Have you ever wanted to know what it would be like to eliminate your electric bill? How exactly does that look? Well, let’s just cut to the chase:
We installed solar panels for this client in April. Immediately we wiped out their electric bill for May, June, and July. They also have 727 kilowatt-hours of electricity “in the bank” to use toward future months when they may have a shortfall.
No matter what, you are going to pay a “customer charge.” This is the base fee for the privilege of being connected to the utility grid. It’s well worth it because, after all, you need the utility grid to provide power when you are not producing it.
Banking Excess Electricity Credits
Aside from that, net-zero solar energy homeowners produce more energy than they consume in some months. These excess credits carry forward to future billing periods. If a shortfall exists, the utility company will draw from the accumulated credits before they start billing for electricity in excess of solar production. It’s an elegant billing mechanism that works seamlessly. This process is called Netmetering.
It’s similar to the old “rollover minutes” that wireless phone providers used to offer.
At the end of the calendar year, the utility will wipe out any credits you have accumulated and pay you for the excess at the wholesale rate, also known as the “avoided cost” rate. Because this rate is lower than the retail credits you get throughout the year, it is wise to not oversize your system significantly relative to your annual usage.
One nuance to Netmetering is that you start the calendar year with no banked credits. If you produce less than you consume in the early months of the year, you may end up with some billed energy costs. This is usually minor, but it is something to note. This might happen in cooler years when a normally net-zero homeowner is using lots of heat for their home or heating a pool with electricity. It’s hard to avoid, but again, usually minor.
Not Achieving Net-Zero
Believe it or not, the vast majority of solar panel owners don’t achieve net-zero. But that is actually a good thing in many cases. Here’s why:
- As mentioned above, exceeding your annual consumption results in a meager wholesale payout.
- Utility companies offer tiered rates, so you pay less per kilowatt-hour for using less net energy in a billing period.
- Larger systems (over 11,7kWdc rating) incur additional interconnection costs and insurance requirements.
- If you run out of prime roof space, you may need to use sub-optimal roof surfaces that are less productive.
- For the above reasons, the return-on-investment, or ROI, may be better for a smaller system.
The majority of our clients install systems that offset a large portion of their electric bill, but not all of it. This improves the ROI and maximizes the efficiency of their system. With Netmetering, you are never “off the grid” anyway. The whole point is to lop off your most expensive energy and reduce your monthly expenses.
Ultimately, most people choose a system size based on a combination of their electric bill and their budget. You wouldn’t walk into a car dealer and say, “I have $20,000 to spend,” but that is precisely how most people buy solar panels. Based on a budget, we back into how many solar panels you can purchase. Then we can tell you how much of your electricity bill that will offset.
Reaching net-zero may give you a huge sense of satisfaction and accomplishment, but don’t worry if you can’t get there. Some homes simply don’t have enough viable roof space. Your budget may not be sufficient. But offsetting a part of your electric bill may actually be in your best interest.
Looking Good, Feeling Good
A zero or low electricity bill looks good for sure. It also feels good. You become your own power plant essentially. The excess energy you send to the grid is essentially sold to the utility company and resold to your neighbors.
Net-zero clients can manage their energy use using online monitoring. You might find that you can use more electricity without incurring much cost. Solar panels are a lifestyle choice as much as an investment. Many of our clients end up enjoying electricity more. They turn the air conditioning down lower, stop worrying so much about turning lights off, and embrace the freedom that a low electricity bill affords.
Solar panels are an investment – an investment in the pocketbook, in you, in your home, in your lifestyle, and in our environment. You will be looking every bit as good as your utility bill!