy you export to the grid using a built-in bi-directional meter, also known as a net meter.
- Your utility company tracks your exported energy over your billing period in kWh.
- Your electric company applies your earned credits to future billing cycles when you consume electricity from the grid, reducing your charges.
- Your electricity bill details the calculation of consumed energy against your exported energy to determine your net energy usage. Positive net energy usage results in a bill, while negative net energy usage results in a credit for your billing cycle.
FAQ About How to Read Your Solar Electric Bill
A minimum bill charge, or delivery charge, is a type of fixed charge or service fee applied to your electricity bill every billing period, regardless of usage. The fees cover infrastructure maintenance such as power lines, customer service, and other basic operational expenses, like meter readings. The amount of your minimum bill charge varies depending on your utility company.
There are many factors impacting your electricity bill, including the size of your solar system, local electricity rates, energy use, rebates, incentives, and the amount of solar energy your system produces. On average, you can expect to reduce your electricity bills by 50 percent to 70 percent.
Maybe. If your net usage is negative, meaning you have exported more electricity than you have consumed, you may not owe money on your electricity bill for your billing period. Most times, negative net usage results in credit applying to your account under net metering policies.
Your net metering credits carry over to your next billing cycle for future use. However, billing practices vary among utility companies and states. Many companies have policies limiting carryover credits or imposing minimum fixed charges regardless of your net usage.
Solar Electricity Next Steps
Understanding your electricity bill after installing solar is the key to maximizing your benefits. By deciphering the various components, such as energy production, net metering credits, fixed charges, and more, you gain valuable insight into your consumption, energy savings, and the financial impact of your solar investment.
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