How Much Money Do Solar Panels Save You On Electric Bills
When it comes to potential energy savings, solar panels have long been a terrific alternative. However, you should be aware that the amount you save will vary based on a number of circumstances. We may make an approximation based on average statistics.
According to the US Energy Information Administration , the average home consumes 887 kWh and spends around $115 each month. A 2-square-meter solar panel may provide up to 45 kWh of alternating current every month. To totally meet the monthly average consumption of 887 kWh per family, youll need 20 panels totaling 8kWp and delivering 900kWh 45 output every month.
With each panel providing 400 watts per hour, the total output for all 20 panels is 8,000 watts per hour. If this seems excessive, keep in mind that you may make money from the extra energy your system generates and exports back to the grid. Solar panels utilize the sun, a sustainable energy source, so it is not wasted.
If enough solar panels are placed to match the typical monthly power demand, a home might save US$1,384 per yearor not have to pay for electricity at allusing this plan.
Can I Make Money With Solar Panels On My House
There are a few different ways individuals can make money with solar panels. One way is to install solar panels on their home or business and take advantage of net metering.
This is where individuals can get paid by their utility company for the extra power that their solar panels produce.
For this to work, the utility companies need to have a good relationship with the solar farm owner and agree upon a fair price for the electricity.
Another way to make money from solar panels is to become a solar farm operator.
Solar farms are large area landmasses that contain hundreds or thousands of solar panels that are all connected.
These farms produce enough electricity to power an entire community or city.
Solar farm operators are responsible for managing the farms day-to-day operations and ensuring that all the equipment runs smoothly.
They also sell the electricity produced by the farm to the utility companies.
There are also financial models where landowners can lease their land out to companies who want to build solar farms.
In this case, landowners would not have any upfront costs and would receive payments every month from the company leasing their land.
The amount of money that you can make from solar panels depends on how many solar panels are installed.
Savings From Solar Panels Outstrip Income From Fit
Solar panel returns are a balance of income from the Feed in Tariff and savings on electricity bills. As Feed in Tariff levels have reduced and electricity bills have risen over the years, this balance has shifted. Since the tariff cuts in February 2016, savings are now a larger part of the return from solar PV than tariff income.
Payback from domestic solar panels is now primarily about savings ahead of subsidy and this would seem like a good sign for the maturity of the technology.
Looking forward, solar panel returns are going to be highly dependent on electricity costs. Retail electricity costs seem to have resumed their long term rising trend. While this is not good news for consumers, it has a positive impact on the economics of solar panels.
For the householder considering solar panels, their actual usage profile will have a huge impact on their expected returns. It is very important to get a clear picture of your households electricity use and how it will affect your returns. This is a standard part of the assessment installers will undertake for you before you decide to buy.
The increasing importance of electricity savings also means that maximising savings by using as much free solar electricity as you can is likely to have a big impact on your return on investment. This has implications for battery storage and other add-on technologies that aim to maximise the productive use of your free solar electricity on-site, thereby increasing your returns.
Don’t Miss: Do Solar Panels Give Off Heat
How Much Does It Cost To Set Up A Solar Farm
Installation costs are often quoted at between $0.80 and $1.36 per solar watt installed, but Im not sure where these figures come from. Its generally known that solar farm installation costs are less then half than domestic solar costs, which are well under $3/solar watt in the US.
Its probably safe to assume $1/watt as an average figure, making our calculation easier. For a solar farm minimum size of 1mW it will cost about $1 million for the physical installation of panels and all associated equipment.
Basic cost of setting up equipment for a 1mW solar farm = $1 million.
Add another 15% to 20% to this if single axis solar tracking equipment is needed to maximize output. Its rare to have dual-axis tracking on solar farms due to the poorer ROI associated with it.
Solar farm installation cost including single-axis sun tracking = $1.2 million
Associated permits and licenses = $5000
Hook up to grid = $3000 to $10000 .
Software to coordinate and manage solar strings = $3000
Ongoing maintenance = $20/kw x 10000kW = $20000/year
More resources relating to making money with solar farms:
What Are Alternatives To Solar Panels
There are several solar alternatives out there on the market. Solar lights, sun tunnels, solar shingles, solar ovens, solar AC, and solar water heaters are just a few examples of how solar can be utilized in a home without installing a complete set of solar panels on your home9.
If you think the solar panels arent right for you, consider switching to Inspire Clean Energy. You can get the benefit of using clean, renewable energy without the need to install, maintain, and wait for your solar system to pay off.
Visit our homepage and enter your address and/or ZIP Code to get started. If Inspires clean energy supply plans are available in your area, you can proceed with linking your utility and discover the beginning of consistent and predictable monthly energy bills.
Don’t Miss: How Is Sole Proprietorship Taxed
What Are The Benefits Of Solar Panels
- With energy bills set to rise, taking the annual cost of an average household bill to over £2,500, take control of your energy bills by making the switch to solar energy.
- The cost of solar panels are at their lowest point since 2010.
- They’re an investment that will not only see you rely much less on your energy supplier and receive government payments, you’ll be adding value to your property so all in all while those initial costs may put you off at first, you could soon make it back and begin profiting.
- Store excess energy generation during the day in a solar battery storage system for use after the sun has set compare the Best Solar Batteries.
Find out if solar panels are the right choice for your home in Are Solar Panels Worth It?.
Utility Fees For Solar Hookups
Unfortunately, you may still get dinged for demand charges from a utility. These are fees imposed just to keep you connected to the grid, regardless of whether you use power from it at all. Many building codes require a backup in case a solar system fails. Other utilities argue that having fewer people on the grid increases rates across the board since they cant sell at high enough of a scale. Additional fees help the make up that difference so electrical rates for all customers can stay lower, in theory.
The legitimacy of those arguments is open to debate, but many solar power evangelists see these as cynical means of pushing back on the solar trend thats threatening the bottom line of entrenched energy utilities shackled to dirty power.
Also Check: How Are Solar Panels Made
How Much Do Landowners Get Paid For Solar Panels
A very simple option for a landowner is to simply lease the land to the solar farm operator. The amount earned per acre varies a lot, due to a number of reasons:
- Are there any government or other incentives in the State?
- Level of land prices in the area
- How far is the nearest grid connection?
- Is there a demand for solar power in your State?
A landowner can expect to earn on average $2300 per acre of land leased to solar farm operators.
Can You Earn Money By Installing A Pv System
As you can see, most of the available incentives for solar energy aim to reduce your consumption from the grid and the costs of the PV system. You cannot make money with the Federal Tax Credit or with the Net Metering Schemes.
The Feed-in Tariff scheme is the only option that allows you to earn money with your PV system. However, there are not many utilities that offer you the possibility to access the scheme at residential scale, and the profits will vary a lot according to the project itself, the location, the size of the system, and the price of electricity. SRECs are also another option to obtain money from a PV system, but they are more intended for commercial systems that can easily produce 1 MWh in a year. If you decide to change or get rid of your solar panels, there is some money to be made back by recycling the solar panels and their parts.
Commercial and utility-scale projects can achieve higher earnings with a fixed contract of FiT from a solar farm. Low size PV systems can eventually achieve earnings through this scheme, however, the attraction of solar energy on residential-scale in the US should be seen from a perspective of savings rather than from a making money perspective. To estimate how much you can save with solar energy you can visit the PVWatts tool.
References
Don’t Miss: How To Make A Solid White Background In Photoshop
Solar Panel System Size
Its a no brainer that the larger the solar panel system you choose, the higher the installation cost will be. But what factors impact the size of the solar panel system you require? Well, the right size PV system will depend on a couple of factors:
- The size of your property
- The available roof space, pitch and orientation of the roof
- If there are any shading factors
- The radiation levels of where in the UK you live.
- And how much energy you use and the amount of energy you want to generate.
It is important that the size of your solar panel system meets your energy requirements, in order to make the switch to solar energy worth while.
Solar Panel Cost Calculations
To calculate average purchase and installation costs by system size and electricity needs, the Royal Institution of Chartered Surveyors analyses costs from a variety of sources, including surveys, online quotes and retailer pricing information. It combines these with quotes from specialist subcontractors to give the most accurate average prices.
The prices include everything necessary to carry out the installation. This includes materials, labour, preliminary work, contractor costs, VAT and profit.
Materials costs are based on national average best trade prices and represent typical prices in autumn 2021. Labour rates are based on current industry wage agreements and allowances. Both are affected by the current economic climate and industry pressures.
Data copyright RICS 2021 and reproduced with permission. Prices are correct as of October 2021.
*Which? conducted an online survey in June 2021 with 1,116 Which? Connect members who have solar panels.
Don’t Miss: What Is A Solar Charger
Appendix A: Data Sources
Data used in the compilation of this report was gathered from the following sources:
- Quarterly Energy Prices, June 2017 BEIS
- Quarterly Energy Prices, September 2014 DECC
- Quarterly Energy Prices, December 2013 DECC
- Quarterly Energy Prices, December 2012 DECC
- Quarterly Energy Prices, December 2011 DECC
- Quarterly Energy Prices, December 2010 DECC
- Feed in Tariff Tables Ofgem
- Feed-in tariffs scheme: consultation on Comprehensive Review Phase 1 tariffs for solar PV DECC
- Solar PV cost update- Parsons Brinkerhoff, May 2012
- Solar PV Cost Data DECC, April 2014
- Updates To The Feed-in Tariffs Model Documentation Of Changes For Solar Pv Consultation Cambridge Economic Policy Associates Ltdand Parsons Brinckerhoff, 26 October 2011
- Small scale solar PV cost data DECC, December 2013
- Review Of Ro Banding For Small-scale Renewables A Report For The Department Of Enterprise Trade And Investment Cambridge Economic Policy Associates and Parsons Brinckerhoff, JANUARY 2014
Make The Best Choice About Solar Energy
Solar energy is not right for every homeowner, nor for every home. With that said, many homeowners will find that the total cost of solar is more than offset by long-term, recurring energy savings that provide a sizable return on investment. Make sure you factor in cost, energy needs, tax incentives, home value and more as you seek to make a fully informed decision about whether to make the switch to renewable energy with solar.
Don’t Miss: How Much Energy Can Solar Panels Store
Can A House Run On Solar Power Alone
Practically, it is not often possible. This is because solar only works when the sun is shining – which means when it is cloudy or nighttime, they do not generate electricity. There are some battery solutions to provide power during these times, but they still tend to be quite expensive. Most homes with solar panels still rely on the grid from time to time.
Youre Our First Priorityevery Time
We believe everyone should be able to make financial decisions with confidence. And while our site doesnt feature every company or financial product available on the market, were proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward and free.
So how do we make money? Our partners compensate us. This may influence which products we review and write about , but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services.Here is a list of our partners.
You May Like: How Much Do You Make Installing Solar Panels
The Angle Of Solar Panels
The angle of the panels also affects how much electricity they produce. Solar panels tilted towards the sun will generate more electricity than those that are not. The correct angle to install solar panels depends on your locations latitude.
In the United States, the best angle to install solar panels is between 30 and 40 degrees if you are located south of Colorado and between 70 and 80 degrees if you are located north.
Do You Really Save Money With Solar Panels
Solar panels are a great way to reduce your energy bills, because they allow you to create your own power instead of just buying it from the National Grid. Once youve got your shiny new solar panels installed on your roof, youll be fuelling up on good, clean, complimentary sunlight.
According to the Energy Saving Trust , a standard 4kWp system in Southern England can save you up to £330 per year, providing you’re at home during the day. If you’re out all day until 6pm, annual savings are closer to the £225 mark. This is also factoring in earnings from the Smart Export Guarantee.
Take a look at how much money solar panels could save you, depending on where youre located in the UK and how much time you spend at home, according to the EST. You can also find out more on our page about whether you should invest in solar panels .
| Location |
|---|
Take a look at:How to pigeon-proof your solar panels
Recommended Reading: Can I Get Sole Custody Of My Child
How Can You Find The Right Solar Installation Company
At SolarReviews, we recommend going with a reputable local solar installer. Generally, youll want the installer to meet these requirements:
- Been in business for over 5 years
- Hires their own installation crew
- Has between 15 and 20 employees
- At least one NABCEP-certified installer
But remember, you also want to make sure the company is charging a fair price for their services. If its too cheap, you might have to worry about a shoddy installation or low-quality equipment. If its too expensive, you might be paying an extra premium for no added benefits.
You need to find a happy medium of a solid price from a trusted company that uses high-quality materials. The best way to connect with companies in your area is by using our state-of-the-art solar calculator, which will not only give you a detailed cost and savings estimate catered to your specific home, but will also put you in contact with our vetted solar installers.
Learn more: Guide to the top-rated solar installers in your area
Federal Renewable Energy Tax Credit
The first, and maybe most important, was an incentive implemented across all the US is the Federal renewable energy tax credit. This incentive is focused on any residential homeowners that choose to install any of the following sources of energy to power their home: Solar Water Heating systems, geothermal heat pumps, small wind turbines, fuel cells, and solar photovoltaic systems.
The program entitles the homeowner to receive a 30% rebate credit over qualified expenditures related to the equipment, labor costs, system installations, and piping or wiring to interconnect the renewable energy system to the household. Therefore, the program allows you to offset the costs of the PV system by 30%, which will be attributed to your annual tax payments.
If the 30% equivalent amount exceeds your tax liability, then you will be able to carry the remaining amount to the next taxable year.
You must know that the program will be available for solar until 2021 and will reduce to 26% tax credit from January 1st of 2020. In other words, if you are thinking to go solar, now would be the perfect time to do it.
It is important to mention that energy storage systems do not qualify for the program. Keep that in mind.
Read Also: How To Get Into The Solar Industry
