Before installing solar panels, you’ll want to know how much they can save you on your energy bills. Solar panels require a large up-front cost, and while you can usually obtain financing for them, you’ll want to know if your investment will pay off. What factors affect the profitability of solar panels? Find out what your life can be like before and after installing solar panels to find out if it’s the right choice.
Want to save money on your electricity bills?
Get a free quote on a residential solar panel installation!
How Much Do Solar Panels Save on Electricity Bills?
Solar panels are priced per watt, meaning the price of a system scales fairly constantly the larger it gets. As of 2019, the average price per watt for solar panels in the US was about $3. Most residential solar panels are rated 5-10 kWp, or kilowatt peak, which means they can produce that many kilowatts during their peak production. The full price of an installation anywhere from $15,000 to $30,000, but thanks to rebates and tax credits, most homeowners pay much less than this.
The amount of savings your solar installation will deliver depends on its size, as larger systems are simply able to collect more sunlight. The angles at which solar panels are set will also affect their efficiency and whether or not solar panels are a worthwhile investment. With an average of 310 sunny days a year, Las Vegas is an ideal location for solar panels. With the basics out of the way, we can begin to look at the factors that influence how much a rooftop solar array can save you.
Your Home’s Solar Energy Potential
The amount of sunlight your home receives annually will be a major factor affecting your savings from solar panels. Homes in the Southwest, including Nevada, receive a high amount of intense sunlight throughout the year, giving them a high solar energy potential. However, nearby obstructions that shade your home can reduce its solar potential. In addition, south-facing roofs in the Northern hemisphere have a much higher solar energy potential than north-facing ones.
Size of Your Solar Installation
The size of your solar installation affects how much it can reduce your bill. Larger installations can collect more sunlight and can thus reduce your bill more than smaller ones. However, they require a larger up-front cost and take longer to pay off.
Price of Solar Panels
Prices for solar panels have consistently fallen for the last decade, and look to continue to do so as further advances are made. However, in the near- to mid-term prices for some systems have increased due to tariffs on solar panels from China.
Solar Tax Credits
Homeowners can typically substantially reduce the price they pay for solar panels thanks to tax credits and rebates. The Residential Renewable Energy Federal Tax Credit, the residential component of the solar Investment Tax Credit (ITC), is available until December 31, 2019 and allows homeowners to claim 30% of the cost of their solar system. Its reimbursement rate will drop to 26% and 22% in 2020 and 2021, respectively, before finally expiring at the end of 2021. State and local tax credits or rebates can further lower prices.
Electric Bill: Before and After Solar Panels
The Solar family wants to reduce their monthly energy bills. They live in Summerlin and currently pay, on average, $150 per month for electricity. They plan on staying in their home for at least ten years, given its location near a great school, parks, and a shopping center. They’re interested in installing a 7 kWp solar panel system, as it is the one best suited to the size of their roof and budget.
According to the Energy Information Administration (EIA), the average annual electricity consumption for an American household is 10,766 kilowatt-hours (kWh). The EIA also reports a nationwide average price for residential electricity in September 2019 of 13.17 cents/kWh, though in Las Vegas this price is only 12.15 cents/kWh. This means the average annual and monthly power bills for a typical household at about $1,418 and $118, respectively. In 2018, the EIA predicted energy prices would rise to a nationwide average of 14¢ per kWh in 2028, though in Nevada they have fallen over the last ten years and may continue to do so.
With their electric bill higher than average, and with rising energy costs likely, the Solars are thinking about their future with solar power and without.
The Solars plan on staying in their home for at least ten years, and as their children grow, they expect their energy costs to increase as well. If their current usage remains steady, they can expect to consume about 15,000 kWh per year, given that their monthly bill is $150 and they pay 12.15 cents/kWh. Assuming prices steadily increase from 12.15 cents/kWh to 14 cents by 2028, they can expect to consume about 150,000 kWh of electricity over the next decade, which will cost about $19,600.
After choosing a 7 kWp solar panel system, the Solar family is able to produce about 7,000 kWh, or a little under half of their annual energy needs annually under ideal conditions. Assuming a cost per watt of 3 cents, their system cost $21,000, or $14,700 with an ITC. During that time, their will save them about $9,125. However, if they decide to own their home for more than 16 years, their solar system will begin to pay for itself.
Will Solar Ever Eliminate My Electric Bill?
Most solar installations will reduce your bill but won’t eliminate it entirely. However, if your system is installed under optimal conditions, you could receive a negative bill from your utility company, meaning you are a net seller of energy. This might be applied to your next bill or can be paid to you directly. Your utility will likely still charge you a minimum fee each month to account for their own losses that come from scheduled energy production that goes unused.
Solar panels are a considerable investment and take several years to break even, which means they might not be a wise choice if you’re planning to move within the next few years. However, if you do decide to install a solar system, Zillow reports that homeowners can typically expect one to raise their home value by about 4.1%. Homeowners typically recoup close to the cost of materials and installation if they sell, but not more. However, under ideal conditions, a solar installation can yield returns equal to its cost, several times over, making it a worthwhile long-term investment.