If you’ve decided to join the solar electricity revolution, congratulations! The earth thanks you. Those first bills should be pretty exciting (who knew a bill could put a smile on your face?) but they can! They can also be pretty confusing. Each utility is different, so while we wish bills were simple and straightforward, that is most often not the case. We’re here to help! We’ll help you identify the important items on your bills and how to determine if you are saving money.
A Lesson on Solar Billing
First up, the solar bill. If you purchased a solar energy system outright with cash, you don’t receive any solar bills except a monthly statement from your solar provider that tells you your system’s production for the month. If you obtained solar panels through a lease or a Power Purchase Agreement (PPA), you will receive a monthly bill from your solar company. If you financed a solar energy system through a loan provider you will receive a monthly bill from that organization, this can sometimes be the solar company, but most loans are offered through a third party.
Here are some quick details about the bills associated with each of these financing options:
- Solar Lease: Your solar bill from your solar provider will be the same amount each month. The fixed amount you will see on the bill is determined by the amount of power your panels were designed to produce over their lifetime. That total is divided into fixed monthly payments for the term of the lease contract.
- Solar PPA: You pay your solar company a fixed rate for every kilowatt-hour (kWh) your panels produce. This means that during sunnier months, your bill will be slightly higher than it is during cloudy ones. That might sound backwards but those sunny months are actually when you’ll be seeing the most savings - more on that in the utility portion below.
- Solar Loan: Your bill will be the same, predetermined amount each month until you pay off the loan - just like an auto loan. A bill will come from the creditor you financed your solar purchase through.
Here’s a sample bill from a solar provider - this one is for a solar PPA - remember yours might look a little bit different and PPA rates will vary based on where you live. Luckily, solar bills are a bit more straightforward than your utility bills. Solar companies do not have access to all of the data your utility company owns in regards to your usage, so most of the information you will receive from your solar company is in regards to the panel production and how much solar energy was produced that month. They may be as simple as this:
Next up, the utility bill. If you’re thinking, “Wait, I have TWO bills now?” stay with us. It may be a little confusing at first to have two bills, but don’t let it fool you. Your solar panels are still producing cleaner, cheaper electricity for you than the utility company - you might just need to do a little math to figure out how much you’re saving.
The good news is, the utility bill piece of your savings equation should be the same regardless of how you’re financing your solar panels. There are essentially two or three pieces to most electrical bills:
- Service charge and fees. This is usually a flat rate charged to all utility customers regardless of how much electricity is used. It’s the fee you pay for being connected to the grid. It may appear on your bill as one charge or multiple fees, but it won’t change when your solar panels are active.
- Taxes. Pretty self-explanatory - these are usually calculated based on grid-electricity use, so the more you rely on electricity from your solar panels, the less you’ll pay in taxes. Hooray! It’s important to note that some taxes will be separated out as a line item that you can clearly see, and some utilities include the tax in their rates.
- Electricity use. Here’s the part to really get excited about. Your electrical provider charges you a volumetric rate for the number of kilowatt-hours (kWh) you use. Your utility bill will only show the number of kWhs you used from the grid, it doesn’t measure how much electricity you use from your solar panels. In other words, if you were to use only power from your solar panels, this amount would be zero.
Many utilities use tiered pricing, meaning that once your usage exceeds a certain amount of electricity, your rate per kWh goes up. Relying on your solar panels can help you stay in the lower-tiered (cheaper!) pricing even when you need power from the grid.
If your utility offers net metering, it can be slightly more confusing but the savings also stack up even more, so it’s worth following the numbers. When your solar panels produce more electricity than you use, your solar energy system sends the excess solar energy to the grid. With a net metering agreement, you get credit for that excess electricity - usually as a kWh credit that will show up on your next month’s bill or as a total sum at the end of the year.
If net metering is available to you, here is a simple equation you can use to figure out your energy/electricity usage you will be charged for:
Electricity use charges = kWhs used from the grid - credits for kWhs of exces ssolar energy sent to the grid
This simple equation will result in a negative number when you send more energy to the grid than you use. Many utilities with net metering agreements allow you to rollover a negative kWh balance at the end of the month. Some calculate it as a dollar amount credit.
Annual True-up Statement
One other statement you may already be familiar with is the true-up statement. This is an annual statement you will see at the end of the 12th month of your billing cycle. This bill reconciles all cumulative energy charges, credits or compensation for the 12 months. If you have a balance due after all charges and credits are reconciled, that amount will appear on the last bill of your annual billing cycle. Any remaining credits will be reset to zero before the next cycle begins.
It’s important to note that several factors can affect the true-up statement. Any changes that increase energy usage such as change in lifestyle, additional members living in the home, acquiring large appliances, installing a pool, etc. could increase your true-up statement.
Remember, a solar energy system is designed to meet specific energy needs for the home. If your usage increases after the fact, you may be using more energy from the grid than you realize. There are several easy ways to help ensure you save energy to keep your bills down. Read our 12 tips to saving energy here.
Let’s look at a sample bill. This one includes net metering where negative kWh use is credited to the customer as a dollar amount:
Your utility can provide information on how long your net metering credits can roll over and any other specific details related to your area. A good way to check your solar energy savings is to compare last year’s utility bill with your “post-solar panels” bill for the same month this year to see the difference. Make sure to note whether your utility’s per kWh rate increased since last year, too.
With a little practice, you’ll be scanning your bills and will easily be able to know exactly how much solar energy your system is producing and how much energy you are using - not to mention the comforting feeling you’ll have knowing your home is using clean, renewable solar energy!
If you’re still not clear on how your solar and utility bills fit together after our walk-through, contact your solar provider or your utility company directly for an explanation tailored to your bill. We’re always willing to help!
If you do not have solar and want to see how solar energy can benefit you and your household, contact a solar provider today.