How Much Can You Save with Solar Energy?

We’re always looking for ways to cut down on everyday costs, so why not consider saving on our utility bills too? It’s not easy to haggle over utility bills since there are often limited options for electricity, gas, and water providers, making it seem like a monopolized market where we’re stuck with the rates given. However, there are some tactics to lower electricity costs, and switching to solar power might be a big one. We’re seriously thinking about making this switch and are eager to figure out if the savings from solar energy are worth the investment.

### Figuring Out Your Current Electric Bill

Calculating your electricity usage depends on a few factors like:

– The size and age of your home
– How many and what quality your doors and windows are
– Weatherproofing efforts
– The types and amount of electric appliances
– Number of people living in your home

To give you a general idea, the national average electricity usage is about 877 kWh monthly or 10,649 kWh annually. With an average price of $.13 per kWh, the typical annual expense for electricity is around $1,384.37. In my area, the cost per kWh is $.11, which is slightly below the national rate. I can share that our yearly electricity cost for our 7-person, 1,888 sq. ft. home was $1,461.24. Although this seems higher than average expenses, we have more occupants and a 30,000-gallon in-ground pool running half the year, so we seem to be spending less compared to similar homes.

### Figuring Out Solar Panel Costs

Once you’re clear on your yearly and per kWh costs, the next step is to estimate the cost of solar panels. Most solar systems offer about a 6 kW power output, providing an energy yield between 7,000 – 9,000 kWh. Even though it may not seem enough to power your house year-round, it can actually cover your needs. Your home will use the solar-generated power first, and then switch to the grid if the solar power runs out. Similarly, any excess power produced by your solar panels is sent to the grid, allowing you to sell any surplus energy while buying only when needed. This setup often lets people reach a zero-balance state with their electricity company.

### Is It Worth the Switch?

This means you’d stop paying the electricity company, focusing only on the cost of the solar panels. You can either buy them outright or lease them for 10-12 years. Many opt for leasing if they can’t pay upfront, but this includes lease interest, which could lead to a net loss. Installing solar panels typically costs between $15,000 and $25,000, influenced by your location and roof specifics. In my area, it leans closer to $15,000.

Given our current spending, it would take us about 10.25 years to earn back our investment in solar panels, so we need to think about it carefully.

### Tax Credits as a Bonus

The federal government still offers tax credits for solar panel purchases. This solar panel tax credit, started in 2005, is scheduled to phase out by 2024. So, if we buy solar panels this year for $15,000, we could get a 26% tax credit, reducing the cost to $11,100. This would mean we’d only need about 7.75 years to recoup our costs, and then essentially enjoy free electricity for about 17.25 years.

### Considering Solar

Deciding to go solar involves considering factors like your current electricity use and finding ways to reduce it. You also need to figure out your per kWh cost and annual expenses to judge if solar panels are a good investment. Remember the extra benefit from solar tax credits too!

In our situation, we’re still debating because we’re not sure if buying solar panels would offer better returns than other investments. So, we’re still making up our minds.

Have you found that switching to solar could help cut your electricity costs?